India’s Gig Economy Policies Need More Nuance; Consistent Re-Evaluation is Key

In his international bestseller, Thinking, Fast and Slow, Daniel Kahneman details out his research with his long-term associate, Amos Tversky on mental systems, biases, and heuristics i.e. mental shortcuts built into our mind that allow us to solve problems and make judgments quickly and efficiently. In the book, he explains why our judgements may be skewed based on a number of factors including the availability heuristic, which is the tendency of our minds to draw the easiest available information of subject from our memory and apply that to situations thereafter. The availability heuristic makes our lives and decision making easier, but it comes at the cost of accurately judging events and leaves us with blind spots because of our rush to make decisions.  

The availability heuristic can cloud our judgement as the mind jumps to the most memorable information, which could be because of the shock value or the omnipresence of the information. An illustration of this would be trending topics on Twitter, which are often aberrations that our minds assume are the norm because of the pervasiveness of the conversation. For example, we may be inclined to assume that the economy is doing terribly without looking at the aggregate data, if we’re surrounded or inundated by anecdotal evidence of people losing their work.  

Similarly, when we think of gig workers and platform workers, the examples that sprout to mind are those of Zomato and Swiggy valets, Uber and Ola drivers, Dunzo delivery partners, and Urban Company service providers. While working long hours to provide services for these companies, gig workers with the above companies lack the same protections afforded to employees and have most recently had their incomes severely impacted because of the economic upheaval caused by COVID-19. Noting this, both Houses of Parliament passed a slew of measures to recognize and create provisions to provide social security to both platform and gig workers. Under the new Code on Social Security,  

• Section 2(35) defines a gig worker as “a person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship”, and  

• Section 2(61) defines a platform worker as “a person engaged in or undertaking platform work” i.e. a work arrangement outside of a traditional employer-employee relationship in which organisations or individuals use an online platform to access other organisations or individuals to solve specific problems or to provide specific services or any such other activities which may be notified by the Central Government, in exchange for payment. 

On the face of it, the government should be commended for such a move. However, if one takes a more nuanced view of the gig economy sector and the specific definitions used, it becomes clear that the move could end up restricting the scope of future innovation, while causing collateral damage be felt by companies and workers, who aren’t the archetype of gig / platform workers in our minds i.e. hosts on Airbnb, graphic designers on Fiverr, freelancers on Upwork, programmers on Coder, and even non-commercial enterprises such as carpooling on QuickRide, and CouchSurfing, all of which are covered by the above expansive definition. 

While the government’s goal to build a social security net is laudable, its definition of those eligible within this net could result in increased cost of business, which counteract another one of its main policy goals – Ease of Doing Business. To ensure that policies and schemes are targeted appropriately, it is essential to build different categories of gig and platform workers, and not bucket them under the same umbrella. Some of the pertinent questions that need to be mulled to this end include: 

• Is the money earned from gig work a primary source of income for the person? For many people mulling alternate careers, independent gig work on platforms becomes a pilot towards a complete shift. For others, it can be an after-hours project as part of the passion economy. Compliance burdens such as registration mulled under the Draft Rules under the Code on Social Security to participate serve as disincentives, precluding people from creating value for themselves and the economy. 

• What is the amount of income the person is making of work? Under the present definition of platform workers, Zomato valets maybe lumped into the same category as coders making over $250 hours an hour. If policies were to be made for this class of workers, distinctions should be made based on income, as they are for many other policies. 

• How long has the person been involved in gig work? For a person to be categorized as a gig / platform worker, there should be a threshold on the amount of time that the person has been doing the work. Without such thresholds, people involved in casual gig work would be classified with those involved in near full-time work.  

• Is the person leasing an asset or providing a service? Often, distinctions between the sharing economy and gig economy are blurred. For services such as B&Bs, hosts are primarily leasing idle assets and monetizing them. The provisions of warmth and hospitality are incidental to the primary product i.e. the room and boarding.  

• Is the work being undertaken for a commercial or non-commercial purpose? Those undertaking work without a profit motive or a commercial motive should be exempt from the definition and any compliance under the Act. Carpooling and activities such as couch surfing, should be precluded from this definition.  

Beyond gig work, the implications of the availability heuristic can be seen in other policies such as the motor vehicle aggregator guidelines, which put the same compliance burdens on carpooling aggregators and taxi aggregators, despite the divergence in their purpose and business models.  

To use the language of Donald Rumsfeld, this additional information, omitted by the availability heuristic, would fall under the category of “Unknown, Knowns” i.e. things we understand, but are not aware or conscious of. To effectively overcome the impact of these biases, structures must laid down to expand our knowledge of the present, while keeping an eye to ensure that future innovation isn’t stifled. In 2014, the government had already instituted a Pre-Legislative Consultation Policy, which aimed to ensure that consultation before law-making becomes the norm. 

Though the policy has helped shift the needle in the right direction, there is a long way to go before our laws can be called truly consultative. Steps to need to make to ensure that an assessment of each stakeholder group, which could be impacted, should be undertaken with second and third-order effects in mind. Apart from those impacted in the present such as industry players, civil society, consumer forums and directly impacted groups, stakeholders building the future should also be taken into consideration. Given that the laws laid down are not only going to impact existing companies but also future innovations, seed, angel and venture investors, entrepreneurship councils, disruptors and innovators need to be brought into the conversation. 

Additionally, and most importantly, it is necessary to understand the limitation of our ability overcome these biases and to put in place processes that make us continuously rethink our policies in light of new evidence and technological advancement.  The last decade has been one of policy playing catch-up as new models driven by data and technology have upended existing structures. With the pace of progress of technology, not only in terms of computing but also in biotechnology and space tech, the next few decades can be expected to be supercharged. Sunset clauses on policies and mandatory re-evaluations on a timely basis are essential if our laws are to stay relevant and protect the population, while not stifling innovation. 

A wider, deeper and constant conversation is the only way to ensure that even if we tread down the wrong path, we can adjust course that will bring about positive change not only today but in the future.  

Note: BW Legal World is accepting nominations for Global Legal Summit and Legal Leaders Awards in various individual and practice categories. Let's celebrate excellence in law. Please visit the website to nominate now: http://bwevents.co.in/bw-legalworld/2020/