India plans welfare measures for gig workers ahead of elections

India plans to roll out welfare measures for “gig” workers employed through platforms like Amazon, Uber and India’s Zomato as Prime Minister Narendra Modi’s government prepares for elections, government and trade union officials said.

The plan, part of the Social Security Code enacted in 2020, could include accident, health insurance and retirement benefits, said a senior government official with direct knowledge of the plan.

Ahead of the elections early next year, Modi’s party is eager to announce steps after the northern state of Rajasthan, ruled by opposition Congress party, approved setting up a fund through a surcharge on sales at platforms.

“There is an urgency to announce relief measures for gig workers,” said a government official, citing meetings with trade unions, gig platforms and state officials.

Gig workers need state protection, given rising exploitation by employers, said Ashwani Mahajan, an economic official at the Rashtriya Swayamsevak Sangh group, which has close ties to Modi’s government.

India’s gig workers, those outside traditional employer-employee relationships, are rapidly becoming an important part of the world’s fifth-biggest economy as the sector surged under COVID-19 restrictions and has been boosted by high unemployment.

The labour ministry declined to comment on the plans. Labour Minister Bhupender Yadav told lawmakers this week any scheme for gig workers might be funded through contributions by federal and state governments, as well as the platforms.

An industry expert with direct knowledge of the discussions said the platforms unanimously agreed with the labour ministry’s proposal about social security for gig workers and were ready to contribute to a “transparently” run welfare fund.

“We expect the announcement of federal measures in the next few months as players don’t want to deal with multiple states.”

Amazon, asked for comment on the proposed scheme and its potential costs, referred Reuters to a Thursday media statement that the company had created over 1.3 million jobs in India for delivery agents and sellers, including 140,000 in the past year, while boosting the retail business of small firms.

Uber and Zomato did not immediately respond to requests for comment. In addition to the big-name companies, hundreds of other online platforms and the people they hire for piecemeal work would be affected, spanning services such as cab-sharing, retail, food, construction and finance.

There are no official figures for the size of India’s gig economy, although private estimates put the number employed at 10 million to 15 million people. The Boston Consulting Group forecast in 2021 it had the potential to create 90 million jobs and annual transaction volumes over $250 billion.

By 2030, the government think tank NITI Aayog estimates, the gig economy could employ more than 23.5 million, about 7% of the non-farm workforce.

The government has not calculated the cost of the planned welfare measures as it must get data from the companies, said the sources, who asked not to be named because they were not authorised to speak to the media.

The government could initially provide gig workers with state-funded medical and accident insurance and a mechanism to address complaints, one official said, while a setting mechanism for employers’ contributions to the fund.

The measures propose employers contribute between 1% and 2% of their annual revenues to a security fund, up to 5% of the amount paid to workers, the sources said.

More than 290 million people have registered for an online government portal meant to issue identity cards to gig workers and other unorganised employees, while gathering such details as biometric data and their skills.

The government is worried about rising complaints by gig workers and social media campaign against platforms about cuts in commission and long working hours.

Blinkit, the grocery unit of food delivery platform Zomato, faced disruptions in operations in April when hundreds of workers protested over commission cuts.

“We have no channel to raise our complaints,” said Uber driver Sheetal Kashyap, 47, adding women workers like her face safety risks and exploitation due to low bargaining power.

Shaik Salauddin, national general secretary of the Indian Federation of App-based Transport Workers representing over 45,000 cab drivers, said they were lobbying political parties for a package before the elections.

“We should be recognised as employees, eligible for all benefits under labour laws, including fixed working hours and decent working conditions.”