Social security for gig workers must aim for a balance of flexibility

The government recently announced its intention of using its e-Shram portal—an initiative aimed at creating a National Database of Unorganized Workers (NDUW)—to identify and extend the benefits of its social-security schemes to gig workers working for e-commerce platforms. 

Such workers make up about 1.5% of India’s total workforce and 2.6% of the non-agricultural workforce. Importantly, this segment is growing rapidly and estimates suggest that there will be over 23 million gig workers by 2029-30, or 4.1% of the total workforce and 6.7% of the non-agricultural workforce.

The role of technology in the gig economy is dichotomous. On one hand, it improves the work flexibility and earnings potential of a gig worker, while on the other it creates welfare responsibility challenges. 

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Given its huge potential to create livelihoods, we must find the right balance between worker protection and preserving the flexibility that gig work offers.

For possible solutions, let us look at traditional notions of social security and how it has evolved with the rise of the gig economy.

Traditionally, social security systems have been associated with formal employment, where the state mandates employers to provision for benefits such as health coverage, insurance, retirement contributions and other forms of protection. 

In contrast, the gig economy operates on a model of freelance, temporary or contract-based work, where workers are not tied to a single platform. This creates challenges in terms of determining who is responsible for ensuring that gig workers receive social-security benefits.

Even the developed world is grappling with challenges in providing social-safety nets for gig workers and are adopting differing approaches that reflect their own legal and regulatory landscapes. In the US, gig workers are typically classified as independent contractors. 

However, companies like Uber have adopted an Independent Contractor Plus (IC+) model, which maintains the ‘independent contractor’ status of their workers while offering limited benefits such as health and accident insurance. 

The EU is still wrestling with how to balance flexibility with worker protections; the region’s regulatory frameworks indicate a trend toward expanding social security coverage to include gig workers.

Multi-apping reality: Gig workers often engage with multiple platforms simultaneously, a practice known as ‘multi-apping,’ to maximize their earnings and flexibility. 

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This independence, while financially beneficial, leads to long-term insecurity among workers, as they are left vulnerable without a social-security cover. As no single platform can be assigned the responsibility, the flexibility of a gig work relationship comes at a price.

Institute portable benefits: The idea of portable social-security benefits holds promise, as it lets gig workers carry their benefits with them across platforms, accumulated in a personal social-security account (such as one that may be held at India’s e-Shram portal). 

Under this model, gig workers need not compromise their work flexibility for attaining benefits. Each platform they work with would contribute proportionally to a fund. This fund-based model would allow workers to access their entitlements regardless of platform shifts.

For portability to succeed, the state must create and manage a system of portable social-security benefits. This would involve registering all gig workers, collecting contributions from platforms and ensuring that these funds are used equitably for their social security.

The role of India’s Code on Social Security: The government’s Code on Social Security, 2020, was India’s first comprehensive legislation aimed at extending social-security benefits to all employees and workers in both the organized and unorganized sector, including gig workers. 

The Code proposes the establishment of a social-security fund for workers, financed through contributions from platform companies, to enable the government to provide benefits under schemes like PM Jeevan Jyoti Bima yojana, Ayushman Bharat, PM Jan Arogya Yojana, etc. 

However, while the Code and e-Shram portal represent significant progress, there are still many hurdles in implementation. For instance, determining the minimum level of engagement required by a gig worker to qualify for social-security benefits is essential. 

Also, policymakers must ensure that all platforms, without exception, contribute to the social-security fund, which could involve adding a pass-through in user tariffs that platforms charge their customers. 

A crucial success factor will be ensuring that gig workers who rely on platform work as their primary source of income are prioritized, as opposed to those who only engage in gig work sporadically and draw their primary livelihood from elsewhere.

Navigating India’s complex labour laws labyrinth will also pose a challenge, labour being a concurrent subject under the Constitution, meaning that both state and central governments have jurisdiction over it. However, this is critical to ensure that all gig workers, including out-of-state migrant workers, get the benefits they deserve.

Though Gazette-notified after being passed in Parliament in September 2020, the Code has not yet come into full force and provisions for gig workers have not been fully implemented, leaving ambiguity over the status of gig workers. 

Also read: New Biden administration rule seeks to make more gig workers employees

Though the Code holds the promise of delivering social security for gig workers in an equitable manner, its success will depend on ironing out key details, such as eligibility criteria, platform contributions and effective Centre-state coordination to extend coverage. Addressing these issues quickly will help gig workers get their due.