Budget 2021: FM races to fix flaws in labour model

Thanks to the pandemic, the Union Budget 2021-22 not only recognized the vulnerabilities typical of the country’s migrant, gig and platform workers—but has also offered some solutions.

In her first post-Covid budget speech, the Finance Minister Nirmala Sitharaman announced that for the first time globally, social security benefits will extend to gig and platform workers. The FM also announced various other measures to help the migrant workers in the country.

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Acknowledging the critical role played by the gig and platform workers in keeping the Indian economy up and running, Sitharaman said that minimum wages will apply to all categories of workers, and they will be covered by the Employees State Insurance Corporation (ESIC).

“To further extend our efforts towards the unorganised labour force migrant workers particularly, I propose to launch a portal that will collect relevant information on gig, building, and construction-workers among others. This will help formulate Health, Housing, Skill, Insurance, Credit, and food schemes for migrant workers,” the FM said.

The gig and platform workers include those associated with e-commerce platforms such as Amazon, Zomato, Swiggy, Ola, etc. These workers are not entitled to social security benefits like provident fund, group insurance and pension.

During the period of pandemic-induced lockdown, the increasing role of the gig economy was clear. The Economic Survey 2020-2021 tabled in Parliament by the Finance Minister duly made note of this segment growth.

“The lockdown period saw the growth of the gig economy and increasing work from home in the organized sector. As per the Periodic Labour Force Survey (PLFS) report 2018-19, there was an increase in workforce totalling 48.78 crore during 2018-19 as compared to 47.14 crore during 2017-18. The size of the workforce increased by about 1.64 crore, of which 1.22 crore were in rural sector and 0.42 crore in urban sector,” the survey stated.

Interestingly, the Economic Survey further revealed that till recently, gig or platform workers were devoid of their basic rights and social security protections mainly because they were neither considered as worker nor employee under the definition of employee in the labour laws of the country and were not entitled to legal protections under labour laws. To address this anomaly, the survey mentioned that for the first time, these class of workers have been brought under the ambit of the newly introduced Code on Social Security 2020 by defining them exclusively in the category of unorganized worker for providing social security benefits.


The gig workers include those associated with e-commerce platforms such as Amazon, Zomato, Swiggy, Ola, etc.

Moreover, highlighting the challenges before the nation’s internal migrants, who have had a turbulent phase during the lockdown period, the survey stated that COVID-19 has exposed the vulnerability of urban casual workers, who account for 11.2% of urban workforce.

The stakeholders representing the labour sector have welcomed the Government’s move.

Hailing the portal’s launch for the unorganised labour force, Lohit Bhatia, President, Indian Staffing Federation emphasises that the Covid crisis clearly showed that the most vulnerable section of society is not the permanent and temporary workers in the formal economy-but it was the migrants, daily wagers, domestic workers, gig and platform workers who bore its maximum brunt.

Highlighting that such a segment is also uncovered by any social security coverages, formal employment contracts, ability to claim benefits etc, Bhatia opines that the collation of labour-related data will help target the benefits to this group better.

“It [the portal] will help capture this segment’s economic impact and earnings. The portal can also be used at some stage for targeted taxation benefit to MSME, individual households that employ from this segment to assure financial inclusion. It would also be extremely helpful in bringing the segment on par with the staffing and gig economy personnel, which will also allow migrations from the two segments across each other,” he says.

Bhatia adds the announcement of creating a platform to register gig workers is in line and extension to the earlier approved labour codes under the Occupational Safety and Health (OSH) code, where Parliament has approved a law to this effect. He, however, flags that the industry is still awaiting the final rules to this effect which will confirm method, types of coverages and disbursement of the same in case of an eventuality.

“The social security code already mentioned that gig/platforms shall contribute up to 1-2% of their revenue subject to max of 5% payout to individual gig workers on monthly basis. For a country like India, where gig and platform economy is attracting so many youths, it will be beneficial to cover them for immediate mediclaim and long term pension and other benefits just as permanent and temporary staff are covered in the formal economy,” he reasons.

Gayathri Vasudevan, Chairperson & Co-Founder of social enterprise LabourNet adds that this initiative was being practised by the State governments for construction workers only, but by extending it to gig workers, would now cover the entire labour force.

“The centralised collating of migrant workers for the critical construction sector will allow for authentic data to drive the Labour Market Information Systems, which has been the endeavour of the government for a few years now. This will ensure services at work destination vs access only at domicile to transform quality of lives of migrant workers,” she adds.

Vasudevan opines that the increasing focus on social benefits for workers, especially the gig workers, and the rationalisation of labour compliances has the potential to encourage micro and petty contractors to increase the employment opportunities for gig and platform workers.

More to offer
The FM, while observing that the country’s Social Security Code 2020 has made provision for universalisation of social security for the entire workforce, has also stated that women will be allowed to work in all categories and also in the night-shifts with adequate protection.

“The increasing empowerment of women by promoting them to work in all sectors and also night-shifts, with adequate precautions in place, can revolutionise their impact on society and their households,” Vasudevan emphasises.

For Rama Kirloskar, Director, Kirloskar Brothers Ltd, minimum wages to all categories of workers will ensure economic development of the blue collar workforce and will impact around 15 million gig workers in India. She adds that the move to allow women to work in all categories and also in night shifts with adequate protection will ensure more participation of women in the workforce and further boost economic development.

“The budget addresses the needs of the unorganized labour force and this year’s budget proposals are indeed required to make India’s workforce future ready,” says Kirloskar.

Budget 2021: FM races to fix flaws in labour model Budget 2021: FM races to fix flaws in labour model Reviewed by TechCO on 2/06/2021 Rating: 5

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