Indian gig workers ought to get a well-crafted social security net

Source: The post is based on the article “Indian gig workers ought to get a well-crafted social security net” published in Mint on 31^st July 2023.

Syllabus: GS 2 – Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation

Relevance: concerns with the Rajasthan Platform-based Gig Workers (Registration and Welfare) Act 2023

News: Rajasthan Government has enacted the Rajasthan Platform-based Gig Workers (Registration and Welfare) Act 2023. It aims at regulating the gig economy in the state.

It is a positive step for gig workers as Niti Aayog expects 200% growth in gig employment by 2030.

What are the key features of the Act?

Read Here: Rajasthan’s move spells some hope for gig workers

What are the concerns with the Act?

Implementation: The Act establishes a statutory framework for the protection of gig workers. However, adequate execution is required for it to be effective.

Lacks Architecture on the Social Security System: The Act emphasizes inclusive governance and financial assistance for welfare goals.

However, it lacks information on the specific architecture of the social security system as well as actual implementation, leaving design and execution to bureaucracy.

Centralizes Welfare Fund: It centralizes welfare contribution into a single fund, administered by a government-appointed welfare board. Hence, instead of empowering the individual worker, the Act empowers appointed government authorities and other board members.

A more effective approach would have been to transfer funds directly into individual gig worker welfare accounts through separate accounts created by the welfare board.

The fund should not only be used for long-term returns but also to buy group insurance (life, term, health, and accident) for its members.

The fund could also be used to alleviate the impact of gig income volatility by providing discounted micro-overdraft loans through the already implemented Open Credit Enablement Network.

Funding the Social Security System: The Act intends to support the social security system by levying a 2% tax on aggregators.

However, social security is the responsibility of society and should be financed by the state’s exchequer, using taxes from individuals and corporations.

The government could also offer matching grants to encourage voluntary contributions.

What can be the way ahead?

India requires a national, multi-contributor social security system that leverages the existing digital public infrastructure. It is also necessary to create a system that combines various government schemes to benefit gig workers.