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Challenges in proposed social security for gig workers

By DM Deshpande

The central government has proposed a slew of social security benefits for workers in the informal sector and the gig economy. Benefits include pension, PF, health cover and education for their children. Proposed measures are without doubt well intended as it will give a comprehensive cover to vulnerable sections of our population.  But the implications are many and long lasting. Industry feels that the government has not made a proper study of financial implications of the proposed measures.

While workers in the informal sector are well defined, gig workers are a relatively more recent phenomenon. Typically a gig worker gets paid for the gigs or tasks he performs, such as driver partners of taxi aggregating companies such as Uber and Ola, food delivery boys of Swiggy, Zomato, workforce supplying platforms and the like. Gig workers are mostly picked from low paying informal jobs and given an opportunity for better wages and a promise of life with dignity.

In the developed west, gig economy has flourished where the formal employment is almost 100 per cent. Compare this in contrast with India where the formal jobs are less than 10 per cent of the total workforce.

Is there a need to regulate the gig economy workers? Views are divergent. Take the example of taxi aggregators. Initially in order to recruit more drivers and to acquire market share they were paid huge incentives. During that boom period a few years back, some IT professionals too, going by reports in the press, were attracted to join as driver partners. Now it is a different story. They have trimmed the incentives. Most drivers have to work for 10 to 12 hours to eke out even meagre livelihoods and pay for car loan EMI’s. Delivery boys, though given fancy name as executives, suffer the same fate.

So, on balance, some regulation is in order. IT companies have invited it due to their own failure in self-regulation. The Sept. 10 regulation in California, US, has evoked worldwide attention. Known as the Assembly Bill 5, the legislation mandates treating gig workers on par with regular employees of the company with all attendant benefits. However, there are stiff challenges in Indian scenario.

The slowdown has affected the government’s own ability to spend. A Universal Social Security Scheme that covers all workers is an ideal solution provided the governments have the fiscal space to accommodate the huge costs involved. Now, the central government has asked the state governments also to formulate laws to regulate and protect interests of gig workers. There is no clarity, therefore, on a vital question of who will foot the bill. The Industry has cautiously welcomed the proposed code.

According to TeamLease, a big temping company, 56 per cent of all the new jobs-both white collar and blue collared are in the gig economy. They also point out that since IT industry was given a free hand, and that is how it could flourish, government should not bring in unnecessarily tough regulation. Even to pay PF and other benefits, costs will go up by at least 30 per cent if not more. If it is passed on to the consumers, it will kill a nascent and promising industry. In US the gig economy has been at work for more than a decade and now the regulation has come.

Unions have pointed out that a mere code is not going to help. Presently, gig worker in India is not an employee. So, there is no employer-employee relationship which entitles the later to benefits enshrined in various labour laws. But the present dispensation, where the gig worker takes up freelance work or short term assignment, is also having certain merits. There is freedom to choose hours or place of work and it is a lose sort of affiliation with a company. Studies show that this arrangement suits youngsters generally and the new millennials.

No one knows how big is the gig economy in the country. According to a study by Ernst & Young in 2017, every fourth gig worker in the world is in India. Since then there has been a rapid growth in this industry. The Delhi NCR region alone is estimated to have more than 5.5 lakh workers in the gig economy. So the government should do a calculated balancing


Otherwise it my hit jobs at a time when the job scenario is grim in the country. After all, aim of the government should be to facilitate faster economic growth with emphasis on generation of decent jobs. That will automatically ensure fairness to gig workers, as well.  

The author has four decades of experience in higher education teaching and research. He is the former first vice chancellor of ISBM University, Chhattisgarh.

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