New State Law in India Brings Hope for Gig Workers of Ola, Uber, and Zomato

Gig economy workers in India are rejoicing over a significant stride forward in their ongoing battle for improved labor rights and better working conditions.

Characterized by arduous tasks, lengthy hours, meager pay, and a lack of job security, gig workers have long sought essential entitlements like paid leave, insurance, and pension benefits. However, a ray of hope emerged on July 24th when the state of Rajasthan in western India enacted a groundbreaking law aimed at extending social security benefits to platform-based gig workers – a demand they’ve advocated for extensively.

The 2023 Rajasthan Platform-Based Gig Workers (Registration and Welfare) Act introduces several crucial measures. A central focus is the establishment of a social security fund, funded through a welfare tax ranging from 1% to 2% applied to transactions conducted on qualifying apps, such as ride-sharing and food delivery platforms. Additionally, contributions from gig workers and government grants will augment the fund’s resources.

A digital repository of gig workers within the state will be developed as part of the law, wherein they will be registered along with the platforms they are affiliated with. This initiative aims to facilitate a streamlined process for addressing worker grievances, complemented by the creation of a welfare board responsible for oversight and enforcement. The law also mandates penalties for aggregator platforms that fail to adhere to its regulations.

Championed by numerous labor rights activists, the law is hailed for providing gig workers with a measure of the rights enjoyed by their counterparts in formal employment. It is anticipated to serve as a blueprint for other Indian states considering similar measures.

Nonetheless, detractors voice concerns that the law might impede the gig economy’s progress by potentially displeasing customers. The prospect of aggregator platforms raising prices to offset the welfare tax has led to apprehensions about increased transaction costs.

Gig workers in countries such as the US and UK have been engaging in unionization efforts to secure labor rights. Similarly, their Indian counterparts have been pursuing this avenue, hindered by their exclusion from the country’s labor laws due to their non-“employee” classification.

Gig platforms, distinct from traditional “employers,” often label themselves as “aggregators.” Their workers are commonly referred to as “partners” or “independent contractors.” Critics argue that this nomenclature is unfair, as gig workers are subjected to platform-imposed rules without receiving a share of the platforms’ profits.

India harbors a substantial population of platform-based gig workers, officially numbering slightly over seven million according to government-run think-tank Niti Aayog. However, experts posit that this figure could be higher. The country’s burgeoning population has exacerbated job market scarcities, propelling many, particularly young individuals, towards gig work as a means of livelihood.