News Highlight
Code on Social Security 2020 provides for the framing of suitable social security schemes for gig and platform workers.
Key Takeaway
- The definitions of ‘gig worker’ and ‘platform worker’ are included in the 2020 Social Security Code.
- The Code on Social Security, 2020, calls for developing appropriate social security programmes for gig and platform workers.
- They are about life and disability insurance, accident insurance, health and maternity benefits, old age protection, etc.
- The Code also provides for establishing a Social Security Fund and one of its funding sources.
- It is an aggregator contribution of 1 to 2% of an aggregator’s yearly turnover, subject to a maximum of 5% of the amount paid or payable by an aggregator to such workers.
Code on Social Security, 2020
- Key Provisions
- In September 2020, India’s Parliament passed the Social Security Code (SS Code 2020).
- The SS Code 2020 consolidates existing social security regulations and tries to bring informal labourers under the jurisdiction of social security administration.
- The provisions of eight central labour laws are merged and rationalised in the SS Code 2020.
- Employees’ provident fund, employee’s state insurance (ESI), maternity benefit, and gratuity are all exclusively for workers in the organised sector.
- The employee threshold has been removed: The existing employee threshold for state insurance has been removed.
- The central government can now provide ESI benefits to any organisation, regardless of the number of employees.
Key Benefits of Social Security Code 2020
- Maternity benefit
- Under the SS Code, maternity benefits have not been made universal.
- Maternity benefit is presently applicable for establishments employing 10 workers or more.
- The definition of ‘Establishment’ in the proposed code did not include the unorganised sector.
- As a result, women working in the unorganised sector would be excluded from receiving maternity benefits.
- Employees Provident Fund
- According to the SS Code, the EPF Scheme shall continue to apply to all establishments with 20 or more employees.
- As a result, access to employees’ provident funds remains unfilled for informal sector workers in the new legislation.
- Payment of gratuity
- Every shop or establishment employing or employing 10 or more employees on any day in the previous 12 months shall pay a gratuity to eligible employees.
- However, although gratuity payment was enlarged in the new Code, it is still inaccessible to most informal workers.
Challenges informal workers face in availing of social security
- Registration barrier
- To be eligible for social security, an informal worker must first register on the central government’s designated web portal.
- Absence of definition
- The current code’s lack of specific and explicit regulations would hamper the implementation of universal registration.
- Lack of awareness
- According to experience, informal employees are largely unaware of social security programmes.
- Lack of digital literacy
- Because most informal workers lack digital literacy and connectivity, online registration poses an additional challenge.
- Lack of documents
- Informal employees also struggle to provide all the documentation required for the registration procedure.
- Providing proof of living and income data without tangible employer-employee interactions is challenging.
Status of Gig Economy in India
- About
- A gig economy is a labour market in which independent contractors and freelancers fill temporary and part-time roles rather than full-time permanent workers.
- With the increased availability of digital platforms, India’s gig economy has grown dramatically.
- They enable people to provide their services freelance or part-time.
- According to a Boston Consulting Group report, India’s gig labour includes 15 million workers in businesses such as software, shared services, and professional services.
- According to the International Labour Organisation, India’s gig economy will rise by 23% by 2025.
- Growth Drivers of the Gig Economy
- Internet and mobile technology are rising.
- Liberalisation of the economy.
- Flexible work is becoming increasingly popular.
- E-commerce is expanding.
- Growing youthful, educated, ambitious population looking to enhance livelihoods through side income production.
Way Forward
- The SS Code 2020 attempts to bring informal employees into social security coverage, however, it falls short of its goal of making social security universal.
- Without sufficient social security, India will face an ageing population, and the current workforce will be unable to support it in the future.
- Providing social security can aid in the formalisation of labour.
- Employers should assume responsibility for providing social security to their employees because their productivity benefits them.
- While the government plays a role, employers bear the primary responsibility.
- While the gig economy provides numerous opportunities for individuals to earn a living and gain work flexibility.
- There is a need in India for improved regulation and protections for gig workers.
Pic Courtesy: Gigonomy
Content Source: PIB