Using Swiggy, Zomato, Ola, and Uber will all become more expensive! Platform fees will increase

If you use Ola and Uber for rides and Swiggy and Zomato for food delivery, you're in for a tougher time. The new labor codes, which came into effect in India on November 21st, could directly impact gig-economy platforms like Swiggy, Zomato, Ola, and Uber. Companies will now be required to contribute to the Social Security Fund, which is expected to increase their per-order and operational costs. A report by Kotak Institutional Equities claims that this additional expense could ultimately be passed on to users. This means that bills for food delivery, cab rides, and quick-commerce services could increase in the coming days.

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Social Security Fund, which could impact platform fees and delivery charges. This could make food delivery and cab rides more expensive for users.

Services will become more expensive for users

According to a Kotak Equities report, the implementation of the new Labor Codes will increase per-order costs for companies like Swiggy, Zomato, Ola, and Uber. Companies may be required 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% limit is implemented, an additional cost of ₹3.2 per food delivery order and ₹2.4 per quick-commerce order will be added. The report estimates that this will be directly passed on to users.

How will platform fees increase?

The report suggests that companies can recover these costs from users by increasing platform fees, imposing surge-based charges, or adjusting delivery prices. Currently, these platforms provide benefits like accident insurance, health insurance, income protection, and maternity benefits separately. If all benefits are provided through a centralized fund, the additional cost per order could be slightly reduced to ₹1-2. However, overall costs are almost certain to increase.

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Labor Codes came into effect on November 21st

Four new Labor Codes replaced 29 old laws, creating 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 a national minimum wage, although it is unclear whether this will apply to gig workers. Kotak believes that without a robust digital infrastructure and real-time worker tracking, it will be difficult to deliver these benefits equitably.