Ensuring Social Security and Formalization of Gig Workers in India

Introduction

The Union Ministry of Labour and Employment is working on drafting a national law to incorporate gig workers into social security schemes, addressing the pressing need for improved working conditions. The government aims to provide health insurance, retirement savings, and other essential benefits to gig workers, with aggregators (platform companies) contributing 1%-2% of their revenue to a social security fund.

Key Objectives

1) Social Security for Gig Workers

• Gig workers will be offered health insurance and retirement savings plans, a critical step towards improving their working conditions.
• The social security fund, contributed by platform companies, will provide benefits like life insurance and occupational safety support.

2) Welfare Board Model and Worker Registration

• A welfare board will manage the social security fund and ensure the protection of gig workers’ rights and welfare.
• Mandatory registration of gig workers will make them eligible for the proposed benefits.
• Aggregators will be required to give a 14-day notice before terminating any gig worker and provide valid reasons, ensuring transparency.
• A dispute resolution mechanism will be established to protect workers from arbitrary actions by employers or platforms.

Defining Gig Workers

1) Who Are Gig Workers?

• Gig workers engage in temporary or flexible jobs rather than traditional employment.
• According to the NITI Aayog Report 2022, gig workers are divided into:
  • Platform workers: Use digital platforms (e.g., Uber, Amazon) to connect with customers.
  • Non-platform workers: Engage in temporary, technology-independent jobs (e.g., construction, day labor).
• India is currently the 5th largest gig workforce globally and may move to the 3rd position by 2030.

2) Ambiguity in Employment Relations

• Gig workers are classified as informal workers, placing them outside the traditional employer-employee relationship.
• Aggregators often treat gig workers as independent contractors, exploiting this ambiguity to avoid formal labor obligations.
• This loophole leads to a misconception that gig workers are not entitled to the same protections as formal employees.

Government Initiatives for Gig Workers

1) Code on Social Security, 2020

• Recognizes gig workers as a distinct category within the informal sector and envisions social security benefits for them.
• The implementation and specific rules are yet to be finalized by the states.

2) Labour Codes and Gig Workers

• The four new labour codes (2019-2020) covering wages, social security, industrial relations, and occupational safety rationalize India’s labour laws, merging 29 central laws.
• Of these, only the Social Security Code 2020 acknowledges gig workers and empowers the government to design social security schemes for them.

3) e-Shram Portal

• Gig workers registered on the e-Shram portal will be eligible for life insurance, accidental insurance, and other benefits.
• Aggregators will be responsible for registering gig workers on the platform.

4) Social Security vs. Institutional Social Security

• Institutional social security offers formal workers comprehensive benefits, such as 26 weeks of paid maternity leave.
• Gig workers, in contrast, receive limited cash benefits for maternity leave under social security schemes, highlighting the disparity between formal and informal workers.
• The Social Security Code 2020 offers gig workers social security schemes but does not grant them the full institutional benefits enjoyed by formal workers.

Opportunities and Growth for Gig Workers

1) Market Growth

• The gig economy in India is valued at USD 20 billion and is expected to grow by 17% annually until 2027.
• The gig workforce is projected to grow to 23.5 million workers (2.35 crore) by 2029-30, forming 6.7% of the non-agricultural workforce.

2) Diverse Employment Sectors

• Companies like Uber, Ola, Zomato, Swiggy continue expanding, creating more opportunities for gig workers.
• Platforms such as Upwork, Freelancer, and Fiverr enable professionals to offer services globally, contributing to the growth of India’s freelance workforce.

3) Flexibility in Work

• Gig workers enjoy flexible work hours, location independence, and can choose their projects, making it an attractive option, particularly for millennials and Gen Z.

Major Challenges for Gig Workers

1) Exclusion from Key Labour Protections

• Gig workers do not enjoy minimum wage protection or occupational safety regulations.
• They are excluded from the Industrial Relations Code 2020, preventing access to dispute resolution mechanisms.
• This leaves them vulnerable to unsafe working conditions and unpredictable income.

2) Precarious Employment and Income Insecurity

• Gig workers can be easily disconnected from platforms, causing loss of income.
• Their earnings are often unpredictable and vary depending on market demand.

3) Exploitation and Lack of Collective Bargaining

• • The power imbalance between platforms and workers leaves gig workers susceptible to exploitation.
  • Workers lack collective bargaining power, making it difficult to negotiate better working conditions.