If you use Ola-Uber for rides and Swiggy and Zomato for ordering food, then the burden on your pocket is going to increase. The new labor codes implemented in India from November 21 can have a direct impact on gig-economy platforms like Swiggy, Zomato, Ola and Uber. Companies will now have to contribute to the social-security fund, which is likely to increase their per-order and operation costs. Kotak Institutional Equities report claims that this additional expenditure may ultimately reach the users. This means that the bills for food delivery, cab rides and quick-commerce services may increase in the coming days.
Services will be expensive for users
According to the report of Kotak Equities, due to the implementation of new Labor Codes, the cost per order of companies like Swiggy, Zomato, Ola and Uber will increase. Companies may have to contribute 1-2% of annual turnover or up to 5% of payments to gig workers to the government’s social-security fund. If the 5% cap is implemented, an average additional cost of Rs 3.2 will be added to food delivery orders and Rs 2.4 to quick-commerce orders. The report estimates that its direct burden will be passed on to the users.
How will platform fees increase?
The report suggests that companies can recover this cost from users by increasing platform fees, imposing surge-based charges or changing delivery prices. At present, these platforms provide separate facilities like accident insurance, health insurance, income protection and maternity benefits. If all benefits are routed through a centralized fund, the additional cost per order may come down to Rs 1-2. Nevertheless, increase in total expenditure is considered almost certain.
Formal staffing companies will benefit
Organized staffing companies will benefit from the new labor codes as compliance will be easy and centralized. This can strengthen the role of companies like TeamLease. However, tracking social-security benefits will be challenging due to gig workers’ irregular work schedules, frequent platform changes, and simultaneous work on multiple apps. The government’s e-Shram database will play an important role in this process.
Labor codes came into effect from November 21
Four new Labor Codes have replaced 29 old laws and given a unified system. For the first time, gig and platform workers have been included in the formal social security framework. Under the Wages Code, the central government will now set the national minimum wage, although it is not clear whether it will apply to gig workers or not. Kotak believes that without strong digital infrastructure and real-time worker tracking, it will be difficult to deliver these benefits equitably.
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