India’s social security scheme for gig and platform workers

Under the Code on Social Security 2020, the Ministry of Labour & Employment has planned to formulate a new scheme for the social security of gig and platform workers. The government seeks to extend social security to gig and platform workers since they do not enjoy a conventional employer-employee relationship for improving productivity and helping the economy. India has approximately 65 lakh gig and platform workers, as per Niti Aayog, however, the number can reach 2+ crore due to segment growth projection which is only expecting 3 crore workers by 2030. For the first time, the Code on Social Security 2020 has defined gig workers and platform workers on official terms, thereby acknowledging their existence in the economy.

Key Points:

• Lack of Traditional Employer-Employee Relationship: Gig and platform workers do not have the conventional employment relationship with the employer to remain protected or receive benefits such as pensions or paid sick leave; thus, the government seeks a strategic way to improve productivity and boost the economy by expanding the coverage of social security.

• Growing Gig Economy Workforce: According to Niti Aayog, India has approximately 65 lakh Gig and Platform workers out of which the number is expected to cross over 2 crore as it is a very fast-growing segment, Existing data points predict over 3 crore workers by 2030.

• Definition of Gig and Platform Workers in the Labour Code: For the first time, the Code on Social Security 2020 has formulated legal definitions of gig workers and platform workers and acknowledged their existence in the economy.

• Gig Worker Population Expected to Reach 23.5 Million by 2030: A Niti Aayog report released in 2022 stated that gig and platform workers in India were 7.7 million in 2020-21 It projected that this figure will rise to 23.5 million in 2029-30.

• AI Impact on Employment: A ray of hope: Union Labour Secretary Sumita Dawra opined that AI will not lead to loss of jobs, citing the example of auto industry where AI has displaced the labour force but provided them with other jobs.

• India’s Workforce Strength and Formalization: India has become perceived as having a solution to the labour deficit with 643 million workers, with a major shift seen in the formalisation of the workforce, with 7 crore Indians enrolling into provident fund pension schemes since 2017.

• Employees' Linked Incentive (ELI) Scheme to Support Labor Formalization: The ELI Scheme, which has been outlined in the Budget, aims at assistance to the manufacturing sector as well as enhance the formalization of the employment, which would be constructive even for employees from various fields.

Factors that led to rapid growth of gig workers in India

COVID-19 During the periods of the lockdown, most conventional careers became unstable, leaving many people chasing other forms of livelihood. As big organizations adopted the work from home model and independent contractors continued to provide life support services such as food delivery services, healthcare services, delivery services, the gig economy became feasible.

• Digital Revolution: Perhaps most important of all, India’s outright digital transformation has been a major plus. Better reach of smartphones, cheap internet connection, availability of App-based gig economy platforms like Zomato, Uber, Swiggy & Ola has given better opportunities to gig workers.

• Changing Workforce Preferences: The modern employee, especially the new generation, and knowledge workers are inclined towards contract or flexible work rather than the conventional employment. Self-employment provides flexibility and freedom of choice due to the freedom to select the work for the worker of the gig economy himself.

• Additional income: This is essentially because individuals as a result of hike in cost of living and inflations, in particularly low income earners are embracing gig economy to source their incomes.

• Business Demand for Cost-Effective Solutions: Business, especially start-ups, and small business entities are outsourcing work to gig workers in a bid to minimize costs. For instance, instead of hiring employees who work full-time for the company, one can hire gig workers to accomplish certain jobs.

Who are gig workers?

As per the NITI Aayog database, gig workers are workers who work outside Organised Employee Friendly Sector structures such as employer-employee relationship. They categorize gig workers into two; those working under the platform, and those who do not work under the platform.

• Platform workers are those whose life work activity is performed through online software applications or on digital platforms.

• Some of the non-platform gig workers are casual wage workers in the ordinary sectors looking for employment for at least part time or full time.

• The Code on Social Security,2020 also explains gig workers as people involved in earning living other than in organisation employment.

Government policies regarding gig economy workers in India

Labour, as mentioned before, comes under the Concurrent List of the Constitution, so both central and state governments have control over the sector.

• Code on Social Security, 2020: The Code on Social Security, 2020 specifically provides for laying down appropriate social security provisions with regard to life and disability cover, accident insurance, health and maternity benefits, old age protection, etc. for gig workers and platform workers. It also outlines how a Social Security Fund can be established to support the financing of the welfare scheme. Code on social security 2020: Section 113 empowers the central government to register unorganized workers, gig workers, and platform workers. However, the Social Security Code enacted by the Parliament in 2020 has not been operationalized fully because the rules are yet to be notified in the official gazette by the States.

• e-shram Portal: Government of India has also introduced an online platform called ‘e-shram’ through which all the informal and gig workers can register themselves.

• Rajasthan Act: Rajasthan was the first state to pass the law for gig workers, the Platform Based Gig Workers (Registration and Welfare) Act on July 24, 2023. This law mandated the creation of welfare board and new identifiers for workers as well as a mechanism of payment tracking through Central Transaction Information and Management System (CTIMS).

• Karnataka Act: The Karnataka Platform-based Gig Workers (Social Security and Welfare) Bill-2024 has provisions for protection against unfair dismissal of gig workers and redressal of grievances. A welfare board and a welfare fund under the labour department will be opened to support the workers.

What are the demerits associated with the exclusion of gig workers from the Traditional formal employees?

• Currently, Indian labour and employment laws recognize three main categories of employees:

  1. Government employees,

  2. Employees in government-owned organizations are often referred to as Public Sector Undertakings (PSUs).

  3. Employees working in private sectors may be managerial employees or working under that category of employees.

• All of the above formal employees are guaranteed certain conditions of work like Minimum Wages as provided under the Minimum Wages Act, 1948, number of hours of work, compensation for termination, etc.

• Thus, several outcomes have occurred due to labor rights limitations with regard to gig workers in India not having the ‘employee’ status under Indian law – no formation of unions, exploitative contracts, etc. For this reason, there is also no tripartite discussion between the government, employers, and the gig workers’ unions.

Problems in Current Government Initiatives for Gig Workers

• Lack of Traditional Employment Status: Gig workers are considered as “aggregators” instead of employers, which means that they cannot enjoy labor rights.

• No Minimum Wage Protection: It also suggests that gig workers do not have institutional restraints such as the minimum wage and protections of occupational safety.

• Ineffective Welfare Boards: Welfare boards have been badly addressed, they are least heralded and have been used poorly by exacerbating funds, as witnessed in past welfare acts.

• Exclusion from Legal Protections: Gig workers are not included under Industrial Relations Code 2020 and thus cannot approach the appropriate forums for a dispute.

• Power Imbalance: Due to the imbalance in power in favour of the platform companies, incentives and income of the gig workers are what took a hit according to the ILO study.

• e-Shram Portal Registration: As of now, the gig workers are not able to register through the employers, and they have to register themselves on the e-Shram portal which is very time-consuming and has marginal advantages.

• Formal Companies with Informal Workers: While many gig workers are in formal companies, there is no reason for them to be outside the traditional employment regime.

• Social Security Gaps: The Social Security Code 2020 envisages minimum social security for gig workers by extending marginal maternity benefit but fails to guarantee employment protection.

• Low Compensation and Platform Issues: It is established that gig jobs provide low wages for workers, and challenges such as shifting commission schemes, unpaid wages, and deceptive earnings figures.

• Gender Disparities: Gig workers are exposed to low wages, slow promotions, and sexual harassment than their male counterparts.

• Poor Treatment: People like delivery personnel are exploited since they are not employed by legitimate companies, but rather work for various restaurants, stores, and even housing societies.

Way forward

• Define Employment Relations: L egally categorize gig workers under independent contractors but follow the Uber model to give them legal rights and structure gig economy.

• Financial Inclusion: Offer suitable financial products and credit services to platform workers and the individuals that are establishing platforms.

• Skill Development: Encourage the skill development models under platforms to enhance the worker’s mobility within the platform economy.

• Enhance Social Inclusion: Enact gender sensitivity and accessibility measures, where platform businesses and Civil Society Organizations should come together to support underprivileged workforce like women and PwDs.

Conclusion

The social security schemes for gig and platform workers in India will not only ensure their welfare but also contribute to strengthening the economy. This move will help in creating a more structured and resilient gig workforce, leading to stability and growth across various industries.