The Gig Workforce Needs The Chaar Dhaam Yatra

That the US$ 25 bn gig economy has emerged as the biggest job creator in India in the last 5 years shouldn’t surprise anyone. Look around! Gig workers abound – delivering biryani, driving us to airports or designing the cool web interface for your boutique. The 15 mn strong gig workforce though occupies a unique policy blind spot. While some may argue the lack of clearly defined labour laws allow gig employers to get away with lopsided contract terms, the bigger social failure that should draw our attention lies elsewhere. The lack of a social security cover for them creates a huge long-term liability for the society and, eventually, the government. The estimates of this range from Rs. 1.6 lac crores by 2027 – and, since social security burden should always be viewed in the long term – to a nosebleed-inducing Rs. 12 lac crores by 2057.

Simply put, we are sitting on a ticking bomb. Our children will pay the price.

Chaar Dhaam

The Modi 1.0 regime was proactive in designing the chaar dhaam of social security cover for workers in India. Aysuhman Bharat (Modicare), PMJJY (life insurance), APY (retirement) and PMSBY (disability) programmes are unique in their design that co-opts government, public and private players to offer solutions to the market. Over 15 crore subscribers in under 5 years aren’t numbers to scoff at no matter how strong a critic you might be of these plans. Of course, one can’t deny the criticism. There is state overreach in some of these plans and state capacity often curtails the ambitions of these plans. But these are robust platforms.

However, the question to ask is this – why hasn’t the gig workforce enthusiastically subscribed to these plans? A deeper study reveals three issues preventing the chaar dhaam yatra by gig workers.

They aren’t that into you

First, there isn’t a common definition of a gig worker. The pre-platform world had two types of workers – employees or contract workers – and all our laws and schemes are tailored to them. A gig worker is a different animal. They work on a contract, but their accountability is limited to a ‘gig’; often a really short-term task involving limited skills. They are paid by the gig and they could opt in and out of gigs anytime.

Second, the regulations that guide the chaar dhaam schemes aren’t all suitable for a gig worker. The volatility of their incomes, a lack of formal employment contract and the difficulty in classifying their profession make it difficult shoehorn them into these schemes. Further, you would think the size of the gig workforce and their growth rate would have attracted players to design products for them. However, the market hasn’t seen any innovation here barring a few health insurance products aimed at them. The challenge is the conventional norms of underwriting, assessing risks, income proofs and KYC. In short, try as you might, you can’t create a pension plan ‘satchet’.

Lastly, the gig worker is blissfully unaware of even the existing eligible plans for them. There’s no specific communication aimed at them while it abounds for other unorganized class of workers. The platforms also haven’t focused on this as they burn cash, scale and disrupt (or, so they say). A few group accidental cover plans for cab and delivery aggregators barely make the cut for social security.

One could argue the rapid growth of gig economy has been facilitated by the laissez-faire approach that has characterised their labour practices. The experience in India from other sectors suggests this might well be the case. Any policy designed for this, therefore, should be light on intervention and use of state capacity, precise in addressing the blindspot and efficient in deriving the desired outcomes. The recent California AB5 law is useful reminder of how to achieve the exact opposite of this formulation. If California can get a gig workforce law that wrong, we must tread these grounds with extreme caution.

Your delivery is 3 steps away

We should first focus on the minor tweaks needed in laws to make gig workers easily access existing schemes. The Contract Labour Act, 1970 could define a gig (“hybrid”) worker as a part-time worker who is exclusively retained for a cumulative period (1000 hours/annum) on a tech-enabled platform. This is a simple, close-ended definition that sets a threshold of working hours on a platform to qualify as a gig worker. The other tweak needed is around product guidelines for insurance and pension. A time-bound working committee could draft key recommendations to have “hybrid” workers and their unique employment features included in product guidelines. These could then be easily incorporated within the chaar dhaam schemes.

This won’t be enough. Long-term financial and risk products need intermediation. No one queues up overnight to buy a newly launched pension plan. The two key intermediaries that will need a nudge are the pension and insurance companies, and the 2-sided platforms. A 3-year tax break (up to a total of Rs. 5000 crs on MAT) and corresponding ‘soft’ targets for enrolment of hybrid workers on GoI enabled schemes can be a useful design. The specifics of these can be finalised by a policy thinktank that understands this space (Takshashila in Bangalore has done some stellar work here).

For the pension and insurance providers, the Ministry of Labour & Employment (MoLE) could think of a “seed” fund. An initial corpus of Rs. 2000 crs p.a. can be set aside for 3 years from the current annual budget of Rs. 20,000 crs that central and state labour ministries spend on various social security schemes for unorganized workers. This would encourage gig workers to participate in the chaar dhaam schemes where the government matches the contribution made by a gig worker up to a maximum of Rs. 4000 p.a. The flywheel will then get going. The providers will then get a taste of the market, its size and growth and craft innovative solutions for it. The regulations around policyholder protection, grievances and fund management are anyway extant in the current regulations.

Once the groundwork is done a comprehensive communication campaign can be rolled out. This will enlist the platforms, government and social media channels to inform and educate gig workers about the chaar dhaam schemes and how they could benefit from them.

Rate us on our delivery

The burgeoning social liability burden of an ‘unprotected’ gig workforce can’t wait for an intervention any longer. A clearly defined policy as outlined here will cover 70 per cent of the gig workforce by 2027 and reduce the social liability by about Rs. 84,000 crs. The budget to tackle this could be the most productive use of Rs. 5500 crs by the government in the next 12 months. We need to act now. Else, the gig could be up soon.

(Raghu Sanjaylal Jaitley deeply acknowledges the inputs of Team PP – Soorya, Sukanya, Krishna, Ipshita, Sanjana, Anurag and Roshini – for this post. Sincere gratitude to Anupam and Sarthak for their guidance)

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