Progress Made, Challenges Remain

Quick Summary:

• The Karnataka “Platform Based Gig Workers (Social Security and Welfare) Ordinance, 2025” aims to provide social security for gig workers but presents important gaps in its framework.
• The ordinance uses ‘payout’ (final payment to gig workers) as the parameter for calculating welfare cess, ranging between 1% and 5%, with a likelihood of cess skewing towards the lower bound (1%).
• This approach undercuts provisions in the Center’s Social Security Code, which mandates a minimum of 1%-2% cess on platform turnover.
• Example: For Zomato, even a 2% cess on payouts equals only around 1% of turnover. A higher payout-centric cess would minimally impact consumers but considerably benefit worker welfare.
• Challenges arise with new models like Namma Yatri’s subscription model for autorickshaw drivers,where platforms pay zero commissions. Thes drivers might be excluded from welfare benefits unless changes are made to include customer fees as a revenue base for cess calculation.
• Suggested solutions include aligning sector-specific regulations and recalibrating the system to ensure fairer contributions across diverse business models.

Indian Opinion Analysis:

The Karnataka ordinance represents an earnest step toward addressing gig workers’ social security needs but falls short of creating an equitable framework. Basing cess calculations solely on ‘payouts’ is problematic as it results in reduced contributions compared to turnover-based calculations under central social security laws. Additionally, evolving platform business models like subscription systems pose questions about inclusivity and implementation fairness.

To ensure meaningful impact, policymakers must balance employer obligations without overburdening customers while maintaining operational viability for platforms. Sector-specific calibrations will be crucial given the diversity within gig-based industries. Ultimately, strong accountability mechanisms need enforcement to bridge these potential shortcomings effectively.Read more: Link