Lessons from India in the great California experiment
The US state of California has voted to keep rideshare and delivery industry workers as independent contractors in the recent election cycle. The Financial Times, in its editorial titled ‘A California setback for gig economy workers’, was quick to denounce the referendum, calling on other US lawmakers to not follow suit. This is a strange reading of the passage of Proposition 22 (Prop-22), which is a resounding endorsement of the role of the platform economy in unlocking livelihood opportunities and catalysing economic growth.Prop-22 repealed the unpopular Assembly Bill 5 (AB-5) legislation, which mandated platforms treat their workers as employees. AB-5 found analogous applications in France and Spain too, and inadvertently led to job losses in the broader gig economy. Over 100 exemptions have been amended to AB-5 over the past year, illustrating the struggles of applying a ‘100-year-old solution to a modern problem’.
Prop-22 will make the Protect App-Based Drivers and Services Act the law of the land. Rideshare and delivery workers will continue to be flexible, gig-based workers while also gaining economic security. Worker protection will take the form of assured earnings, healthcare subsidies, vehicle expense compensation, occupational accident insurance, and protection against discrimination or harassment, owed by the platform company. This is but the first step that California and the rest of the US can take in the direction of universalised social security.
Closer home, with the passage of the Code on Social Security (CoSS) 2020, policymakers have managed to catapult the imagination of financial and social security associated with employment to contemporary realities. Unlike California, India goes a step further in reimagining social protection in the 21st century. California could well adopt some lessons from CoSS 2020 to widen the scope of reforms being proposed via Prop-22.
India draws a distinction between gig and platform workers through CoSS 2020, the absence of which has led to job losses in California, Spain and elsewhere. The issue of labour taxonomy gains critical significance today with digital platforms changing the very nature of work. By affording independence, flexibility and choice, gigs and platforms have created a new form of work outside the traditional employer-employee arrangement. Rightly then, India defines a gig worker as one who works outside the traditional employer-employee setup, and a platform worker as a gig worker who uses the medium of digital platforms to earn a livelihood.
Further, CoSS 2020 decrees that gig and platform workers in India are a step-up from unorganised, informal workers commonly referred to as independent contractors elsewhere. They enjoy independence, agency and guaranteed payments by the clients upon completion of service and are granted benefits of association such as accident coverage, group health policies and retain flexible, multi-platform working arrangements.
India is the first country to mandate social protection for all workers including the new-age gig and platform workers through CoSS 2020. Combined with defining such workers as different from traditional employees and unorganised sector workers, CoSS 2020 is necessitating the adoption of cutting-edge solutions to provide social security for all. CoSS 2020, impacting the lives and livelihoods of over 500 million workers, contemplates the creation of a centralised fund financed by multiple sources and supported by tech-enabled processes. Workers register with the fund and avail benefits directly, while the job-creator, i.e. the digital platform, remains a mediator.
CoSS 2020 lays the foundation for delinking social security from employment and universalising it. The prevailing standard of ‘employment’ provides wages as well as social security in the form of retirement benefits, and health, accident, life insurance etc. This form of social security coupled with employment makes job creation expensive, and renders people vulnerable during times of massive job losses such as this pandemic. Therefore, it is discouraging to see global economies uncritically applying archaic notions of labour governance to new-age disruptions.
Overall, the FT’s position to endorse an AB-5 model in light of progressive examples like CoSS 2020 is therefore ill-perceived. Indeed, both CoSS 2020 and Prop-22 are catalysing a paradigm shift in labour relations in the era of platforms. Delinking social protection from employment is an inflection point in the evolution of platform-work and its ability to unlock livelihood opportunities in the billions.
Raman is associate director and head of Research, Ramachandran is research associate, Ola Mobility Institute