Reforms for the few

A draft law to ensure minimum working conditions and social security for the unorganised sector has turned regressive.

At a time when labour law reforms are being debated, it is important to remember that only 6-7% of the total workforce in the country, that is, workers employed in the formal sector — by the government, state-owned enterprises and private companies — come under the labour laws. The other 93-94% — the vast majority of the country’s nearly 500 million workforce — working in the informal or unorganised sector are outside the purview of these laws.

Landless agricultural labourers, construction workers, beedi workers, sanitary workers, coolies, workers in brick kilns and stone quarries, workers in garment, leather, agarbatti and transport industries, contract and casual labourers are the major constituents of the informal sector, apart from weavers, artisans, hand-cart operators, small traders, pavement vendors, etc.

These workers have no access to basic rights such as fixed working hours, minimum wages, provident fund, gratuity, ESI, paid leave, pension, medical, accident and life insurance coverage, job security, etc., enjoyed by workers in the organised sector.

Unorganised workers are the worst sufferers in unforeseen circumstances like natural calamities or economic crises. For instance, after demonetisation, thousands of workers returned to their native villages as jobs and earnings ceased abruptly and they had nothing to fall back on.

Wages in the informal sector are determined by market forces in the absence of proper regulation. As per data released recently by the National Sample Survey Office (NSSO), the average wage earned by a worker in the unorganised sector is just Rs 6,688 per month. Even the highest average wage of Rs 10,468, earned by unorganised workers in Kerala, cannot be considered a decent wage today and at the current inflation level.

Surveys covering the last two decades have shown that the wages of many categories of workers in the informal sector has not increased at all, and when inflation is taken into account it has decreased in many cases. This is unfair, as the unorganised sector contributes about 51% of the GDP, according to the National Commission for Enterprises in the Unorganised Sector (NCEUS).

As the unorganised workers are spread across a wide spectrum of occupations and as the temporary nature of work takes them from place to place, it is difficult for them to organise themselves and benefit from collective bargaining. Hence, their welfare can be ensured in the immediate future only by introducing universally applicable social security measures. The task is daunting, not only because of the magnitude and complexity of the problem but also because the data available on their living and working conditions is scanty and unreliable.

The National Labour Commission and NCEUS have repeatedly drawn attention to the arbitrary and unjust working conditions and lack of social security and have suggested remedial measures.

Over a period of time, schemes such as old-age pension, widow pension, and MGNREGA were introduced for the benefit of unorganised workers. Due to scanty allocations, delayed release of funds, inefficient delivery mechanism, improper targeting and lack of awareness about the existence of the schemes among workers, a large number of intended beneficiaries have not been able to benefit from them.

Some schemes were formulated without taking into account the nature of their employment and income. For instance, the much publicised Atal Pension Yojana is a contributory pension scheme under which the Government of India will add either 50% of the subscriber’s monthly contribution or Rs 1,000 for the first five years of the scheme, that is from 2015 to 2020. If a subscriber fails to pay the monthly subscription any time during the tenure of the scheme, the GOI contribution and the interest earned on it will be forfeited.

A contributory scheme with such penal provisions does not suit workers who do not have an assured job or income. As per the scheme, an 18-year-old worker contributing Rs 42 per month for 42 years will get a pension of Rs 1,000 beginning at age 60. Experts have calculated that the value of Rs 1,000 will be only Rs. 129 when the worker starts receiving the pension.

Initiatives for reform

As labour falls in the Concurrent List, 44 labour laws relating to wages, employment, industrial relations, social security, etc., have evolved over a period of time. The Centre and states went on legislating, without any coordination between them. The second National Commission on Labour, constituted 72 years after the first NCL, submitted its report in the year 2002, recommending amalgamation of these laws that overlap and override each other, leading to a lot of confusion. But successive governments have failed to implement the recommendations.

The NCEUS released the report “Social Security for Unorganised Workers” in 2006 with a 13-point Action Programme to ensure minimum conditions of work and social security. The Unorganised Workers Social Security Act was passed in 2008 and The National Social Security Board was constituted in 2009. But the board only has an advisory role and no powers to enforce the Act.

In April 2017, the Draft Labour Code on Social Security and Welfare was released, which seeks to introduce a universal social security scheme by way of a single labour code by merging all the existing labour laws. But the move, supposed to be a reform measure, has turned regressive for the workers as the draft code blocks democratic participation by keeping out the trade unions. The code will be governed by a ‘national council’ consisting of 21 members out of whom only three will be workers’ representatives. Even these three will be nominated by the government.

Formulating welfare schemes that are easy to access, doing away with procedural complexities, raising the awareness level of workers, allowing participation of trade unions, and support of media and public opinion are necessary for improving the lot of the unorganised workers.