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Daily Current Affairs 02.06.2022 (Centre to hold sessions on gig workers’ rights, May manufacturing PMI hints at sustained rebound in sector, U.S., Taiwan to ‘quickly’ develop road map for trade initiative)

Daily Current Affairs 02.06.2022 (Centre to hold sessions on gig workers’ rights, May manufacturing PMI hints at sustained rebound in sector, U.S., Taiwan to ‘quickly’ develop road map for trade initiative)

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1. Centre to hold sessions on gig workers’ rights

People employed with many new platforms have been demanding proper wages, social security

Concerned at the lack of job and social security among gig and platform workers, the Centre has decided to train officials of the Union and State governments on technological change, new forms of employment, working conditions and mechanisms to protect labour and social security rights of these workers.

The V.V. Giri Institute, the training arm of the Union Labour Ministry, is organising the programme aimed at sharing information and good experiences on policies and global practices relating to gig and platform workers and their social security.

This is the first time that such a brainstorming session is being held by the government on the gig economy. The workers employed with many new platforms had been protesting and striking work demanding proper wages and social security.

The three-day programme beginning on June 13 will discuss the mechanisms to be evolved on the proposed Social Security Fund for unorganised workers, gig workers and platform workers. The key issue will be the disbursal of social security amount to registered gig and platform workers and how the registration of these platform workers could be completed through the e-Shram portal.

According to a note shared with the States, the Union Labour Ministry, the trade unions and employers’ organisations, the session will try to understand the innovative policy responses that countries have established to protect gig and platform workers and how they have adapted their social protection strategies to extend coverage to them. Trade unions and employers’ organisations have also been invited to the session.

The institute will share international experience on providing social security to the States and other officials. Experiences and interventions of Australia, New Zealand, China, Thailand and Malaysia in this sector will be discussed in the sessions. Examples such as social security for platform workers in the transport sector of Thailand and Malaysia, where there are online models under which 2% for every ride is deducted for health and accident insurance and for social security will be taken up during the session.

Another issue that will be taken up is the employer-employee relationship in the context of the gig economy. Workers’ employment relationships are not recognised in law in this case and gig workers are largely excluded from labour and social security rights, both in terms of law and in practice. Though there are certain benefits for youth and migrant workers, such as quick money and flexible work hours in the gig platforms, uncertain working hours and insufficient income are still considered major issues that need governmental address.

Gig Workers

In general, gig workers are those engaged in hourly or part-time jobs in everything from catering events to software development.

  • They have a non-standard work arrangement with their employers and share a non-traditional employer-employee relationship.
  • The work is usually temporary and completed within a stipulated time.
  • The Code on Social Security, 2020 [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 relationships.’
  • Freelancers, contingent workers, independent contractors, etc. can come under the umbrella of gig workers. Even a part-time professor can be classified as a gig worker.

Platform Workers

A platform worker implies a worker working for an organisation that provides specific services using an online platform directly to individuals or organisations.

  • Examples of platform workers include Ola or Uber drivers, Swiggy or Zomato delivery agents, etc.
  • The Social Security Code defines a platform worker as “a person engaged in or undertaking platform work”.
  • Section 2(55) of the Code defines platform work as “A form of employment in which organisations or individuals use an online platform to access other organisations or individuals to solve specific problems or to provide specific services in exchange for payment”.
  • This work is also outside the traditional employee-employer relationship.

Gig & Platform Work Pros and Cons

Gig and Platform Work Pros

  • It offers flexibility to the workers, who can choose to work for multiple organisations at the same time, and also in some cases, fix their own pay.
  • It offers the opportunity for workers to test their skills in an area where their interests lie. For instance, freelance writers can try a job part-time before embarking on a full-time career in it.
  • Such work also allows remote workers to be employed.

Gig and Platform Work Cons

  • Such workers are generally denied benefits that organisations offer their regular workers, like health insurance, paid leaves, etc.
  • Such work generally suffers from inconsistent pay and a lack of stability in job tenure.
  • While it is said that gig and platform workers enjoy greater flexibility in their terms of employment, they are still bound by mechanisms of control wired by the algorithm that the platforms use. This affects the work hours, pricing, etc.
  • Additionally, entry into on-demand platform work like ride-sharing and food delivery is dependent on existing access to vehicular assets, which is limited for the average Indian worker. To get into the platform economy, such workers depend on intensive loan schemes, which are often facilitated by platform aggregator companies.

Significance of Gig and Platform Workers

Although a fairly new concept for India, the gig and platform workers have become a significant part of the economy.

  • Notwithstanding the drawback of limited access to capital for workers as mentioned above, for a specific class of workers, however, particularly, smallholder agrarian labour migrants with access to vehicular assets, the platform economy is an attractive proposition.
  • Such workers are able to accumulate wealth which they can then invest into farm work.
  • The pandemic has revealed a very significant role that gig and platform workers play in the economy by virtue of their role as delivery drivers and agents. They ensured that basic necessities were reaching people at their homes.
  • These workers also helped many platform companies remain afloat during the pandemic and the resultant economic downturn.
  • Due to the fast pace of urbanisation, this sector has high growth potential.
  • The remittances sent by the platform and gig workers are also contributing to the growth of the rural areas.
  • Such work will also encourage students to take up non-regular work in the market.
  • It would also lessen the burden on employers by helping them avoid taking on employees in the traditional employment structure.

Code on Social Security 2020 Provisions for Gig & Platform Workers

The code mandates compulsory registration of both gig and platform workers on an online portal to avail benefits under the Code which shall be specified by the Central Government. 

  • For the worker to be registered, he/she has to fulfil certain conditions, such as:
  • Between 16 and 60 years of age
  • Has worked for not less than ninety days during the preceding twelve years
  • Has submitted a self-declaration electronically or otherwise in such form and in such manner containing such information as may be prescribed by the Central Government
  • Every eligible unorganised worker, gig worker or platform worker shall make an application for registration in such form along with such documents including Aadhaar number
  • The code provides for social security benefits to unorganized workers including gig and platform workers. Under the code, the Central Government has the power to frame welfare schemes for the workers in the unorganised sector for:
    • Accidental insurance
    • Life and disability cover
    • Old age protection
    • Health and maternity benefits
    • Creche
    • Any other benefit the Central Government may decide

Issues with the Code on Social Security 2020 for Gig Workers

Some experts have expressed concerns about the new code’s impact on gig and platform workers.

  • Platform workers can claim the benefits provided under the Social Security Code but cannot claim labour rights.
  • They are not entitled to go to court for a stable and better pay package, or against the algorithms used by the platforms that allocate jobs to them.
  • The eligibility criteria for claiming benefits might lead to certain workers being excluded.
  • The Code states the provision of basic welfare measures as a joint responsibility of the Central government, platform aggregators, and workers. However, it does not state which stakeholder is responsible for delivering what quantum of welfare.
  • Some opine that there is an overlap in the definitions of unorganised, gig and platform workers. This makes it unclear how schemes specific to these categories of workers will apply. 
  • There seems to be a duality of appropriate governments (central vs state) in certain cases like the provision of social security for unorganised sector workers.

2. May manufacturing PMI hints at sustained rebound in sector

Producers passed on input costs at fastest pace since October 2013: S&P Global

Indian manufacturers won new orders in May at almost the same pace as in April despite raising prices at the fastest rate in more than eight-and-a-half years amid a sharp jump in input costs, as per the S&P Global India Manufacturing Purchasing Managers’ Index survey.

The PMI index stood at 54.6, easing marginally from 54.7 in April. A reading of over 50 indicates an expansion in activity. May marks the 11th month in a row that India’s manufacturing PMI reflected an expansion.

Input costs rose for the 22nd straight month in May, with companies reporting higher prices for electronic components, energy, freight, foodstuff, metals and textiles. Firms signalled prices were set to rise further to cope with these costs, even after resorting to the sharpest increase in output prices since October 2013.

New export order growth quickened, posting the best expansion in 11 years.

Manufacturing sector jobs grew for the second month in a row, owing to ongoing improvements in sales and although the pace of job creation was ‘only slight’, it was still the strongest recorded since January 2020, S&P Global said.

Despite the broader buoyancy, business sentiment was dampened by inflation concerns.

“The survey’s gauge of business optimism shows a sense of unease among manufacturers,” said Pollyanna De Lima, economics associate director at S&P Global. “The overall level of sentiment was the second-lowest seen for two years,” Ms. De Lima added.

Purchasing Manager’s Index

PMI is an indicator of business activity- in the manufacturing and services sectors.

Calculation of PMI

  • It is a survey-based measure that asks the respondents about changes in their perception about key business variables as compared with the previous month.
  • It is calculated separately for the manufacturing and services sectors and then a composite index is constructed.
    • The latest composite PMI decreased to 49.8 in September 2019 from 52.6 in August 2019.
  • The PMI is a number from 0 to 100.
    • PMI above 50 represents an expansion when compared to the previous month;
    • PMI under 50 represents a contraction, and
    • A reading at 50 indicates no change.
    • If PMI of the previous month is higher than the PMI of the current month (as is the case mentioned above), it represents that the economy is contracting.
  • The PMI is usually released at the start of every month. It is, therefore, considered a good leading indicator of economic activity.

Purpose: To provide information about current and future business conditions to company decision-makers, analysts, and investors. As the official data on industrial output, manufacturing and GDP growth comes much later, PMI helps to make informed decisions at an earlier stage.

3. U.S., Taiwan to ‘quickly’ develop road map for trade initiative

Aims to create inclusiveness and durable prosperity: U.S.

The United States will launch new trade talks with Taiwan, U.S. officials said on Wednesday, just days after President Joe Biden launched an economic plan for Asia intended to push back on China that excluded the Chinese-claimed island.

Washington and Taipei will “move quickly to develop a roadmap” for the planned U.S.-Taiwan Initiative on 21st-Century Trade in the coming weeks, which would be followed by in-person meetings in the U.S. capital later in June, two senior U.S. administration officials told reporters.

The initiative would aim to “reach an agreement with high standard commitments that create inclusive and durable prosperity” on issues that include customs facilitation, fighting corruption, common standards on digital trade, labour rights, high environmental standards, and efforts to curb state-owned enterprises and non-market practices, one of the U.S. officials said.

The bilateral initiative largely parallels the Biden administration’s Indo-Pacific Economic Framework (IPEF), an economic partnership with 13 Asian countries. But the United States did not invite democratically self-governed Taiwan to join the IPEF talks.

The announcement came after a virtual meeting on Wednesday between Deputy U.S. Trade Representative Sarah Bianchi and Taiwan’s chief trade negotiator John Deng. Mr. Deng said they hoped there would be an opportunity to seal a free trade deal Taiwan has long sought with the U.S.

Indo-Pacific Economic Framework (IPEF)

  • It is a US-led initiative that aims to strengthen economic partnership among participating countries to enhance resilience, sustainability, inclusiveness, economic growth, fairness, and competitiveness in the Indo-Pacific region.
    • The IPEF was launched with a dozen initial partners who together represent 40% of the world GDP.
  • Opportunity for Indo-Pacific Region:
    • It is a declaration of a collective desire to make the Indo-Pacific region an engine of global economic growth.
  • An Economic Vision:
    • The Indo-Pacific covers half the population of the world and more than 60% of the global GDP and the nations who will join this framework in the future, are signing up to work toward an economic vision that will deliver for all people.
  • Focus Areas: Unlike traditional trade blocs, IPEF won’t negotiate tariffs or market access, and the framework will focus on integrating partner countries in four areas which include:
    • Trade: It intends to build high-standard, inclusive, free, and fair-trade commitments and develop new and creative approaches in trade and technology policy that advance a broad set of objectives that fuels economic activity and investment, promotes sustainable and inclusive economic growth, and benefits workers and consumers.
    • Supply Chains: IPEF is committed to improving transparency, diversity, security, and sustainability in supply chains to make them more resilient and well-integrated.
      • To coordinate crisis response measures; expand cooperation to better prepare for and mitigate the effects of disruptions to better ensure business continuity; improve logistical efficiency and support; and ensure access to key raw and processed materials, semiconductors, critical minerals, and clean energy technology.
    • Clean Energy, Decarbonization, and Infrastructure: In line with the Paris Agreement goals and efforts to support the livelihood of peoples and workers, it plans to accelerate the development and deployment of clean energy technologies to decarbonize our economies and build resilience to climate impacts.
      • This also involves deepening cooperation on technologies, on mobilizing finance, including concessional finance, and on seeking ways to improve competitiveness and enhance connectivity by supporting the development of sustainable and durable infrastructure and by providing technical assistance.
    • Tax and Anti-Corruption: It is committed to promoting fair competition by enacting and enforcing effective and robust tax, anti-money laundering, and anti-bribery regimes in line with existing multilateral obligations, standards, and agreements to curb tax evasion and corruption in the Indo-Pacific region.
      • This involves sharing expertise and seeking ways to support the capacity building necessary to advance accountable and transparent systems.
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