To

Ms. Arti Ahuja

Secretary
Ministry of Labour and Employment
Government of India
Shram Shakti Bhawan, Rafi Marg
New Delhi-110001

From
Akshita Bhadoria
Master’s student in Public Policy
Jindal School of Government and Public Policy
O.P Jindal Global University, Sonipat
Haryana-131001

Dated: 10/11/2024

SUBJECT: CENTRALIZED SOCIAL SECURITY SCHEME FOR PLATFORM BASED

GIG WORKERS

EXECUTIVE SUMMARY

The role of gig workers in the unorganized sector workforce in India has grown drastically in
the last few years and is still booming. India currently has 7.7 million gig workers, according
to NITI Aayog, and that number is expected to rise to 23.5 million by 2029–2030. Despite
the gig workers being aided with minimum wages, they require numerous social security
schemes and measures ranging from provident fund, pension, insurance, and medical care.
Since they are not employed by any firm, their legal status is also vague and deprives the gig
workers of the statutory protection offered under labour laws of India. The necessity for a
guaranteed support system during times of extreme need becomes crucial because they
struggle with basic facets of employment and income insecurity for a large portion of their
working lives. The state is primarily responsible for these workers' assistance because there
isn't a clear employer for them. This calls for a centralized social security scheme for their
benefit.

The informal worker makes contributions to the national economy throughout their working
lives and is frequently an essential component of the national production supply chain and
contributes indirectly to the tax revenue. The demand for social security schemes that are
fiscally supported has an economic rationale as well. Additionally, by supporting a better and
more productive workforce through a solid social security infrastructure, the government
indirectly boosts employee morale and enables the economy to get the most out of a young
workforce.

From the first Unorganized Workers Social Security Act 2008 to the Code on Social Security
2020, we have come a long way in identifying gig workers but there is still a lot that needs to
be done in providing them with basic welfare schemes and benefits and recognizing the
potential of their workforce. Therefore, we are proposing a centralized social security scheme
for platform-based gig works providing them with provident fund, pension, insurance, and
medical care.

This policy memo starts with a contextual background on the informal sector and gig
economy and move towards the policy problem emphasizing the need for a timely action.
Issues analysis is done followed by the existing frameworks that are in place now for gig
workers. We then arrive at solutions by addressing the shortcomings of the status quo and
give alternatives. Stakeholders’ response and feasibility of the solutions is assessed to arrive
at the recommendation. The memo ends by mentioning how we plan the implementation and
its limitations.
1. INTRODUCTION

1.1 CONTEXTUAL BACKGROUND

The employment in India is categorized by two categories of employees: formal and

informal. As per the National Survey Organization's Periodic Labour Force Survey (PLFS),
the formal sector encompasses 9% of all workers whereas the remaining 91% of workers fall
under the informal sector. According to the Quarterly Informal Economy Survey, (QIES) by
World Economics, the magnitude of India’s informal economy is estimated to be around
43.1% which represents approximately $4,287 billion at GDP PPP levels. There is a
significant demarcation when it comes to the benefits received by employees of both the
sectors. The formal sector employees receive regular monthly salaries and come under the
ambit of various social security norms such as gratuity, pension, health insurance covers etc.
which are not received by the informal sector employees. Under the PLFS’s definition of a
worker, a major portion of the casual and regular wage workers are termed as gig workers
who participate in a temporary or hourly basis work with an average earning lower than the
regular salaried worker and are considered as independent contractors having a non-
traditional employer-employee relationship. The Code on Social Security, 2020 defines a gig
worker as ‘a person who performs work or participates in a work arrangement and earns from
such activities outside of traditional employer-employee relationships.’ When gig workers
engage with platforms such as websites and online apps like Swiggy, Zomato, Ola, Uber, Yes
Madam, etc. to establish contact with consumers, they are termed as platform workers. Gig
work brings along increased autonomy and flexibility for the gig workers with regard to
variable work timings, have comparatively more independence than the other jobs in various
verticals, etc. but this category is marked by unemployment and irregular job patterns where
they work in a physically and mentally challenging environment for longer hours in order to
enhance their income prospects and economically sustain themselves.

1.2 POLICY PROBLEM

With the entry of a wide variety of informal workers into the arena of unorganized market,
The Unorganized Workers' Social Security Act, 2008 was becoming superfluous and gave
rise to the Code on Social Security, 2020. The code does not have a clear and comprehensive
definition or classification for platform-based gig workers, leading to challenges in accurately
identifying and including them in social security schemes which should be the most
fundamental thing before formulating policies. The code also doesn't have a provision
regarding accessing schemes under EPFO and ESIC for the informal sector workers, which
enables red tapism. Even though the new code envisions extending social security benefits to
workers from all organizations, organized and unorganized, and has brought into ambit
revised definitions concerning various forms of workers in the unorganized sector, it comes
with lacuna concerning specific areas that deal with the gig economy.
Gig workers in India would likely remain vulnerable to financial insecurities, lack of
healthcare coverage, and inadequate protection, perpetuating challenges in their livelihoods.
Failure to adapt policies may hinder the growth potential of the gig economy, leading to
missed opportunities for economic advancement and a more inclusive social security
framework.

1.3 NEED FOR TIMELY ACTION

With the estimated rise of gig workers from 7.7 million in 2020 to 23.5 million in 2030,
according to the report on ‘India’s Booming Gig and Platform Economy’ (NITI Aayog,
2022), this burgeoning growth comes up with a critical policy problem- providing adequate
social security gig workers. Since these gig workers are not recognized as employees under
any statute, they are not employed by their employers per se. This may lead to gig workers
getting paid less than minimum wages with no accountability on the part of employers
resulting in their exploitation. Therefore, they are stymied from accessing essential benefits
such as provident fund, pension, and health insurance. As their contribution to the Indian
economy, especially to the nation's finances and in terms of employment, is very huge and
crucial, it becomes imperative on the part of the state to provide them with safety net in the
form of social security benefits.

2. METHODOLOGY

2.1 ANALYSING EXISTING DATA/RESEARCH

i. According to NITI Aayog, India currently has 7.7 million gig workers, and the
number is expected to grow up to 23.5 million by 2029-2030 and Indian economy
receives approximately $1 billion a year from gig work.
 ii. 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)
iii. The key highlights of another such important report by ASSOCHAM further discloses
that the gig economy of India can increase to the US $455 billion at a compound
annual growth rate (CAGR) of 17% by 2024 with the probability of adding 1.25% to
the Indian Gross Domestic Product and furnishing over 90 million jobs catering to the
non-farm sectors of India.
iv. The Taskmo Gig Index (TGI) shows that the participation of youth in the Indian gig
economy has registered an eight-fold growth in the years between 2019-2022.
v. According to the Gig Pulse report by LEAD at Krea University, approximately 40%
of the workforce in the Indian gig economy are the primary breadwinners of their
family, while 66.2% of gig workers lacked any savings. Amongst the gig workers, a
majority of them, i.e., 73% of them had no access to any insurance protection scheme
while less than 3% of them are covered under any pension scheme.

3. ISSUE ANALYSIS

3.1 MAJOR ISSUES WHY THERE IS A LACK OF SOCIAL SECURITY SCHEMES

i. Traditional Legal Frameworks – The majority of social security programs are created
with traditional employment structures in mind. The flexible and fleeting nature of the
gig economy means that it does not easily fit into these preexisting frameworks.
ii. Informality of Gig Economy - Because the gig economy is often informal, it can be
difficult for authorities to keep an eye on and enforce compliance with social security
requirements. Since many gig workers work in a decentralized, digital workplace, it
might be challenging to monitor their contributions and guarantee benefits.
iii. Dynamic Nature of Work - In the dynamic gig economy, employees take on a variety
of short-term jobs for various platforms. Because gig labour is inherently
unpredictable, traditional social security models—which are based on long-term
employment with a single employer—might not be appropriate.
3.1 FACTORS THAT RESTRICTS THEIR PURVIEW UNDER LABOUR LAWS

i. Lack of formal employer-employee relationship - The legal definition of an employee

in India is determined by factors such as the amount of control the employer has over
the worker and the worker's level of financial dependence on the employer, i.e, there
should me a formal relationship between the employer and employee. But in the gig
economy, where workers could have lots of clients and a lot of liberty, this definition
is not always accurate.
ii. Independent contractor status - India's labour laws serve to protect workers who are
engaged in permanent employment and are entitled to benefits such as paid time off,
health insurance, and retirement benefits. Independent contractors and contract
workers are not subject to these limitations, though.
iii. Multiple platform engagements - Many gig workers work on several platforms at
once. This multiplicity of engagements can make it challenging to identify the main
employer and to ascertain the full scope of accountability on an organization in
abiding by the labour regulations.

3.3. CHALLENGES FACED DURING IMPLEMENTATION STAGE

i. Lack of Financial Aid – Since we are talking about the unorganized sector, it is very
important that there should be a financial sustainability to this from the governments
side and not just ask the aggregators, i.e., the companies involved take an upper hand
in the worker's matter.
ii. Resistance from platforms – Companies involved in such arrangements might resist
these as they will have to incur additional costs for providing and maintaining the
entire trajectory of these functions.
iii. Enforcement and Compliance - Enforcing compliance with social security
contributions and benefits in a sector known for its informality will be difficult.
iv. Public Awareness and Education - It's possible that many gig workers are ignorant of
the social security system's benefits and how to use it.

4. STATUS QUO

i. Social Security Code (2020)

 • Formal definition of gig workers and include them within the ambit of social security
provisions.
• Envisioned the establishment of a National Social Security Board (NSSB) to
recommend and regulate social security schemes for unorganized workers, including
gig workers.
• Proposed to extend the coverage of schemes under the Employees' Provident Fund
Organization (EPFO) and Employees' State Insurance Corporation (ESIC) to gig and
platform workers.

ii. Rajasthan Platform-Based Gig Workers (Registration and Welfare) Bill, 2023
• Setting up a welfare board - ‘The Rajasthan Platform Based Gig Workers Welfare
Board’, which will have two members each from gig workers and aggregators to be
nominated by the state government besides two civil servants.
• The state government will maintain a database of the gig workers and generate a
unique ID for every one of them.
• "Platform-Based Gig Workers Fund and Welfare Fee"- a fee will be levied on
aggregators - must be deposited on the fifth of every month at a minimum of 1% and
a maximum of 2%, subject to the government’s decision.
• Penalties for Non-Compliance- Aggregators failing to pay the welfare fee on time will
be charged an interest rate of 12% per annum from the due date.
• If any other clause is violated, they will also be subject to monetary fines of up to Rs.
5 lakhs for the first offense and up to Rs. 50 lakhs for the ones that follow to the
government.

iii. Karnataka State Gig Workers Insurance Scheme

• The Karnataka government has notified a Rs 4 lakh insurance cover for gig workers,
which was announced in the state budget - Rs 2 lakh for life insurance and Rs 2 lakh
for accidental insurance.
• Implementation body- Karnataka State Unorganized Workers’ Social Security Board.
• Provides coverage for both full-time and part-time workers in food and grocery
delivery apps, as well as courier platforms.
 • In addition, a worker is also eligible to claim a hospital reimbursement of Rs one lakh.
The accident insurance covers accidents even while off duty, as long as the person is
still working as a gig worker.

iv. Pradhan Mantri Shram Yogi Maan-Dhan (PM-SYM)

• voluntary and contributory pension scheme for unorganized workers aged 18 to 40
years with monthly income of Rs. 15000 or less.
• An unorganized sector worker joining pension yojana at the age of 29 years will have
to contribute only Rs. 100 per month till the age of 60 years. A worker joining the
pension yojana at 18 years, will have to contribute as little as Rs. 55 per month only.
The Government will deposit an equal matching share in the pension account of the
worker every month.
v. Others - Health coverage provided under ‘Ayushman Bharat’ and life & disability
coverage provided under ‘Pradhan Mantri Jeevan Jyoti Bima Yojana’ and ‘Pradhan
Mantri Suraksha Bima Yojana

5. SOLUTIONS

There is an urgent need to have legal frameworks and new bills for the rights of gig workers
towards social security taking into consideration the growth the gig economy is bringing in.
Keeping in mind the restrictions for the same, we are proposing a centralized social security
scheme for gig workers. The proposed solutions are:
i. There should be a single authority in the form of the central government to monitor
and regulate social security schemes which covers provident fund, pension, medical
and insurance of the platform-based gig workers and each state government should
take up the implementation in accordance with the Centre.
ii. There should be a clear definition and provision for platform-based gig workers. As
per the code, gig workers are workers which fall outside the “traditional employer-
employee relationship “while the platform workers are workers who fall outside the
“traditional employer-employee relationship” and offer their services for payment
through various web-based platforms. Both the definitions overlap in nature and a
clarity in their definition will improve the effectiveness of the schemes targeted
towards specific categories of workers.
iii. Every state, instead of having multiple small schemes, should integrate everything
into one efficient scheme that covers the essentials under the umbrella of social
security so that it will improve the productive usage of funds.
For e.g., Merging of Karnataka’s State Gig Workers Insurance with the Karnataka
Airavatha Taxi Scheme in which all the taxi drivers who register themselves for this
scheme will have eligibility to avail insurance cover, low interest loans and subsidies
to purchase automobiles.
iv. The Government should draft a model contract for aggregators to review the nature of
their contracts with workers and treat them as employees and provide them with all
social securities under the EPFO and ESIC umbrella as provided for the organized
sector wherein the funds towards these will be contributed by the employer,
employee, and the government.
v. Formulate a Gig Workers’ Rights Bill with provisions for mandatory registration of
aggregators and workers, issuance of unique IDs, provision of minimum wages, and
creation of a Gig-Workers Board to look after the welfare of gig-workers and as an
outside agency to review the agency primarily responsible for this.
vi. The government should work to create cooperatives for gig workers, provide them
with access to institutional credit, recognize their trade unions, and take the initiative
to build the infrastructure and environment needed to increase the job opportunities
available for women and people with disabilities.

STAKEHOLDER’S RESPONSE

Solutions Impact
Status Quo - - + -
Proposed New + -/+ - +
Solutions
Interest Groups Gig Workers Government Companies Trade Unions /
Bodies Workers
(Ministry of Associations
L&E)
6. FEASIBILITY
FEASIBILITY CHART
Nature Status Central as Merging Formulate Create Draft a model Clear
Quo Monitoring/ multiples a Gig cooperatives contract for definition
Regulating schemes Workers’ and aggregators so that and
Authority and by Sate Rights Bill recognize workers come provision
Implementation Govts. and their trade under the EPFO for
by Stat Govts. into one creation of unions and ESIC umbrella platform-
umbrella a Gig- where funds come based gig
scheme Workers from employer/ workers
Board employee/Govt. in SSC
Political - + +/- +/- +/- +/- +
Financial + +/- +/- +/- +/- +/- +/-

Operational + + +/- +/- +/- + -

Social - + + + + + +

6.1 POLITICAL/ ECONOMIC FEASIBILITY

Through this scheme, a large part of the stakeholders gains something monetarily or
otherwise. It also helps in the welfare of the country by providing job opportunities in the
expanding gig industry and solves unemployment, the major issue our economy faces for the
rising young population and will encourage them to take these jobs. Politically, it will be a
trump card for election politics, but can conflict with different party politics as well.

6.2 FINANCIAL FEASIBILITY

The status quo and proposed solutions mention a cess levied on companies that use gig
workers or mentions that a small amount be provided by those companies while providing
social security schemes for gig economy workers. This along with the pooling's of workers'
own money and some financial aid from the government makes this a viable policy in terms
of financial sustainability.

6.3 OPERATIONAL FEASIBILITY

The efficiency of implementation of these policies is contingent on effective collaboration

among government bodies, companies, and other stakeholders. The central being a regulating
body and respective states implementing the policy according to their state landscapes will
make this implementation efficient.

6.4 SOCIAL FEASIBILITY

Proposed changes are inclusive of and relevant to India's diverse social landscape, will help
in building strong worker engagement and ensure equitable access, which are critical for the
successful social implementation of such initiatives. Public awareness (helpline number and
facilitation centers in this case) plays a major role in community perception and workers
acceptance and representation.

7. RECOMMENDATION
We are proposing a centralized social security scheme for platform-based gig workers
providing them with provident fund, pension, life insurance and medical coverage. For that
by assessing the feasibility we are recommending:
• There should be a single authority, i.e., the central government to monitor and
regulate social security schemes and each state government will take up the
implementation.
• The Government should draft a model contract for aggregators to review the nature of
their contracts with workers and treat them as employees and provide them with all
social securities under the EPFO and ESIC umbrella as provided for the organized
sector wherein the funds towards these will be contributed by the employer,
employee, and the government.

7.1 IMPLEMENTATION STEPS

• Establishment of a national level committee to address the existing policy gaps and
recommend new centralized policies while simultaneously studying the changing gig
economy. (Even EPFO and ESIC with the help of research organizations can do it).
• The Ministry of Labour and Employment will undertake the implementation of the
recommended changes with the help of each state's government.
• The central ministry will act as a regulating agent and monitor the state's
implementation activities.
 • EPFO and ESIC will help both the central and state governments throughout the
process as it comes under their organization's ambit.
• One year of time for phase-1 implementation and making sure every worker is
identified and included. The committee is to provide a report after this as to the course
of action that needs to be done and changed to the ministry.
• The Ministry may be directed to devise a legal framework as per the
recommendations provided by the Committee in a time bound manner. This working
of the Ministry may be reviewed in-house and by credible independent bodies.

7.2 IMPLEMENTING AGENCY

Ministry of Labour and Employment with the help of Employees’ Provident Fund
Organization (EPFO) and Employees’ State Insurance Corporation (ESIC) and State Govts.

7.3 TIME FRAME FOR IMPLEMENTATION

Initial implementation period of 1 year and then a two-level review to be undertaken

simultaneous to the workings of the Implementing Agencies.

7.4 REVIEWING AGENCIES

At two levels simultaneously by: -

i. the Implementing Agency (Ministry of Labour and Employment along with State
Governments) and
ii. An unbiased outside reviewing agency.

7.5 EXPECTED OUTCOME OF THE RECOMMENDATION IF IMPLEMENTED

Enhanced financial stability and social protection while fostering a more inclusive,
sustainable, and secure gig economy. The centralization would promote uniformity and
simplifying administrative processes which will provide a robust social safety net which in
turn will boost potential for overall economic growth of the country.
7.6 LIMITATIONS

The recommendation is just, feasible and implementable at all levels; economic, financial,
operational, and social, except for one stakeholder, the companies, as it will be additional
expenditure for them. But tying a legal thread onto it will easily be a solution for that.
Enforcing compliance towards social security schemes and creating awareness for the same
will be an issue but can be tackled with the help of co-operatives and trade unions.

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