Pension Costs for Gig Workers Likely to Be Passed on to Consumers

Under a proposed plan or scheme by the central government to provide social security to millions of gig economy workers, digital platforms may pass on their contribution to the workers' welfare fund to consumers—making services like food delivery and ride-hailing more expensive.

Officials from the Union Ministry of Labour and Employment say most aggregators are on board with the scheme, which has been under consideration since late last year. “The idea is to neither deduct anything from the worker’s earnings nor place any additional burden on the aggregators,” a senior official said. “In that case, the cost will be passed on to the consumers.”

Most major platform-based Indian companies continue to operate under tight financial conditions, having reported significant losses in recent years. Food delivery giant Swiggy, for instance, posted a loss of Rs 2,350.24 crore in 2023-24, following losses of Rs 4,179.3 crore in 2022-23 and Rs 3,628.9 crore in 2021-22. Its main competitor, Zomato, turned a corner in 2023-24 with a consolidated profit of Rs 351 crore, after reporting losses of Rs 971 crore in 2022-23 and Rs 1,222.5 crore in 2021-22.

The scheme—initially slated for rollout by now—has been delayed, with the government opting for a cautious approach to build a robust policy framework suitable to both the worker and the aggregator. Under the plan, platform-based firms and aggregators are expected to contribute around 2 per cent through the Employees’ Provident Fund Organisation (EPFO), though the exact amount is yet to be finalised. The rollout is now expected later this year.

“What’s certain is that social security will be provided through the EPFO, as there’s no better relief than a pension fund for low-income workers,” the official added. In the case of a worker engaged with multiple platforms, each aggregator will be required to contribute to their individual fund.

In November 2024, the Labour Ministry constituted a committee—headed by an Additional Secretary-level official—to draft the social security framework for gig workers. The committee includes representatives from industry, platform aggregators like Zomato and Swiggy, the Indian Federation of App-based Transport Workers (IFAT), as well as knowledge partners from NITI Aayog, the International Labour Organization (ILO), the National Council of Applied Economic Research (NCAER), and various state governments.