Protecting gig workers

Social security law must balance equity with profitability

The Supreme Court has made a significant intervention by admitting a public interest litigation from the Indian Federation of App-based Transport Workers —which includes those employed by online delivery and taxi aggregators — that seeks to classify gig workers as wage workers entitled to social security and other employment benefits. The apex court will be hearing this petition even as the Code on Social Security, which covered unorganised workers, gig workers and platform workers for the first time, is awaiting implementation. 

The Code was one of a suite of labour laws that Parliament passed in September of last year and received presidential assent in May of this year. The new laws could change the dynamics of labour markets. It is also significant because, although labour is a concurrent subject, it vests considerable powers and responsibilities with the central government. For instance, it mandates the Centre set up a social security fund for this category of workers in addition to separate funds by the states. It also recommends a National Social Security Board, with representation by the Centre and state governments, aggregators and platforms, to monitor, and recommend welfare schemes for such workers. Funds for such schemes are to involve contributions from the Centre, state and the aggregators. Apart from imposing budgetary requirements on the Centre and states, the new laws will also introduce levels of complexity into labour law administration, which may explain why the government is still to notify the Code seven months after it was signed into law.
 

Several key issues need to be addressed for the laws to be meaningfully implemented. Since the Code involves some amount of employee contribution, the critical issue would be to define the employee-gig worker relationship, as proposed legislation in the EU seeks to do. The EU law determines this relationship in terms of levels of aggregator supervision, as did the UK law passed earlier this year that granted worker status to Uber drivers. This could be a tricky exercise in India since there are many categories of self-employed workers who typically divide their time between multiple employers (food delivery agents or cab aggregators being good examples).  The second issue is balancing benefits to gig workers against the cost advantages that platforms and aggregators derive from their low-cost business models. Narrowing the gap between the cost of a permanent worker and a non-permanent one may well crimp profitability but the imposts should not be heavy enough to deter expansion or raise entry barriers for India’s burgeoning start-up ecosystem, which has driven job creation. Though many of these laws can be tested only once they are implemented, the bigger concern must be the absence of redress for gig workers in the Code. Labour courts do exist and are considered reasonably efficient, but they remain institutionally unwieldy and expensive for ordinary workers to access. The rules would do well to introduce a responsive appeal institution so that workers can enforce their rights. With the economic uncertainties created by the pandemic likely to endure for the foreseeable future, gig or contract employment is set to expand exponentially. According to the Boston Consulting Group, India’s gig economy could soar to 90 million jobs in the next eight to 10 years from about 24 million today. This may still be small within the vast pool of unorganised labour, but ensuring their welfare could well determine the health of India’s prosperous gig economy.