As business and borders are closed down, there are enough reports to show how the workers (think daily wage earners, home service providers, cab drivers) across industries in restaurants, hotels, shopping malls are left high and dry. Most of them don’t have fixed monthly incomes but earn from the number of tasks they do, whether it is deliveries or home services and currently, their income has taken a big hit.
“The COVID episode makes me question if the gig economy model works in India?,” asks Sahil Barua, co-founder of logistics firm Delhivery during the webinar organised by TiE Delhi-NCR and Fireside Ventures.
While he might be sticking his neck out by undermining the aggregator or on-demand model of work, but, COVID crisis has made many question the sustainability and viability of these new business models.
“The COVID lockdown has impacted the vulnerable sections of society the most where they have lost their jobs and their livelihood has come under threat,” Barua added.
“Aggregator models like Ola, Uber, Swiggy need to start social security measures in their respective companies. While it is difficult to protect their entire earnings, but there has to be some sustenance amount, at least of Rs 5,000 per month, that is going into their bank account, otherwise, it is like a ‘use and throw’ model,” says Jayant Krishna, Senior Fellow, Center for Strategic & International Studies (CSIS) & Executive Director, Public Policy, Wadhwani Foundation.
Krishna suggests that firms can charge consumers for their social security to fund for provident fund, insurance, and most importantly, unemployment insurance. It can anywhere be 7-10 per cent of the service cost. “Such practices have to come in big time even if it increases the cost of services or reduce the number of people accessing the service,” says Krishna.
He adds, “If not, sooner or later, government will chip in and enforce social security plans for these workers and then there will be a backlash from these firms on the increasing cost of doing business.”
For informal workers, the situation is better as the government has pitched in to help but it is to a limited extent. Some workers have got anywhere from Rs 500 to Rs 3,000 a month through direct benefit transfer but it is certainly not enough. Very few firms are taking care of their labour and there are many more who are not.
Barua says there is an underlying need to change in the labour models that exist in India that offer a greater focus on safety and security of staff. “There should also be a lot more focus on benefits provided to people who are out there and delivering at the last mile, staff in warehouses and trucking terminals. This has not been the case historically in India and it is something that should change,” he says.
Taking care of employees, who have proven to be the backbone of essential services in crisis times, is good for business too.
Barua says they are now working at 80 per cent of their capacity of the pre-lockdown period. One of the reasons, he says, they have been able to resume operations and retain a large portion of its workforce is because all delivery, warehousing staff etc are salaried employees of the firm with guaranteed provident fund and insurance, like any other corporate employees.
PC Musthafa, co-founder and CEO, of Bengaluru-based iD Fresh Food, says that since all of their 600 salespeople and drivers for their fleet of 375 vehicles are full-time employees with the firm, it helped them turn their offline business into an online/offline model and distribute to 30,000 retail outlets. They had issues in procuring raw material from farmers as state borders were closed, but he said it is easier to resolve issues and tweak the business model when teams are all in-house.
Within a week they launched ‘Store Finder’ that identifies open stores near one’s location and tells the exact quantity of iD Fresh products supplied on a given day. It also has ‘Notify Me’ feature that will provide SMS alerts when fresh stocks get refilled in the store. That was the first step in their transition from an offline food company to an online food distribution firm.
They also started looking at direct home delivery models by tying up with RWAs. They have tied up with 10 RWAs in Mumbai and are planning to scale it up in other cities. “During this crisis what helped us was that we own the entire supply chain,” says Musthafa.
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