Welcome cover for gig workers

This newspaper reported on Tuesday that the Union government is planning to bring a Bill which will offer social security benefits to India’s gig workers. The Bill, the report also said, might ask companies in the gig economy to allocate part of their revenues (1-2%) to fund some of these. While details are yet to emerge, a policy intervention on social security for workers in the gig economy is an idea whose time has come and also one which must keep evolving.

The size of the workforce in the gig economy is still relatively small — about eight million in India’s 550-million-plus labour force — but it is likely to keep growing and be one of the biggest sources of employment generation in the country. If more and more work is to be generated in the gig economy, it is necessary that it offers basic social security to workers. The labour market regulator must do what it can to ensure this.

There is also a question of fairness vis-à-vis workers in the gig economy, which is mostly in the start-up space. A lot of these firms get their seed capital from venture capitalist funds and are not necessarily tied to the traditional constraints of breaking even which hold for the representative firm in an economy. While the founders and senior executives manage to land on their feet (thanks to the very high salaries they draw) even if the business bombs or continues to make losses, the blue-collar workforce often faces a squeeze. This happens even when the business grows in scale, and the focus turns to profitability. This is an unjust distribution of risk and rewards between employers and employees.

Laudable as the objective of social security for gig economy workers is, such ideas are easier to celebrate in first principles than implement effectively. There are legal considerations such as gig employers defining their employees as partners/vendors rather than employees. One can also raise questions whether forcing mandatory social security contributions from employers will nudge them to question workers working for various platforms simultaneously, which is the very essence of the gig economy.

These are difficult questions to answer and, in many ways, represent the changing nature of capitalism itself. As the fifth-largest economy and the most populous country in the world, India must keep engaging with such questions to maintain a healthy balance between capital and labour.