Union Budget | Right moment to offer welfare, social security to gig workers

Industries big and small, and the nation's taxpayers, are all eyes for Union Budget 2025-26, slated for presentation on Saturday, February 1.

Another section of the population waiting with high hopes for the Budget are gig workers — those who doo-deliver our food, groceries, vegetables and meat orders, drive our cabs and autorickshaws, do small jobs like electrical and plumbing, and so on.

After years of demands, petitions and suggestions, the upcoming Budget is expected to address some major challenges gig workers face. It is also likely to offer measures to ensure their welfare and social security.

Long excluded 

This segment of the workforce, which continues to grow rapidly, remains largely outside the purview of traditional labour laws. Despite the recognition of gig workers under the Code on Social Security, 2020, the implementation of these provisions remains incomplete, leaving them without any essential benefits like paid leave, maternity protections, or adequate occupational safety.

For instance, the new labour codes include provisions for a social security scheme aimed at gig economy workers, such as delivery personnel for food and ride-hailing apps. However, these benefits have not yet been implemented, as the necessary rules for their rollout are still pending notification.

“The Labour Codes need to be made effective, considering aspects such as the changing workforce, the need for consistency in interpretation and enhancements in ease of business and technology use,” said Saraswathi Kasturirangan, Partner, Deloitte, in a report.

7.7 million gig workers

According to various reports, there are about 7.7 million gig workers in the country, expected to grow to around 24 million by 2029-30, increasing at a compounded annual growth rate of 17 per cent. They are expected to constitute about 4.1 per cent of the workforce by 2029-30.

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The Standing Committee on Labour, chaired by MP from Odisha Bhartruhari Mahtab, submitted its report on the Code on Social Security, 2019, on July 31, 2020. The Code seeks to consolidate and replace nine existing laws related to social security.

It mandates social security provisions for establishments based on criteria such as size and income thresholds while empowering the government to notify schemes for unorganised sector workers, including gig and platform workers.

Gig workers operate outside traditional employer-employee relationships, while platform workers connect with organisations or individuals through online platforms to provide services or solve problems.

Collection of cess 

Additionally, the Code allows for the collection of a cess to support the welfare of construction workers. The Standing Committee on Labour emphasised the need for a universal social security framework covering all workers, including unorganised, gig, and platform workers, with secure financial commitments and clear timelines for implementation.

Key recommendations include:

1. Reconsidering establishment-size thresholds

2. Creating a dedicated fund for unorganised workers with mandatory minimum entitlements

3. Introducing unemployment insurance for unorganised workers, including those in the construction and plantation sectors

Other proposals include reintroducing industry-specific welfare funds, ensuring maternity benefits for all women workers, and strengthening cess collection and benefit portability for construction workers.

The Committee highlighted the importance of a robust and inclusive social security framework to safeguard the rights and well-being of all workers, particularly those in vulnerable and emerging categories.

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Classification issues

Gig workers are often categorised as independent contractors rather than employees, excluding them from employer-sponsored benefits such as provident funds, insurance, or paid leave. This lack of institutional social security leaves gig workers exposed to exploitation and precarious working conditions.

While there are efforts to bridge this gap, the progress has been limited:

1. The e-Shram Portal facilitates the registration of gig workers to access life and accident insurance benefits.

2. The Pradhan Mantri Shram Yogi Maandhan Scheme offers pension benefits to workers in the unorganised sector, including gig workers.

However, these measures only scratch the surface, and the forthcoming Union Budget is seen as an opportunity to introduce more robust frameworks.

Also Read: Not expecting much from this budget: Veteran trade unionist Amarjeet Kaur

Key expectations

1. Social security fund

A proposed social security fund could pool contributions from gig workers, aggregators, and the government. This fund would provide medical and accident insurance, retirement benefits, and emergency financial support, creating a safety net for gig workers.

2. Labour codes

The effective enforcement of labour codes is crucial to address inconsistencies in regulatory provisions and bring more workers under the social security umbrella. These codes must adapt to the evolving nature of work, ensuring workforce flexibility and promoting ease of doing business.

This will reduce compliance costs, uniform interpretation of laws, and enhance ease of doing business, encouraging investments. There will also be greater adaptability of labour laws to support the gig and platform workforce.

3. New-age workforce

The Budget could widen social security provisions to include gig and platform workers. Organised sector employees benefit from schemes like the Provident Fund and group medical insurance, funded primarily by employers. Similar models could be extended to gig workers through contributions to designated schemes for life insurance, pensions, and emergency funds.

If these measures are implemented, gig workers can access financial support during distress such as sickness, accidents, or disability. They could also get coverage for high-risk roles like delivery agents and drivers, safeguarding them against occupational hazards.

Also Read: Union Budget 2025: Will healthcare finally get its due?

Inclusive framework

According to Deloitte, the rise of gig and platform work has diluted the traditional employer-employee relationship. Freelancers and niche service providers now form a significant portion of the workforce, requiring a tailored approach to social security.

Extending these benefits to unorganised sectors like self-help groups and domestic workers would also ensure a more inclusive framework.

A transparent and streamlined regulatory framework, supported by digital platforms and AI automation, could bridge the gap between gig workers and essential welfare benefits, fostering economic growth and workforce well-being.