In the recently concluded assembly elections in Telangana and Rajasthan, welfare policies for gig workers have featured prominently in the campaign promises of two political parties. The Congress party promised to establish a social security net along the lines of the Rajasthan Gig Workers Act, 2023, while the Bahujan Samaj Party proposed a gig workers welfare board in its manifesto.
As India’s gig economy expands, the issue of social security within the sector has attracted increased political and media attention. These workers not only operate outside the constraints of a traditional employer-employee relationship but also lack full control or agency over their work, unlike their self-employed counterparts.
However, gig work mimics some of the characteristics of both the organised and unorganised forms of employment, such as the delivery of assigned tasks and the flexibility of working hours, respectively. Therefore, any discussion on a social security net for gig workers must be benchmarked against the traditional or organised employer-employee relationship on the one hand and unorganised self-employment on the other.
In addition, policy debates have yet to address several other critical issues, such as the imposition of a transaction-based levy and eligibility criteria for gig workers. These issues are important from both design and welfare perspectives.
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Existing social security net for Indian workers
There are several social security schemes for organised sector employees in the country, including the National Pension Scheme, the Employees’ Provident Fund, and the Employees’ State Insurance. In each of these schemes, an employee is required to make a deductible contribution from their gross salary. The employer too makes a contribution.
For workers in the unorganised sector — such as home-based workers, street vendors, and domestic workers — Pradhan Mantri Shram Yogi Maandhan is a government scheme that provides old-age protection and social security. This voluntary and contributory pension scheme covers around 42 crore unorganised workers and promises a monthly pension of Rs 3,000 after attaining the age of 60. The eligibility requirements include a maximum monthly income of Rs 15,000 and a worker’s contribution between Rs 55 and Rs 200, depending on their age (18-40). The central government matches the worker’s contribution to the scheme.
In both the organised and unorganised sectors, workers’ contributions are at least equal to those made by employers or the government. Surprisingly, this aspect has received little attention in the debate surrounding social security for gig workers in India.
Gig workers’ contributions to social security
The Rajasthan Gig Workers Act, the only state with such a legislation so far, requires a platform or primary employer to contribute between 1 and 2 per cent of the value of each transaction toward social security for these workers. Currently, section 11 of this Act allows gig workers to contribute to the social security fund but is silent on whether or not it is mandatory for them to do so.
If gig workers contribute below 1-2 per cent, a systematic discrepancy arises between them and the employees or workers in both the organised and unorganised sectors. That is, gig workers will be allowed to make a lower contribution than the platform, which is an option denied to their counterparts in the organised and unorganised sectors. This could lead to demands from organised and unorganised workers to similarly reduce their social security contributions, akin to various reservation demands in the country.
Worker contribution is an essential part of establishing a commitment, which helps eliminate the archetypal principal-agent problem where their interests aren’t aligned, as discussed by economist Mark Pennington. It would incentivise gig workers to maximise benefits from the social security net instead of behaving opportunistically by making premature or illegitimate claims from the deposited security pool.
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It’s a matter of choice and flexibility
The main feature of the gig economy is work flexibility. For some, such as students who work part-time, it may be a short-term commitment, while for others, such as professional cab drivers, it may be more long-term. For the former, earnings from gig work are more likely to be used immediately for necessities such as tuition fees, commuting, and daily expenses. On the other hand, the latter will see the job as a long-term occupation and will want to invest from their income to a social security fund.
Mandating all gig workers to opt into a social security scheme could also inadvertently impede their opportunities for upskilling. According to a CIIE .CO survey, 52 per cent of gig workers found it challenging to upskill or explore new job prospects due to the demands of their working environment. The survey highlighted that gig platforms, while initially hooking individuals with short-term income opportunities, often result in prolonged employment without a clear path for long-term career growth.
In this context, enacting a regulation that fixes part of the gig income, would be tantamount to a withdrawal from an intended investment in skills. This, in turn, could negatively impact the formation of social capital that such investments create and defeat the premise of gig work being transitory.
Thus, the design of social security for gig workers must seek to preserve the flexibility of work. The choice of participating in social security should be voluntary for gig workers. They should be able to decide if their work is a short-term or long-term commitment, and whether or not to sign up for social security.
As the debate on workers’ welfare intensifies, governments must craft a robust framework that imposes conditions to access social security, while retaining the hallmarks of the gig economy— flexibility and choice.
The authors work at Koan Advisory Group, a technology policy consulting firm. Views are personal.
This article is part of ThePrint-Koan Advisory series that analyses emerging policies, laws and regulations in India’s technology sector. Read all the articles here.
(Edited by Asavari Singh)