India’s gig debate misses a key point: Better wages for delivery agents will aid the economy without hurting platforms

This has triggered a bizarre debate online, as if asking for better wages amounts to socialism and charges of gig worker exploitation go against entrepreneurship.

The obvious gainers from low-paid gig work are consumers who get doorstep deliveries both extra-cheap and ultra-fast.

Entrepreneurs running platforms that give millions of people work who may be left jobless without this option deserve appreciation; the profits they earn are indeed a reward for risk-taking. However, this does not mean that concerns raised about the work conditions of gig workers, their earnings and lack of social security or occupational safety lack merit.

What platforms pay their delivery agents is a pass-through. In other words, their earnings do not come from squeezing riders. If all companies had to pay, say, 5% more than what they do now, consumers would simply have to shell out that much more. This would not dent platform margins on those deliveries. Such a payout hike would need all platforms to pay 5% extra, without any player trying to grab orders by offering order placers a cheaper deal.

The Labour Codes recently notified by the Centre could make the gig debate redundant. If implemented uniformly in a clearly defined market—urban spaces, for example, where wages need to track higher living costs—these codes can address the expectations of workers without harming the viability of businesses that employ their services.

An old demand of gig workers that is not justified is their call to classify them as employees. Gig work is a new kind of job that leaves workers free not to toil when they so choose. This freedom is valuable even if wages are low.

What regulation should do is ensure realistic delivery timelines, given the distances to be covered and traffic conditions, and insist that riders get insurance and social security benefits from the platform fees paid by customers. This won’t threaten the model.

The term ‘exploitation’ is subject to much confusion. In a technical sense, if one defines exploitation as the worker not being able to appropriate the entirety of the value generated by his or her effort at the workplace, workers will always be ‘exploited,’ however well they might be compensated.

Yet, for a country to prosper and generate jobs, a private enterprise must get a return on its capital and entrepreneurs should be rewarded for entrepreneurship, which involves ideas, initiative, management skill and big money put at stake. The question is whether workers are paid wages that are fair or not.

Market rivalry for workers can drive up wages. But if this mechanism fails, as in a monopsony situation (one employer or a cartelized lot), then regulation must step in. In general, better-paid workers tend to produce more, which serves employers well. Acting in aggregate, higher wages could also raise consumption in aid of the economy.

Subsistence earnings depress demand, investment and growth. India’s delivery gig model is not broken, but still needs a fix. A mix of Labour Code adherence and collective rider assertion could reset our gig sector to the benefit of all.