Set social security ball rolling for informal and gig workers
Through the e-Shram portal, the Government of India has registered unorganised labour in the country, which has crossed 28 crore registrations.
In India, we have two categories of employees: formal and informal. Formal employees are covered by social security norms and paid regular monthly salaries, leave encashment and bonuses, apart from other benefits. According to the National Survey Organisation’s Periodic Labour Force Survey (PLFS), formal accounts for 9% of all workers (half in government bodies and the remainder in the private sector). The remaining 91% are informal and don’t receive social security benefits. Formal workers usually work till the retirement age of 60 and get a gratuity when they retire, provided they have worked in an organisation for over five years.
PLFS defines workers as three types: the self-employed (who could be own-account workers or unpaid family labour) and two types of wage workers: regular and casual (daily) wage. A small share of regular wage workers enjoys social security benefits, while a majority of the self-employed, casual wage earners, and regular wage workers do not.
Covid and the digital advancements have given rise to a new term: gig worker. They are neither employees nor employers. They are paid based on the services they render. They are not supported by social security.
Gig workers are usually freelancers who engage in hourly or temporary work, have a non-traditional employer-employee relationship, and could be considered self-employed (though there is a debate around this). The self-employed in developing countries, including India, account for around half of all workers; of the remaining half in India, a quarter each are casual and regular wage workers.
Platform workers are a subset of gig workers as the former use an app or website to connect to customers. In other words, Gig-Platform (G-P workers) are a special new subset of the self-employed category. Platform-based gig workers are found in the transport sector (ride apps); delivery service (food and grocery, courier, e-market services, healthcare, etc.); ITES (content creators, media service providers, digital marketers, influencers, YouTube marketers, website developers, mob app developers); hospitality services (cleaners, housekeeping, laundry); professional services (plumbers, electricians, carpenters, painters); professionals (teachers, coaching centres, auditors, workforce consultancy, etc); and logistics services (through logistics apps).
Gig workers are those who are unemployed or unable to find regular jobs and want to work from home or are special-skill holders. They make money and are willing to spend long hours working. Most platform-based gig workers—predominantly delivery agents or drivers—don’t have any growth or skill development in their lives. They work 18 hours a day to meet targets or earn extra money and constantly work under pressure. They do not earn if they are not working (in this regard, they are like own-account workers and casual wage workers).
What has been done so far or is not being done for gig workers? Only a little, as most labour laws do not generally extend to self-employed or casual wage workers. For the first time in India, Rajasthan has recently enacted a law to constitute a welfare board for the benefit of platform-based gig workers. But this excludes the vast majority of the informal workforce, the traditional self-employed, casual wage workers and the majority of regular workers.
Through the e-Shram portal, the Government of India has registered unorganised labour in the country, which has crossed 28 crore registrations. There is no social security policy for them at the Central or state level, though the Social Security Code 2020 passed by Parliament (the rules have not been notified; it is not law) promises to provide benefits to unorganised workers, including G-P workers. Why the government seems to single out G-P workers from 91% of India’s informal workers, is a question only they can answer.
What are the concerns of the G-P worker? Confining the rest of this piece to G-P workers, their concerns can be various. There are no defined and monitored benefits for the G-P workers such as medical care, protection from the hire and fire policy, or work issues (stress related to target-oriented push from the aggregator). There is also non-availability of any redressal mechanism, long working hours, wear and tear of personal assets used for work, loss of income due to emergency break in service.
What needs to be done? We know 91% of India’s 540 million workers are without core social insurance (i.e., old age pension, death/disability insurance, maternity benefit). In that case, one Rajasthan law for G-P workers, a fraction of all informal workers, is not a solution. Such fragmentary solutions have been tried for decades in India by forming state-level welfare boards and for construction and bidi workers, separately at the national level. These often don’t offer the core social insurance.
Meanwhile, we should begin with at least the following: a) Enrol G-P workers in each state under different categories and professions with details (e.g. place of stay, qualifications, expertise, chosen career path, family particulars, expected earnings). b) Allot a unique identity number (UIN) to them. c) Enrol their employer. d) Use AI to link the workers’ UIN numbers with their employers’ details. e) Collect a fixed cess from the service charge paid to the gig worker and employer every time a payout happens. The state government should also contribute a fixed percentage of money. The total proceeds can be used to fund the benefits for G-P workers. f) Link the e-Shram portal with state-level data and create a unique platform for job-sourcing like the GeM portal. This could go into a social insurance fund to provide social security.
However, if we are serious about eliminating informality, as the Sustainable Development Goals require India to do, then the Social Security Code 2020 will need modification to at least commit to ensuring social insurance for all of India’s informal workers. One of us has already provided the architecture and road map for India to achieve this goal in 10 years.
Visiting professor of Economics, Centre for Development Studies, University of Bath, UK
K E Raghunathan
Central Board of Trustee, EPFO & National Chairman, Association of Indian Entrepreneurs