As stated by multiple sources, the Indian government is actively pursuing the implementation of social security benefits for gig workers. In this blog post, we will delve into the details of these benefits, and how they can positively impact gig economy workers.

The gig economy and social security benefits

Let’s start with the fundamentals: Let’s discuss what is the gig economy, who are gig workers, what is social security benefit (aka government schemes), and why it is needed.

Meaning of Gig economy and Gig workers!

The “gig economy” is a modern work landscape characterized by short-term or freelance jobs. It includes platforms like Uber, Taskmo, TaskRabbit and Gig4U. While “Gig workers” are individuals who engage in these jobs, often on a project-to-project basis, without traditional long-term employment contracts.

Whereas,

Gig workers participating in today's economy, earning compensation without the traditional structure of an employer-employee relationship, can be broadly divided into two groups:

• Platform-based - gig workers use digital applications or online platforms to find work.

• Non-platform-based - gig workers are typically temporary or part-time employees.

Although gig work is not a new concept, it has gained significant momentum due to extensive digitization and the emergence of technology-driven gig work platforms.

Presently, we observe technology-based platforms extending their reach to tier II & III cities in India, leading to an increase in gig work opportunities.

Ashwani Mahajan, an economic official at the Rastriya Swayamsevak Sangh group, stated “Gig workers need state protection, given rising exploitation by employers.”

What are social security benefits?

“Social security benefits,” also known as government schemes, are programs established by the government to provide financial support and stability to citizens.

These benefits can include:

1. Old-age/retirement pensions

2. Unemployment insurance

3. Life and disability payments

4. Maternity and child care benefits

5. Rural job guarantee

6. Food security

They serve as a safety net, ensuring that individuals have a basic level of economic security in times of need.

Do Gig workers need social security benefits? 

Now, let's dive into why social security benefits are crucial in the context of the gig economy.

In traditional employment, workers often receive benefits like health insurance, retirement plans, and paid leave as part of their compensation package.

However, gig workers typically don't have access to these benefits. This creates a vulnerability, as they may face financial hardship in the absence of a steady income or safety net.

Labour Minister Bhupender Yadav told lawmakers “Any scheme for gig workers might be funded through contributions by federal and state governments, as well as the platforms.”

Official statistics regarding the scale of India's gig economy are unavailable. However, unofficial estimates suggest that the workforce in this sector ranges from 10 to 15 million individuals.

In 2021, The Boston Consulting Group projected its potential to generate a staggering 90 million jobs and facilitate annual transaction volumes surpassing $250 billion.

According to the government-affiliated think tank NITI Aayog, by the year 2030, the gig economy could encompass over 23.5 million workers, constituting approximately 7% of the non-farm labor force. It wouldn't be an exaggeration to designate them as pivotal economic contributors in the years to come.

Understanding gig workers' challenges  

Gig workers, often classified as independent contractors, freelancers, or temporary workers, lack the traditional job security and benefits that come with full-time employment.

This demographic faces uncertainties in many areas, such as:

1. Income instability

2. Lack of healthcare coverage

3. Inadequate retirement plans

4. Limited job security

6. Absence of employment benefits

7. Legal and contractual ambiguities

Social Security benefits - a vital support system? 

For gig workers, social security benefits step in as a vital support system. 

How?

Social security benefits have so much to offer to the growing gig economy, such as:

1. It can offer a buffer against economic instability, providing essentials like unemployment benefits in case of job loss or disability benefits if they are unable to work due to health issues.

2. These programs are designed to bridge the gap and offer a degree of financial security in a world where traditional employment structures are evolving.

In Rajasthan, there are around 3-4 lakh gig workers, “But there is no social security for these gig workers by the companies. To provide support to these workers and protect them from exploitation, we are bringing a Gig Workers’ Welfare Act, under which a welfare board will be set up. A welfare and development fund of ₹200 crore will be formed,” Gehlot had said in his last budget speech.

In the subsequent section, we will delve into initiatives targeted at addressing the distinct requirements of gig workers, encompassing areas such as social security, healthcare accessibility, and customized retirement planning.

The Indian government schemes for Gig workers

Is India really planning welfare for the gig workers? Yes.

“The plan, part of the Social Security Code enacted in 2020, could include accident, health insurance, and retirement benefits,” said a senior government official with direct knowledge of the plan.

As per the Economic Times, the Parliament has already approved the four labor codes pertaining to social security, industrial relations, wages, and Occupational Safety Health and working Conditions (OSH).

However, their implementation is contingent upon both the Central government and individual states formally notifying the corresponding regulations, given that labor falls under concurrent jurisdiction.

The Code on Social Security, 2020 (Code)  

The Social Security Code of 2020, though already passed into law, is not yet in effect.

This legislation formally acknowledges gig workers, defining them as individuals who engage in work or contractual arrangements and derive income from such activities outside the conventional employer-employee framework.

The Code empowers the government to design social security programs tailored to the needs of gig workers, encompassing provisions for life and disability coverage, accident insurance, health and maternity benefits, elderly care, and childcare benefits.

Additionally, it proposes the establishment of Social Security Funds, which will be funded through contributions from specific aggregators.

Integrates Labour Laws:  

The Code undertakes to integrate the following 9 labour laws relating to social security into one integrated Code:

1. The Employees Compensation Act, 1923.

2. The Employees State Insurance Act, 1948.

3. The Employees Provident Fund and Miscellaneous Provisions Act, 1952

4. The Employees Exchange (Compulsory Notification of Vacancies) Act, 1959

5. The Maternity Benefit Act, 1961

6. The Payment of Gratuity Act, 1972

7. The Cine Workers Welfare Fund Act, 1981

9. The Building and Other Construction Workers Cess Act, 1996

10. The Unorganized Workers’ Social Security Act, 2008

 Pradhan Mantri Shram Yogi Maan-Dhan (PMSYM)   

One of the flagship initiatives by the Indian Government is the Pradhan Mantri Shram Yogi Maan-Dhan (PMSYM) scheme.

This scheme is designed exclusively for unorganized sector workers, including gig workers. It offers a pension scheme aimed at providing them with a regular income post-retirement. This scheme could potentially encompass gig workers if the monthly income threshold of ₹15,000 is raised.

To be eligible, a gig worker must be between 18 and 40 years of age and have a monthly income below a specified threshold.

 Employees' State Insurance Scheme (ESIS)   

The ESIS extends its coverage to gig workers in certain categories. This scheme provides medical, cash, maternity, disability, and dependent benefits to insured individuals.

Gig workers registered under this scheme can access quality healthcare facilities, ensuring their well-being and that of their dependents.

 Atal Pension Yojana (APY)   

The Atal Pension Yojana is another instrumental scheme that caters to gig workers' financial security. It allows them to contribute towards a pension plan during their working years, ensuring a steady income post-retirement.

The scheme offers various pension amounts, allowing workers to choose a plan that aligns with their financial goals.

 National Pension Scheme (NPS)   

The National Pension Scheme is open to all Indian citizens, including gig workers. It serves as a voluntary, long-term retirement savings plan, providing them with a mix of equity, fixed deposits, corporate bonds, liquid funds, and government funds. This diversified approach aims to optimize returns for subscribers.

 The real concern- why are these schemes not in effect yet? 

With a sharp rise in the share of gig economy workers — estimated at over 1. 3% of the active labour force by Niti Aayog — the government is seeking to ensure that platforms do not just provide social security but also disclose it publicly.

According to a report from the International Labour Organization in 2021, only approximately 40% of workers utilizing web-based platforms had access to health insurance.

Furthermore, less than 20% had coverage for employment-related injuries, unemployment, disability insurance, or retirement benefits such as old-age pensions. The figures were reported to be even lower in developing nations.

Companies have raised concerns, citing various challenges.

One of the difficulties they highlighted is that workers often engage in activities across multiple platforms, making it challenging to provide comprehensive coverage.

It's important to note that while the Indian Government has recognized these challenges, there is still much work to be done in terms of implementing effective policies and frameworks that comprehensively support the gig workforce.

Conclusion

Therefore, by ensuring that individuals have access to essential support, we create a more resilient and inclusive economy allowing gig workers to pursue flexible work arrangements without facing undue financial risk.

Ensuring social security is a shared duty of both employers and gig workers.

While the government proceeds at its own speed, why not keep building multiple sources of income with Gig4U? One gig at a time.