January 23, 2022

Worker Classification or Social Security?

Imagine life in olden times: just like WH Auden’s poem The unknown citizen, filled with fixtures and the measured pace of industrial modernity. The digital wave has largely turned this on its head, giving way to a more dynamic economy and society, opening a floodgate of on-demand services and flexible work. In fact, a recent MIT report notes that 63 percent of jobs performed in 2018 did not exist in 1940, the same year Auden wrote the poem when organized manufacturing jobs were in vogue. Gig and platform tasks are the result of this change and represent the technology-mediated resolution and plug-in, plug-out nature of interactions in the new economy. Therefore, they dispute the applicability of age-old labor laws. The vibrations of this paradigm shift are felt from California to Indonesia.

The ongoing debate about social security has its roots in worker classification, which is an overhang of industrial production models. This has given us outdated dichotomies such as skilled/unskilled, organized/disorganized and employer-employee relationships. The latter in particular has had a strong influence on the idea of ​​human labour; ‘benefits’ such as family health care, decent retirement and unemployment insurance are usually linked to formal and organized work. This connection leads us to confuse the social security debate with issues of employee classification. Ultimately, such a system requires employees to make certain tradeoffs to qualify for benefits, often at the expense of their ability to set their work hours, which is in stark contrast to the exercise of individual agency that has come to the digital age.

The answer to the chicken-and-egg question is that employee classification came first. It is therefore illogical to suggest that employee classifications, which rely on defining different types of employer-employee relationships, should be formulated alongside employee benefits. Work-related social security leaves individuals unprotected in the face of uncertainty, contributing to the proportion of informal work (92 percent in India), leading to the tacit creation of “good” and “bad” jobs in the economy. Platform work withstands this by providing limited access to social security and unbundled access to earning an income. The time has come for these laws to catch up with contemporary reality.

India has passed the Code on Social Security (CoSS) 2020, which renounces attempts to retrofit archaic categories of employment types into an essentially contemporary phenomenon. It is the first step in addressing the deeper problem of employment-related social security. Extending forms of social security to those in atypical, non-traditional work relationships such as platforms – as CoSS 2020 does – is key to closing the social security gap in India and elsewhere.

In addition, the code takes the proactive measure of creating two new categories to accommodate these workers, a path untapped in economies where similar legislation has been considered. The labor market effects of general legislative measures elsewhere, such as the AB5 in California dealing a blow to the trucking industry, can only be avoided if the new reality and a renegotiated social contract are recognized. The CoSS 2020 somewhat succeeds in that and could catapult India into the labor reality of the 21st century.

At the same time, disorganized workers have also been recognized with their separate wellness programs in CoSS 2020, positively impacting the entire workforce. The recent launch of the e-Shram enumeration portal is a good example of this. These are welcome moves because they don’t force a trade-off between flexibility and security, the precise factors that draw the sharp line between formal and informal work.

“Flexicurity” (flexibility of the labor market in a dynamic economy, while ensuring the safety of workers) is an old concept in this regard, set out by the World Bank in its recommendation to balance job creation and labor regulation . By adopting CoSS 2020, the Government of India is realizing a number of flexicurity principles such as reliable contractual agreements, lifelong learning strategies and a modernized social security system.

While it commendably embraces the ideals of progressive universalism, i.e. expanding coverage and prioritizing the poorest people, CoSS 2020’s proposals touch only briefly on the principle of portability. Benefit portability ensures that coverages such as health care, long-term savings, and days off are available regardless of which employer the employee is affiliated with. Due to the vastness and diversity of India, it is also important that such benefits are available in a location independent manner.

The disruption caused by the pandemic has given us an opportunity to reflect on the social contracts that dominate labor markets. The “old normal” that gave rise to traditional jobs as we know them today no longer exists, and CoSS 2020 is a step in the right direction. As we navigate a future where a labor-led recovery can deliver inclusive growth and economic recovery, archaic norms must be thrown out to introduce new governance mechanisms, and CoSS 2020 heralds this “new normal”.

– by means of

Sreelakshmi Ramachandran

(The author is a research manager at the Ola Mobility Institute and holds a Masters Degree in Development Studies from IIT Madras. She is deeply interested in studying the position of 21st century cities – both in terms of sustainability and resources of livelihood and livelihood.

(Edited by : Pradeep Suresh V)

First print: IST

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