Gig workers may get social security benefits through 2% transaction levy on businesses

The gig economy represents a fundamental shift from traditional employer-employee relationships to platform-based, task-oriented work. While it offers flexibility and job creation, it often lacks the structural safety nets of formal employment. The proposed funding model—a transaction-based levy rather than a turnover-based one—is a crucial economic design choice. It aims to prevent cross-subsidization, ensuring that aggregators contribute based only on revenue directly linked to gig work, thereby maintaining a level playing field across different platform business models (e.g., a company offering both ride-hailing and e-commerce). This approach seeks to internalize the social costs of gig work into the platform's operating model without relying on budgetary allocations from the Consolidated Fund of India or deductions from the workers' earnings. Niti Aayog's projection that gig workers will constitute 6.7% of the workforce by 2029-30 underscores the macroeconomic importance of formalizing this sector to ensure inclusive growth.

This development highlights the operationalization of the Code on Social Security, 2020, which explicitly recognized 'gig workers' and 'platform workers' for the first time in Indian labor law. The creation of the National Social Security Board is a key institutional mechanism under the Code to design and oversee welfare schemes. A critical governance challenge addressed here is defining eligibility: the Code mandates a minimum of 90 days of work with a single aggregator or 120 days cumulatively across multiple platforms in a financial year to access benefits. This portability of benefits is vital, as gig workers frequently multi-home (work for several apps simultaneously). However, the initial scheme focuses on immediate needs (health, accident, maternity) while deferring long-term benefits like pensions and Provident Fund (PF). This phased approach reflects the difficulty in establishing long-term employer-employee linkages in a sector characterized by high attrition and flexible engagement.

Providing social security to gig workers addresses a significant gap in India's social safety net. The current lack of benefits leaves millions vulnerable to income shocks from accidents, illness, or disability. By mandating aggregator contributions to a Social Security Fund, the state is shifting away from a purely laissez-faire approach towards ensuring basic dignity and security for vulnerable labor segments. This aligns with the broader goals of Article 41 (Right to work, to education and to public assistance in certain cases) and Article 43 (Living wage, etc., for workers) of the Directive Principles of State Policy. The demand from riders for basic amenities like clean restrooms, as noted in the article, further highlights the need for comprehensive welfare measures beyond just financial security, encompassing occupational safety and health standards tailored to the unique nature of platform work.