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Protecting Gig Workers: Addressing Social Security Gaps in India

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By Atheena K.


 

In the last decade, India's gig economy has witnessed exponential growth, with approximately 7.7 million gig workers in 2020, projected to surge to 23.5 million by 2030 according to NITI Aayog. India is the second largest gig economy in the world, with around 56% of all gig workers in the Asia-Pacific region working in India, as per the report by the International Labor Organization (ILO). Notably, the Taskmo Gig Index (TGI) indicates that youth participation in the Indian gig economy has registered an eight-fold growth between 2019 and 2022, highlighting its increasing appeal among younger demographics. These workers engage with platforms such as Uber, Swiggy, Zomato, and Ola, providing services across industries ranging from ridesharing to food delivery. The flexibility of gig work, offering freedom over work hours and autonomy in task selection, makes it attractive to many, particularly youth. However, this form of employment also presents unique challenges, particularly around income security, healthcare access, and retirement benefits.



Barriers for Gig Workers

The most pressing problem workers in the gig economy face are the lack of income security and employment stability. Unlike employees in traditional jobs who receive regular monthly wages and benefits, gig workers are paid based on tasks completed or hours worked. This results in significant income variability, leaving many workers without stable financial footing. Moreover, during economic downturns or periods of low demand, gig workers have no guaranteed income, pushing them into precarious financial situations. A survey by LEAD at Krea University found that 65% of gig workers in India lack any savings, which increases their vulnerability to economic shocks. In addition, almost 50% of these workers have no access to any kind of insurance schemes, exposing them to catastrophic financial risks in case of health emergencies.


Access to health insurance and social security gaps that exist is another worrying factor. The Indian social security system is deeply rooted in formal employment structures, where employees contribute to schemes like the Employees' Provident Fund (EPF) and Employees' State Insurance Corporation (ESIC) and receive benefits in return. However, gig workers, classified as independent contractors rather than employees, are excluded from these protections. Without employer-backed health insurance, pensions, or provident funds, gig workers are left with no social safety net. This lack of coverage is particularly detrimental for workers who have irregular access to healthcare or who work in hazardous conditions, such as delivery personnel navigating high-traffic areas. The pandemic further exposed these vulnerabilities, with many gig workers losing their jobs or income without access to unemployment benefits or healthcare. The absence of these protections puts immense pressure on workers, especially those who are the primary breadwinners of their families. A report by the International Labour Organization (ILO) also highlights how gig workers face increased risks of occupational injuries, with no clear mechanisms for compensation.


Legal Ambiguities in defining Gig Workers continues even now. One of the biggest hurdles to providing social security for gig workers lies in the legal ambiguity surrounding their status. The Code on Social Security (2020) defines gig workers but fails to provide a clear legal framework for their inclusion in broader social security schemes. Gig workers exist in a legal grey area—neither classified as traditional employees nor adequately addressed under the current labor laws. This lack of a formal employer-employee relationship means that companies can avoid contributing to social security schemes on behalf of their workers, leaving millions without access to even the most basic benefits like health insurance or retirement pensions. The multiplicity of engagements further complicates the issue. Many gig workers simultaneously work across multiple platforms, making it difficult to establish accountability. In the absence of a clear definition, determining which platform should bear the responsibility of contributing to a worker’s social security becomes a challenging task. This ambiguity leads to red tape, delaying necessary interventions, and leaving gig workers in a perpetual state of uncertainty.


While platforms like Uber, Ola, Swiggy, and Zomato provide valuable employment opportunities, they are often reluctant to incur additional costs for social security contributions. Their business models rely on the flexibility and lower overheads that come with gig labour and implementing social security protections could drive up operational costs. The resistance from platforms to being classified as employers is further rooted in concerns over loss of business agility and increased regulation. This reluctance from major aggregators creates a significant barrier to providing social security for gig workers, perpetuating their vulnerability.


The decentralized nature of gig work also poses operational challenges in enforcing social security provisions. The gig economy operates across state lines, with workers employed by platforms that may be headquartered in one state but operate nationally. Some states have begun to take matters into their own hands. Rajasthan, for instance, recently passed the Rajasthan Platform-Based Gig Workers (Registration and Welfare) Bill 2023, which seeks to establish a welfare board for gig workers. The board will manage a fund created from fees levied on platforms, which must contribute between 1% and 2% of their revenue. The bill also introduces penalties for non-compliance, including substantial fines. But the bill also has its limitations. First, unclear definitions of gig workers and aggregators prevent the classification of gig workers as employees, limiting their rights. Second, by not integrating existing labor laws, the Bill shields aggregators from providing workplace entitlements. Third, the perpetual registration of workers could enable aggregators to track workers across platforms, limiting their employment choices. Fourth, the Bill lacks a clear definition of social security and leaves it to the welfare board's discretion, raising concerns about its effectiveness. Similarly, Karnataka State Gig Workers Insurance Scheme provides life and accident insurance to full-time and part-time gig workers. These progressive initiatives represent a significant step forward in recognizing and addressing the needs of gig workers, yet these have their own limitations and are still limited to the state level. Furthermore, the financial sustainability of such schemes is a pressing concern. Many gig workers earn less than formal sector employees, making it difficult to levy significant contributions from their earnings without further exacerbating their economic challenges.



The Imperative for a Centralized Social Security Scheme

The rapid expansion of the gig economy presents both opportunities and challenges. While gig work offers flexibility, autonomy, and income opportunities for millions, it also exposes workers to significant risks, including income instability, lack of healthcare, and inadequate social protections. India’s existing labor laws and social security frameworks are ill-equipped to address the needs of gig workers, leaving millions vulnerable to exploitation and economic insecurity. The current Social Security Code (2020), while a step in the right direction, falls short in providing the necessary coverage and protection to gig workers. Legal ambiguities, resistance from platforms, and the fragmented nature of state-level initiatives make it clear that a more comprehensive, centralized solution is needed.


A centralized social security scheme, designed to provide uniform protections for gig workers across India, is essential to securing their future. Such a scheme would not only provide financial stability, healthcare access and other social security benefits but would also ensure that gig workers are recognized and valued as an integral part of India’s workforce. The ILO also recognizes the need to address social security challenges for platform workers, offering insights from global practices to guide policy development. By addressing the legal, financial, and operational challenges currently faced, India can build a more inclusive and secure gig economy, benefiting both workers and the broader economy. 


About the Author

Atheena K is a second-year Master's in Public Policy student at the Jindal School for Government and Public Policy and the Sub-Head of the Research Department at Policy Corner. Her interests include education, governance, gender, and labour studies.

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