Ola, Uber and Zomato: India's gig workers see hope in new state law

Gig workers in India are rejoicing over a modest yet significant triumph in their ongoing struggle for improved labor conditions and rights.

These workers endure demanding tasks, grueling hours, paltry compensation, and a lack of job security, along with the absence of fundamental entitlements such as paid leave, insurance, and pensions.

However, a turning point arrived on July 24th when the western state of Rajasthan enacted a groundbreaking legislation, marking a noteworthy step towards granting platform-based gig workers the social security benefits they’ve long been advocating for.

Named the Rajasthan Platform Based Gig Workers (Registration and Welfare) Act 2023, the law introduces a mechanism to establish social security coverage. This is achieved by imposing a nominal welfare tax of 1%-2% on transactions facilitated by apps within its scope, encompassing services like food delivery and ride-sharing. Contributions from the state government and gig workers alike will be pooled into this fund.

The legislation also encompasses the creation of an online database housing details of gig workers and their affiliations with platforms in the state. Moreover, it outlines the establishment of a framework to address worker grievances, as well as a welfare board vested with the authority to oversee rule enforcement and impose penalties on aggregator platforms that fail to comply.

Numerous labor rights advocates have commended this law, emphasizing that it will finally bestow certain rights upon gig workers that are traditionally enjoyed by those in more conventional sectors. Additionally, they posit that this legislation could potentially serve as a model for other states to emulate.

Critics, however, contend that this legislation might inadvertently slow the pace of the gig economy. They express concern that customers could bear the brunt of the welfare tax, leading aggregator platforms to hike prices in order to cover the additional expense.

Gig workers in the US and UK have been organizing unions to advocate for labor rights, and their counterparts in India have been following suit. However, unlike in many countries, Indian gig workers do not fall under the protective umbrella of labor laws since they are not classified as “employees.”

The platforms that engage these gig workers, rather than designating them as “employees,” prefer the label of “aggregators” and refer to them as “partners” or “independent contractors.” This labeling has sparked criticism, as gig workers are not entitled to a share of profits but are still required to abide by the platforms’ rules.

India boasts a substantial population of platform-based gig workers, officially estimated at just over seven million by the government-run think-tank Niti Aayog. However, experts argue that this figure likely underestimates the true count. The country’s burgeoning population has led to job shortages, prompting many, especially young individuals, to turn to gig work for livelihoods.

The recently passed Rajasthan Platform Based Gig Workers (Registration and Welfare) Act 2023 is viewed as a significant development by labor rights activists. It focuses on registering gig workers, marking the initial stride toward providing them with social security. The Act also establishes transparency in data, encompassing app financial transactions, which may discourage platforms from unfair practices such as data deletion or arbitrary fines.

Nikhil Dey, a member of a workers’ rights group involved in crafting the legislation, highlights that the law introduces a structure for worker representation through a welfare board. Additionally, it pioneers a novel approach to collecting and disbursing social security funds.

Under this legislation, each gig worker registered in the database receives a unique, permanent ID that remains consistent across platforms. This ID facilitates tracking earnings from different platforms through an integrated tracking and financial management system.

As the nature of gig work can be fluid, allowing workers to shift between industries or return to gig work after a hiatus, the system permits continued contributions to the fund, with benefits accessible once the fund matures.

Experts acknowledge that this Act addresses certain challenges that previous social security efforts encountered. However, concerns remain about the legislation’s effectiveness in addressing more immediate labor rights issues, such as imposing caps on maximum working hours or setting minimum earnings. Additionally, the specifics of how the welfare tax will be deducted need to be clarified to ensure it doesn’t erode workers’ incentives or result in fines.

With the growing political recognition of gig workers as a significant voting bloc, lawmakers and governments are displaying greater willingness to address their demands. While the 2020 Code on Social Security obligated gig platforms to contribute to a fund for workers, the associated rules are pending. The Karnataka state government, in a similar vein, announced free insurance coverage for gig workers.

The recent enactment of the Rajasthan law comes shortly before the state’s assembly elections, underscoring the political significance of gig workers’ demands. Labor union leader Shaik Salauddin underscores that gig workers will persist in pressuring governments for their rights, emphasizing that parties of all affiliations are recognizing their potential as a formidable voting force that cannot be disregarded.