Gig workers may get social security benefits through 2% transaction levy on businesses
The government is considering implementing a 2% transaction-based levy on aggregators to support social security for gig workers. This levy will fund benefits such as insurance, health, and maternity support for over 12 million workers. There is a consensus that this approach ensures fairness among different types of aggregators. The new scheme is expected to be launched in 2027, requiring gig workers to meet specific work criteria.
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Context
The central government, through the newly established , is finalizing a social security scheme for gig workers, likely funded by a 2% transaction levy on aggregators. This move aims to operationalize provisions within the , providing essential benefits like health and accident insurance to India's rapidly expanding gig workforce, which is projected to reach 23.5 million by 2029-30.
UPSC Perspectives
Economic
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 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.
Governance
This development highlights the operationalization of the , which explicitly recognized 'gig workers' and 'platform workers' for the first time in Indian labor law. The creation of the 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 (PF). This phased approach reflects the difficulty in establishing long-term employer-employee linkages in a sector characterized by high attrition and flexible engagement.
Social
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 (Right to work, to education and to public assistance in certain cases) and (Living wage, etc., for workers) of the . 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.