Editorial 1: De-dollarisation: the race to attain the status of global reserve currency
Introduction:
De-dollarisation refers to reducing the dollar’s dominance of global markets. It is a process of substituting US dollar as the currency used for:
- Trading oil and/ or other commodities
- Buying US dollars for the forex reserves
- Bilateral trade agreements
- Dollar-denominated assets
The present scenario
- Countries have tried to dethrone the dollar as the global reserve currency for many decades now for various reasons.
- But of late, attempts to de-dollarise have picked up pace in the aftermath of Russia’s invasion of Ukraine last year.
- The U.S. imposed several sanctions that restricted the use of the U.S. dollar to purchase oil and other goods from Russia, and this has been seen by many countries as an attempt to weaponise the dollar.
- Since international transactions carried out in the U.S. dollar are cleared by American banks, this gives the U.S. government significant power to oversee and control these transactions.
The popularity of the U.S. dollar
- Many economists argue that the U.S. dollar is not forced on anyone to be accepted as a medium of exchange for cross-border transactions. They note that the U.S. dollar is widely used in international transactions because people actually prefer to use the American currency over others for various economic reasons.
- The global acceptability of the U.S. dollar has primarily been attributed to the popularity of U.S. assets among investors. The high level of trust that global investors have in the U.S. financial markets, perhaps owing to the ‘rule of law’ in the U.S is considered to be a major reason why investors prefer to invest in U.S. assets.
Challenges in dollarisation
- Many countries believe that their economic sovereignty is threatened by the dominance of the dollar in global trade.
- The global reserve currency status gives it unfair privileges over other countries, thus justifying de-dollarisation attempts by many countries.
- it gives the country the power to purchase goods and other assets from the rest of the world by simply creating fresh currency out of thin air.
- The dominance of the dollar in global trade allows the US government to manipulate its currency to gain an economic advantage over other countries.
- The dominance of the dollar in global trade also increases the risk of a global financial crisis.
- Global trade is largely conducted in dollars, so countries that deal with the US a lot may become too dependent on the US economy.
Steps taken by Governments of Different Countries
- Bilateral Currency Swaps: among ASEAN, African and Latin American countries.
- Initiation of Trade in National Currencies: for e.g The BRICS’s New Development Bank encourages trade and investment in national currencies.
- India’s Efforts: In 2022, the Reserve Bank of India (RBI) unveiled a rupee settlement system for international trade by allowing special vostro accounts in designated Indian banks, a step towards internationalising the rupee.
Way forward
- A mere change in regime along with having to bear the same manipulations albeit from a different country is not what the world wants. The only way forward would be to diversify the currency market with no one currency claiming hegemony.
Editorial 2: Why are Blinkit workers protesting?
Context
- The recent strike by Zomato-owned Blinkit delivery agents after it rolled out its new payout structure for delivery executives has once again brought to the forefront issues plaguing the gig economy in the country.
Defining a Gig Worker
- Gig workers refer to workers outside of the traditional employer-employee relationship. There are two groups of gig workers i.e platform workers, and non-platform workers.
- When gig workers use online algorithmic matching platforms or apps to connect with customers, they are called platform workers. Those who work outside of these platforms are non-platform workers, including construction workers and non-technology-based temporary workers.
The issue
- Whether gig workers should be categorised as ‘employees’ or as ‘independent contractors’ has been a heated debate.
- In India, employees are entitled to a host of benefits under statutes such as the Minimum Wages Act, 1948, Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (EPFA), and the Payment of Bonus Act, 1965.
- Similarly, contract labourers are governed under the Contract Labour (Regulation and Abolition) Act, 1970 and are also entitled to benefits such as provident funds.
- However, given the unique nature of gig work, gig workers display characteristics of both employees and independent contractors and thus do not squarely fit into any rigid categorisation.
- As a result, gig workers have limited recognition under current employment laws and thus fall outside the ambit of statutory benefits.
Code on Social Security, 2020
- The Ministry of Labour and Employment introduced it which brings gig workers within the ambit of labour laws for the first time. Under the Code,
- A ‘gig worker’ is defined as ‘a person who performs work or participates in a work arrangement and earns from such activities outside of a traditional employer-employee relationship’.
- The Code defines platform work as ‘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” in exchange for payment.
- The Code stipulates that Central and State governments must frame suitable social security schemes for gig workers on matters relating to health and maternity benefits, provident funds and accident benefits among others.
- The Code also mandates the compulsory registration of all gig workers and platform workers to avail of the benefits under these schemes.
Concerns
- Out of the four new labour codes proposed, gig work finds reference only in the Code on Social Security. As a result, gig workers remain excluded from vital benefits and protections offered by other Codes such as minimum wage, occupational safety etc.
- They cannot create legally recognised unions.
- Moreover, they remain excluded from accessing the specialised redressal mechanism under the Industrial Disputes Act, 1947.
- They also do not have the right to collective bargaining — a fundamental principle of modern labour law crucial to safeguard the rights of workers.
Ways of improvement
- Empowering the gig workers by forming an umbrella union that provides them with collective bargaining power.
- Mandatory coverage to platform workers under the centrally sponsored schemes.
- Building the Right Physical and Social Infrastructure.
Conclusion
- With a population of over 1.3 billion, and a majority of them below the age of 35, relying on the “gig economy” is perhaps the only way to create employment for a large semi-skilled and unskilled workforce. Therefore, it is important to hand-hold this sector and help it grow.