Gig Workers’ Welfare: Rajasthan shows the way by proposing a law

Moneycontrol, May 25, 2023 

By Pradeep S Mehta & Yatika Agarwal

Rajasthan has become the pioneer as the first state to propose a law to protect the rights of gig workers and make them beneficiaries of various state welfare schemes. Gig workers are occupations such as app-based taxi drivers, food delivery agents, courier boys and so on. They are not formally employed by any firm hence their legal status as labour is also quite ambiguous. It is therefore that the proposed law in Rajasthan can be a good template across the country. However, it should be taken up by the Union government to draft a single national law, as labour laws are under the Concurrent List. It will thus be a milestone step in promoting good and better jobs in India.

Today most global companies in terms of market capitalisation and over 70 percent of Indian unicorns are platform based. The optimal use of the gig and platform economy and India’s demographic profile has increased employment opportunities for unorganised sector workers, especially in Tier 2 and Tier 3 cities.

Importance of The Gig Economy

Critically, the gig economy and the gig workers have a crucial ally in the government. This is because there is no urban economic activity that has a greater potential to create jobs among the educated youth, than the gig economy. As per a NITI Aayog report in July 2022, around 7.7 million people were employed as gig workers as of June 2022. Their number is only likely to treble by 2029-30. The Rajasthan government has also estimated that there are 2.25-2.70 lakh gig workers in the state itself, with about 50,000 engaged with Ola and 35,000 with Uber. Some drivers are associated with both as there is no restriction, thus promoting healthy competition.

While gig and platform-based employment provide a lucrative source of human capital for enterprises, it also exposes workers to various risks. This is due to the absence of a traditional employer-employee relationship. The companies hiring these workers skim their responsibility as employers by calling themselves ‘aggregators’, ‘intermediaries’ or ‘facilitators’. The gig workers are then left vulnerable with no fixed income, insurance, retirement and pension benefits.

Before drafting the welfare legislation, the Rajasthan government had conducted a sample survey to learn about the challenges faced by gig workers. The survey found that more than 50 percent of the gig workers did not have any kind of health insurance and about 40 percent were not covered under the state government’s accident insurance schemes.

If we look at the overall picture of gig workers, the existing labour laws in India offer limited or no recognition to these workers. The gig workers were earlier unable to register on the Union government’s e-Shram portal as gig work was not shown as a category there. The Code on Social Security, 2020, for the first time, recognised gig workers as unorganised sector workers and extended social security benefits to them. But this was too little, and has largely remained on paper.

Rajasthan’s Proposed Law

In these circumstances, the Rajasthan government has introduced the Rajasthan Platform-based Gig Workers (Registration and Welfare) Bill, 2023. This will help to formulate schemes for the benefit of the gig workers, provide them immediate financial assistance in case of accidents and medical emergencies, and offer them health insurance coverage under state government schemes. Moreover, it will ensure gratuity, scholarships, and pensions. It will thus result in attracting more youth to take up gig work.

The state government has also allotted Rs 200 crore to the Rajasthan Platform-Based Gig Workers Social Security and Welfare Fund and levied a “welfare cess” (1 percent of the total value of the service or delivery) on consumers to ensure better rights and facilities for gig workers.

Adding to this, as per the draft of the bill, the government proposes to constitute a welfare board for the platform-based gig workers to register them and their aggregators. The board will generate a unique ID for a gig worker, which would be valid for three years. The information of all registered gig workers will be maintained in a database and help workers seek benefits from government welfare schemes such as PM Sambhal scheme (which provides for old age pension), and also to seek redressal against aggregators over payment disputes and other issues.

The bill also states that if the aggregators contravene any of the provisions made by the Board, such as not filing annual reports, and not integrating gig worker data with the board’s database, they will have to pay a fine of Rs 10 lakh or can be suspended or prevented from functioning in Rajasthan. An important question arises is whether foreign app aggregators (such as Fiverr and Amazon Mechanical Turk) will come under the ambit of the Bill. How will these aggregators be made accountable?

Also, while the establishment of welfare boards is much appreciated, the reality of other sections of workers, say construction workers should not be ignored. These other groups of workers portray a poignant picture of the failure of such welfare boards set up in the past. The benefits claimed by the welfare board are far from the reach of the common workers. In such a scenario, it would be mindful to keep the learning from the failure of past similar initiatives in order to ensure the success of the new bill. Perhaps, the government should consider privatisation of the board so that it can be effective. Examples like the Passport Seva and GST administration come to mind. Both of these are much more sensitive to workers’ welfare.

Seen in this context, the Rajasthan government has started recognising the potential of the gig economy and taking steps to ensure social security to gig workers. It has also motivated other states to introduce similar Bills with welfare measures for gig workers. For instance, the Kerala government is working towards framing a policy to regulate the gig economy to ensure fair wages and better working conditions for the workers in the sector. Therefore, Rajasthan’s Bill is a step in the right direction for the ‘Future of Work’. However, our plea is that the Union government should draft and adopt a national law, so that it is more efficient.

(With inputs from Palashka Jha)

The authors work for CUTS International, a global public policy research and advocacy group. This article has been written following research done under the project: Good and Better Jobs supported by the Ford Foundation.

This article item can also be viewed at: