Planning social security cover for gig workers
Finance Minister Nirmala Sitharaman’s mention of online platform workers’ welfare in her budget speech has brought cheers to this new-age workforce as well as policymakers. The FM made two announcements on the subject: first, that gig workers will be provided health insurance under the PM Jan Arogya Yojana; and second, such workers will be issued identity cards through the e-Shram portal, which is expected to benefit 1 crore workers.
The announcements couldn’t have come at a better time, given the increasing precarity and insecurity of such workers reported in recent months. Let me put this in perspective with the progress already made on this front.
This workforce, which has emerged in recent years all over the world, is there in almost every sector of the gig economy—food delivery, ride-hailing, e-commerce and other professional services. Unlike traditional work, which has stringent entry barriers with defined work hours and payment structures, platform-based gig work is characterised by independent contracting with flexible hours and performance-linked remuneration.
About a century ago, John Maynard Keynes had predicted three-hour shifts or 15-hour work weeks in his pivotal essay, ‘The Economic Possibilities for our Grandchildren’. Many western countries are shifting towards this trend. India is way behind; but the gig model at least provides a flexibility to break away from the traditional model, a state of ‘liquid modernity’, as sociologist Zygmunt Bauman called a society characterised by flexibility, uncertainty and continuous transformation.
The gig economy already accounts for up to 12 percent of the global labour market, numbering an estimated 435 million, as per a recent World Bank report. In India, the Niti Aayog estimates the gig workforce to be around 12.7 million in 2024-25, which may reach 23.5 million by 2029-30. Citing another study, the latest Economic Survey states that the e-commerce industry in India is experiencing a swift expansion, with its business-to-consumer market estimated to grow from $83 billion in 2022 to $150 billion by 2026, showing a compounded growth of 15.9 percent a year.
Considering these emerging trends, the government brought the landmark Code on Social Security, 2020, as part of larger labour reforms, subsuming nine existing central labour laws. The code introduced concepts like gig and platform workers and made provisions for their welfare in areas of life and disability, accident insurance, health and maternity cover, pension and creche facilities; financing is possible through a Social Security Fund and monitoring through a National Social Security Board.
The government made its intention loud and clear through this legislative framework, reiterating the constitutional mandate of a welfare state that flows from the Directive Principles of the Constitution. The budget announcement for extending the social security scheme is a culmination of that commitment.
To address the typicality of the sector and unique business nuances, the code defines gig and platform workers as a separate category, keeping them outside the traditional employer-employee relationship, thereby making it a progressive labour legislation.
In the background, the Union labour and employment ministry has undertaken a massive exercise of stakeholder consultation in different phases, at different levels of engagement, to understand the complexities involved, the requirement of the workers, business models of platforms, following the approach of ‘minimum government’ and ‘maximum governance’. An exclusive committee with members from key stakeholders has been set up to recommend a social security framework.
The budget also proposes to arrange for platform workers’ identity cards and registration on the e-Shram portal. Launched in 2021, the labour ministry’s portal serves as a comprehensive national database of unorganised workers. As a way forward, the ministry issued an advisory to the platform aggregators in September 2024, urging them to register themselves as well as platform workers engaged by them on the portal. For ease of doing business, the ministry launched a separate aggregator module in December 2024. The process will now be fast-tracked and platform workers will be issued unique identity numbers.
While the government is committed to ensuring that all such workers are brought under its social security net, it is important to analyse the requirement of the workers beyond health benefits within the contours of the code on social security. The wishlist may vary by the demographic composition of the gig workforce and the business models used. A close look at international best practices, like those in the UK, Singapore, Oman, Thailand and Indonesia, reveals varying benefits as well as sources of funding.
So, a package of welfare benefits aligned with the needs of the workforce should be worked out with multiple financing mechanism, including from the beneficiaries, especially for old-age benefits like pensions. This will address the workers’ concerns while making the schemes sustainable.
The gig model helps address the problem of human capital exclusion from the workforce. It now makes a sizeable contribution to economic growth. Let us not leave this workforce unattended.
(Views are personal)
Pradeep Kumar Jena | Director (labour welfare), Union Ministry of Labour and Employment