Framework for Code on Social Security must be fair and effective

The Labour Ministry has reportedly begun the process of drafting a national framework for social security standards under the recently notified Labour Codes for platform-based gig workers. One of the objectives is to set uniform standards so that conflicting state rules could be avoided. As per NITI Aayog estimates, there were about 10 million gig workers in 2024-25, with the number expected to rise to 23.5 million by 2029-30. Therefore, the task of the Ministry is enormous, and needs to be carried out with utmost caution and by taking into account the interests of various stakeholders. The announcement of four codes is indeed a reforming measure; this is the reason that corporate India has enthusiastically welcomed the move. The consensus among experts and representatives of MSMEs, however, is that the four codes are a mixed bag: while they include many provisions that will help entrepreneurs, there are also concerns regarding the cost imposed on and the bandwidth of MSMEs, especially the smaller ones, to meet the compliance challenge.

On the positive side, the Code on Social Security allows maintenance of all records, registers, and returns in electronic form, thus reducing compliance costs for employers and making processes simpler and more efficient. Further, it has introduced a five-year limitation of inquiry under the Employees’ Provident Fund (EPF) to determine applicability or recover dues. The deposit for appeals against the order of an EPFO officer has also been reduced. Besides, there is the provision of self-assessment of construction and payment of cess thereon for the construction of a building or other construction works. Another provision allows compounding of offences, thus decriminalising many offences. The code also talks about ‘inspector-cum-facilitator’ to reduce the traditional ‘inspector raj.’ This is certainly nice-sounding phraseology, but it will take a great deal of political oversight and bureaucratic competence to translate attractive buzzwords into action on the ground. MSME representatives have reasons to be sceptical about such wordplay, for the authorities have been discussing the scourge of inspector raj for decades, and it is still there. It is not that nothing has changed over the years, but just as the proof of the pudding is in its eating, the test of a policy or programme is in its implementation.

And the implementation will stand the chance of success only if the national framework the Central government chalks out is reasonable, fair, and effective. The reasonableness will make the Code on Social Security reflect on the socio-economic realities of the country and acknowledge the varying capacities of different industries and state governments. Unnecessarily rigid or burdensome requirements could deter compliance and hinder widespread adoption. Fairness is important because the framework has to ensure that all categories of workers—regardless of their employment type, geography, or income level—receive access to fundamental protections such as health coverage, pensions, maternity benefits, and accident insurance. It also implies financial models that distribute responsibilities rationally among employers, workers, and government bodies, without disproportionately burdening any single group. The effectiveness of the framework can scarcely be overemphasised. This includes creating robust administrative systems, harnessing technology for enrolment and benefit delivery, and ensuring transparency and accountability. Monitoring mechanisms must be put in place to track progress, resolve grievances swiftly, and continually refine standards based on the feedback.