The majority of India’s labour force operates in the informal sector, with the share of informal employment estimated at about 90% in 2018–19, and the share of total employment in the unorganised sector estimated at about 80% based on the Accountability Initiative’s analysis of the Periodic Labour Force Survey.
Further, only 26% of regular salaried earners and casual labourers have access to one or more social security benefits among Provident Fund, pension, gratuity, healthcare benefits and maternity benefits. Of them, just 29% were eligible for paid leave. The precarious nature of informal employment, combined with low social security coverage, has left many workers vulnerable during the COVID-19 pandemic. This includes gig economy workers.
Gig workers have become ubiquitous during the pandemic in urban areas — driving taxis and delivering food or shopping parcels. The gig economy is characterised as an extension of the informal labour economy, with digital gig workers (e.g. for data labelling) and physical gig workers (e.g. ride-sharing, food delivery) able to access gig work through technological platforms.
The bargaining power of workers is typically curtailed through lack of relationships with fellow gig workers as well as information asymmetry with platform providers (wherein platforms alone hold information on the availability of workers, workers’ performances, and a client’s willingness to pay).
The gig economy is likely to become a larger segment of the informal sector in the next decade. The Boston Consulting Group estimates a potential growth to 90 million gig workers in India over the next 8 to 10 years.
With the gig economy redefining the nature of employer-employee relationships and worker rights, it is critical to include gig workers in regulatory frameworks and social security coverage.
Four key labour law codes for workers are discussed below, with only one Code recognising gig workers:
The Code on Social Security (2020) makes provisions for gig economy workers, mandating that the Union and state governments frame and notify relevant welfare schemes. These would provide life and disability cover, health and maternity benefits, old age protection, education, provident funds, injury benefits and other types of measures. A registration mechanism for gig workers and helplines to aid access to social security schemes are envisioned.
The Code on Social Security recommends that schemes be funded through a combination of contributions from Union and state governments, as well as gig platform aggregators. The contribution to be paid by aggregators is envisioned at 1 to 2% of total aggregator turnover, but not more than 5% of the total amount paid by aggregators to gig workers.
As outlined in the Code on Social Security, the National Social Security Board will have oversight of the welfare of gig economy workers. It will include five representatives from aggregator companies and five representatives of gig workers. The Code also mandates that the Union government establish a Social Security Fund for gig economy workers.
While a promising step in the direction of providing social security for gig economy workers, the Code on Social Security does not elaborate on the scope, nature, funding mechanism or minimum goals for gig workers. Further, the implementation of the Code has been deferred beyond the intended deadline of 1 April 2021.
The COVID-19 pandemic has had economic repercussions, with the unemployment rate rising to a high of 23.52% in April 2020, and gradually increasing from 6.52% in January 2021 to 11.9% in May 2021 in the face of the second wave of the pandemic. The largest impact has been on informal workers, who saw a 22.6% reduction in wages compared to a 3.6% reduction for formal workers.
A survey of gig economy workers in September 2020 reveals that nearly 90% of Indian gig workers lost income during the pandemic, with more than a third making less than ₹5,000 a month in August 2020.
Thus, it will be important to keep track of the implementation of social security schemes for gig economy workers as outlined in recent legislation.