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213 viewsAll GS PapersGS Paper 3
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Approach:

  1. Introduction on gig economy.
  2. Mention the provisions in the Code on Social Security 2020.
  3. Issues & challenges.
  4. Conclusion.

The rapidly burgeoning gig workforce is ushering in a new economic revolution globally. India is at the frontier of this revolution with its demographic dividend of half-a-billion labour force and the world’s youngest population, rapid urbanisation, widespread adoption of smartphones and associated technology. The gig economy is poised to undergo rapid expansion in the coming decade. While the gig economy sector has several upsides with respect to growth and opportunities, there are some serious concerns that need regulation.

Provisions in the Code on Social Security 2020:

The Code on Social Security, 2020, gives a legal identity to the term ‘gig worker’. The Code defines gig worker as a person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship.

Chapter IX of the Code deals with Unorganized, Gig and Platform workers. Section 114 of the Code mentions that the Central Government may frame & notify suitable security schemes for the gig and platform workers. The matters covered in the section 114 of the code are; (a) Life and Disability Cover; (b) Accident Insurance; (c) Health and maternity benefits; (d) Old age protection; (e) Creche; (f) Any other benefit determined by the Government.

The Code recommends that schemes  may be funded through a combination of contributions from Union and State governments, as well as gig platform aggregators. The National Social Security Board will have oversight of the welfare of gig economy workers, and will include representatives of both aggregator companies and gig workers. The Code also mandates that the Union government establish a Social Security Fund for gig economy workers.

Issues needing address in the Code:

The code should define the employee-gig worker relationship. 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.

There is a need to balance the benefits to gig workers against the cost advantages that platforms and aggregators derive from their low-cost business models. There is no clarity on how the costs of social security will be distributed among stakeholders. The law lists various possibilities — Government contribution, a mix of Government and private sector money, Corporate Social Responsibility funds or even a 1 – 2% cess on revenues of these companies. The implementation process must be clarified and codified.

Another concern is the absence of redress for gig workers. Labour Courts exist, but they are expensive for ordinary workers to access. Instead, a responsive appeal institution needs to be created.

Way forward:

Platform companies should explore ways to ensure that every gig worker, irrespective of the number of hours put in every month, will be paid an equivalent living/minimum wages. For e.g., Uber UK has committed to provide the national living wage, paid holiday time equivalent to about 12% of driver’s earnings along with a pension plan. Other companies can replicate this model.

The provisions of Code on Social Security should be put into effect. However, the implementation should be undertaken in a gradual manner. Platform companies should be provided time to adjust their business to the new conditions. NITI Aayog’s RAISE Approach can be adopted.

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