Designing social welfare systems for gig workers

While the demand for social security for platform workers heats up, the question that crops up is can one design an exclusive social security system for platform workers? And even if one could design it (like Rajasthan), should one design systems for particular groups of workers.

Isn’t a more universal system of social security more viable given the Indian context? The challenge of course is who pays for it!

The Code on Social Security, 2020 (CSS 2020) defines gig worker as a “person who performs work or participates in a work arrangement and earns from such activities outside of a traditional employer-employee relationship”.

Gig classification

The NITI Aayog report states that “gig workers can be broadly classified into platform and non-platform-based workers. Non-platform gig workers are generally casual wage workers and own-account workers in the conventional sectors, working part-time or full-time.”

The Periodic Labour Force Survey 2020−21 data shows that only 18.6 per cent of workers aged 15 plus had paid leave or employer-provided social security cover and written contract of more than one year. This meant that around 80 per cent of workers would need social security cover.

The CSS 2020 defines “social security” as an all-encompassing measure including all types of workers — organised or unorganised, gig or traditional, who have access to health and income security during old age, unemployment, sickness, invalidity, work injury, maternity or loss of a breadwinner etc.

There are several problems with designing social security only for platform-gig workers approach. First, non-platform gig workers are excluded. Second, it does not account for the non-linear lives that workers lead. Workers can work on two platforms simultaneously. Workers can work part-time on platforms. But that is true for non-platform workers too.

Previous work from NCAER based on the India Human Development Survey (2004-05 and 2011-12) found that that workers employed in textiles and apparels were often involved in four different jobs in urban areas and six in rural areas.

Previous studies have highlighted the relatively lower social security coverage in urban areas during the pandemic and the differential factors affecting poverty.

The NCAER Business Expectations Survey of December 2021 found that 93 per cent of firms reported hiring temporary workers. 28.5 per cent of firms responded that they contributed to health insurance and 11.5 per cent said they contributed to some form of social security. 65 per cent of firms responded that they were not planning to convert any ‘permanent job’ into a temporary one in the next six months.

Basically, social security systems designed specifically for region, type of workers or time or income are likely to falter or have limited outreach. In this case, the first best solution is to design a more universal system.

In the CSS 2020 some provisions are not universal. For example, employees provident fund (EPF), employees state insurance, and gratuity are entirely for organised sector workers and unorganised workers do not enjoy such benefits.

Further, maternity benefits, which were earlier applicable to establishments hiring at least 10 workers, has not been amended.

Also, access to EPF and gratuity still has the minimum workers criterion and so even if they are universalised, still many unorganised enterprises workers will be left out of the system. This become evident from the fact that only 2.7 per cent of the 6.3 crore unincorporated enterprises in the country hired 10 or more workers (NSS Enterprise Survey 2015-16).

Social registry system

In that, first, we need a social registry system where people voluntarily sign in for social welfare. India has already done that in the form of e-Shram database. States are also designing their own social registries like Karnataka and Madhya Pradesh.

e-Shram workers, irrespective of their employment status or geography or any other criteria, should be provided with full health coverage. Health coverage needs to be in two forms — health insurance for secondary and tertiary healthcare and urban walk-in health clinics for primary healthcare. The latter should be financed by municipal funds.

The people registered on e-Shram should be given pensions. While everybody is given an inflation-indexed minimum standard pension, workers should be encouraged to contribute to pensions as they may deem fit to enhance their pensions. The existing schemes for temporary workers or any other relevant scheme/s can be merged and remodelled as deemed appropriate.

A third option could be that e-Shram workers are given unemployment benefits.

It must be ensured that there is neither double-dipping nor exclusion between systems. Unemployment insurance or re-skilling/upskilling opportunities for six months could be added as a third option too.

The last, but not the least, concern is who is going to finance this scheme. All registered companies must pay one per cent of their total annual turnover to each of these bodies — health insurance, pension and unemployment or two per cent to the overall social welfare body.

The government also contributes and so do the e-Shram registrants who are capable of paying. Contribution to these bodies in lieu of Corporate Social Responsibility funds may be made possible.

There needs to be a macro perspective to social welfare. We need to re-haul all ideas of work from a traditional employer-employee, factories/establishments approach to a more flexible one.

We need a more universal approach to social welfare, where everyone contributes to the best of their capability. We need dynamic policies which are in sync with each other. India certainly has the digital prowess to implement such a system.

Bhandari is a Professor and Sahu is an Associate Fellow at NCAER. Views expressed are personal.