Pension Scheme for Gig Workers in India

The Indian labour ministry is preparing to present a pension scheme for one crore gig workers to the Union Cabinet. This initiative follows a recent Budget announcement by Finance Minister Nirmala Sitharaman. The scheme aims to provide social security benefits to workers engaged with online platforms. This includes healthcare coverage and identity cards for gig workers.

Context of the Initiative

The initiative is as it addresses the needs of gig workers. These workers often lack traditional employment benefits. With the rise of the gig economy, there is an urgent need for social security measures. The government aims to integrate these workers into a formal system. This will ensure they receive essential benefits.

Gig Workers Defined

According to the Social Security Code 2020, gig workers are individuals who earn from non-traditional work arrangements. This includes those working with platforms like Uber, Ola, Swiggy, and Zomato. They do not have a conventional employer-employee relationship. This makes them vulnerable to economic fluctuations.

e-Shram Portal

The e-Shram portal was launched in August 2021. Its purpose is to register unorganised workers and provide them with a Universal Account Number (UAN). As of January 2025, over 30.58 crore workers have registered on this portal. The portal aims to create a comprehensive National Database of Unorganised Workers (NDUW). It has integrated 12 schemes from various central ministries.

Mechanism of Contribution

The proposed pension scheme will include social security contributions based on workers’ incomes. Online platforms like Ola and Uber will deduct a percentage from each transaction. This method is similar to the Goods and Services Tax (GST) collection. The specific percentage for contributions has yet to be determined.

Pension Options for Workers

Upon retirement, gig workers will have two options for their pension. They can either withdraw interest on their contributions or receive equal instalments over a specified period. This flexibility aims to cater to the diverse needs of gig workers.

Healthcare Benefits

Under the new scheme, gig workers will also gain access to healthcare services. They will be covered under the PM Jan Arogya Yojana. This initiative is crucial as gig workers often face health risks without adequate insurance.

Impact on Gig Workers

The pension scheme is expected to provide financial security to gig workers. It will help them manage their income better and prepare for retirement. Additionally, it will encourage more workers to register on the e-Shram portal, enhancing their access to benefits.

Future Prospects

The government’s initiative reflects a growing recognition of the gig economy. As the number of gig workers continues to rise, more comprehensive measures may be needed. This could include further integration of gig workers into the formal economy.

Questions for UPSC:

1. Critically analyse the impact of the gig economy on traditional employment structures in India.
2. What are the key features of the e-Shram portal? How does it benefit unorganised workers?
3. Estimate the significance of social security schemes for gig workers in India.
4. Point out the challenges faced by gig workers in accessing healthcare and social security benefits.

Answer Hints:

1. Critically analyse the impact of the gig economy on traditional employment structures in India.

1. The gig economy introduces flexibility but undermines job security associated with traditional employment.
2. It leads to a shift from long-term employment relationships to short-term contracts.
3. Traditional benefits such as pensions, health insurance, and paid leave are often absent for gig workers.
4. Employers may save costs, impacting wage structures and labor rights.
5. The rise of gig work reflects changing consumer demands and technological advancements.

2. What are the key features of the e-Shram portal? How does it benefit unorganised workers?

1. The e-Shram portal registers unorganised workers and assigns them a Universal Account Number (UAN).
2. It creates a comprehensive National Database of Unorganised Workers (NDUW) for better policy implementation.
3. Workers gain access to various government schemes integrated into the portal.
4. The portal facilitates the identification and provision of social security benefits.
5. Over 30.58 crore workers have registered, enhancing their visibility and access to support.

3. Estimate the significance of social security schemes for gig workers in India.

1. Social security schemes provide financial stability and protection against income loss for gig workers.
2. They help mitigate risks associated with health emergencies and job instability.
3. Access to pensions and healthcare improves overall worker welfare and productivity.
4. Such schemes encourage formal registration and participation in the gig economy.
5. They contribute to a more equitable labor market by addressing vulnerabilities of gig workers.

4. Point out the challenges faced by gig workers in accessing healthcare and social security benefits.

1. Many gig workers lack awareness of available benefits and how to access them.
2. Inconsistent income makes it difficult for workers to contribute to social security schemes.
3. Complex registration processes can deter workers from signing up for benefits.
4. Healthcare accessibility is often limited due to financial constraints and lack of insurance.
5. There may be bureaucratic hurdles in availing benefits from government schemes.