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Draft code proposes social security for all informal, gig workers

India does not have a complete and concrete action plan for these category of workersPremium
India does not have a complete and concrete action plan for these category of workers

  • The exact number of gig workers are unknown as they are still figuring out whether they are formal workers or informal workers, a study shows
  • Central Government may formulate and notify, from time to time, suitable social security schemes for gig workers, as per the draft social security code

New Delhi: India may be moving towards social security for all with the draft social security code proposing to offer a slew of benefits from provident funds to health cover, accident insurance, and education for children of informal and gig workers.

The draft code, reviewed by Mint, says the “central government shall formulate and notify, from time to time, suitable welfare schemes for unorganised workers on matters relating to life and disability cover, health and maternity benefits, old age protection, and any other benefit as may be determined by the central government".

The code, which will merge eight existing laws, suggests that along with the central government, states may also formulate schemes for unorganised sector employees for offering them provident fund, employment injury benefit, housing benefit, educational schemes for their children and old age and funeral assistance.

Millions of so-called gig workers may also get life and health benefits, among others.

The draft code says the “central government may formulate and notify, from time to time, suitable social security schemes for gig workers and platform workers" and such schemes would encompass issues such as “life and disability cover, health and maternity benefits, old age protection and any other benefit as may be determined by the central government.

The exact number of gig workers is unknown, but a 2017 study by consulting firm EY said nearly one out of four gig workers in the world are in India.

The draft proposal comes in the wake of California on Wednesday approving a law for wage benefit and protection for gig workers, including those working in taxi aggregating companies such as Uber and Lyft, which is a popular tax aggregator in the US.

Industry experts were cautious about the move and said that while the government seems to mean well, it will bring challenges for policy implementation and growth of gig players such as taxi aggregators, food apps, and workforce supplier platforms.

“I am glad that they are acknowledging the evolution of the gig economy and companies in the space who are pulling out low-paid informal workers to earn more and have dignity of labour and life. The policy, however, is a premature and overambitious," said Rituparna Chakraborty, executive vice president at staffing firm Teamlease Services.

“The IT sector in India grew well because it had the freedom to flourish. The case is similar with gig economy players. They need to have freedom to flourish without a lot of regulations. As the government cannot track workers, it will track and task employers. It means the cost will go up and companies will pass on the cost to gig workers, reducing their take home income," Chakraborty argued.

The best social security for Indians is jobs, she said. Everything else is ambitious because slowing growth means the government may not have the cash to pay for everything, Chakraborty said.

India’s labour market is complex with less than 10% of the workers in formal jobs. Universal social security will benefit millions, provided there is a proper actionable roadmap, which at this point is not clear though the draft proposes unorganised sector social security boards at the Centre and state levels for putting the plan into effect.

The code also proposes to make pension, insurance and retirement saving organisations “body corporates".

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