By S. Irudaya Rajan*, Professor, Centre for Development Studies
The informal economy in India accounts for more than 90 per cent of the workforce and accommodates 50 per cent of the country’s GDP with a large proportion of the socio-economically underprivileged workforce. Unorganized workers, according to NCEUS, “consist of those working in the unorganized sector or households, excluding regular workers with social security benefits provided by the employers and the workers in the formal sector without any employment and social security benefits provided by the employers”. Moreover, a large number of these workers are self- employed, which is made up of casual work and particularly in rural and semi-urban areas. Owing to its highly casual nature, most of India’s self–employed or migrant workers are not job creators and have poor earnings. According to PLFS 2017-18, only four percent of the self–employed are job creators while the rest run small enterprises or stalls of their own or with the help of unpaid family members (which often involves the female members of the household (about 65 per cent), who earn less than 5,000 rupees per month, and 90 per cent had monthly earnings of less than rupees 10,000).
A number of these workers lack of any social or economic safety net. This was especially exemplified during the ongoing COVID-19 crisis where self-employed and informal workers, who are made up significantly of migrant workers, are bereft of family welfare support or health benefits and left without recourse to provide during lockdown (betrayed by employers) except by trying to return home (reverse migration) at all costs – often with tragic consequences.
The simple act of registering the workers either at the place of origin or destination or both can help ameliorate this situation. The registration of workers provides a number of benefits from a policy-making standpoint as it provides a clear picture of the situation these workers face and informs on the ways to improve it.
The Current Scenario of Worker Registration
Labour legislation in India has attempted to address the problem through various measures ranging from providing incentives for registration to punitive measures for non-compliance. The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979 Act directs the employers who employ migrant workers to register their establishments and prescribes punitive measures for those violating the norms. The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 provides an identity card on registration and covers accident, educational, financial assistance, maternity benefits and group insurance schemes for the registered building workers.
The most recent one in this lineage, the Unorganized Workers’ Social Security Act, 2008 converges the benefits of up to 10 social security schemes including the Indira Gandhi National Old Age Pension Scheme, the Aam Admi Bima Yojana and the Rashtriya Swasthya Bima Yojana covering a range of benefits including life and disability cover, old age protection and health and maternity benefits for the registered unorganized workers. Workers can self-declare and self-register as unorganised workers and are issued a card for the same.
However, these legislations are notable for their complete lack of enforcement and lack of awareness among the target population of their benefits. Additionally, the Occupational Safety, Health and Working Conditions Code 2019 introduced in the Lok Sabha last year subsumes 13 different social security schemes targeted towards the unorganized workers and makes Aadhaar mandatory for availing the benefits. With the dilution of already existing legislations, which were ineffective, to begin with, the effectiveness of this code in achieving its stated objectives remains to be seen.
Centralized registration of workers is not a new concept in the developing world. The most famous example of this is the Hukou system of China. The Hukou system requires a registry be maintained of either rural or urban workers where details of the person, spouses and educational attainment are recorded. This creates a sort of internal passport, or “hukou”. Thus, rural and urban hukous need to be purchased in order to move from one region to another in order to access a number of benefits such as old age pension schemes, subsidized healthcare and education, subsidized food grains etc. (Afridi et al., 2015). However, this forms a sort of imposition and such an imposition leads to creating barriers to labour mobility. The purchasing of more valuable urban hukous rather expensive and taxing, leading to a large number of workers outside the Hukou system and forming a “ghost population” of workers, and leading to urban-rural inequality and a number of people without access to basic social security schemes (Boffy-Ramirez and Moon, 2018).
The example of the Hukou shows that despite the advantages of creating a streamlined process for the provision of social security and an estimate of workers through a centralized system, an imposed programme only causes barriers. For such a system to truly work, and to ensure maximum registration, workers need to self-register and believe they can get tangible benefits with little barriers to attaining them. This can be done with the introduction of, for instance, a Migrant Smart Card, which will record a worker’s place of origin and allow him/her to swipe throughout the country using special kiosks. As the migrant swipes, he/she automatically gets registered as such and can easily using the details to avails of the various social security programmes, similar to those which have been mentioned in the Unorganised Workers Social Security Act, 2008. This scheme can also include easy access to finance on site schemes to enable access to formal financial institutions and easy credit options in order to start their own businesses.
As mentioned before, however, to ensure maximum registration, this card should provide material benefits with little barriers to their procurement and usage. This card should function much like how we use a credit card, such as a visa or master card. People apply for these cards voluntarily knowing that they will get not only credit lines for easy payments, but also a number of discounts and extra services at a number of commercial establishments such as shops, airports, travel destinations, restaurants and so on. These services are also portable over regions and time and thus ensure mobility with little hassle.
These Smart Cards, in addition to promising social security and health benefits, can also create a central database that would aid the government in planning for a huge section of the population (introduction of inter-state migration corridors). These smart cards, universally centralized by the Labour Ministry (or new Ministry called, Ministry of Internal Migration), would contain the socio-economic details and could be linked to their Aadhaar or ration card along with their employer’s details and work contracts. This provides the triple advantages of offering social protection, enabling more mobility in inter-state migration which is currently low due to a number of reasons and maintaining a real time data of migrant workers on the move at the time of crisis.
There have been notable examples of incentive-based registration of workers in India as well. The Kerala state government in the past issued a multi-purpose smart card for the migrant workers from other states and included with it a health insurance scheme through the Comprehensive Health Insurance Agency of Kerala (CHIAK). Likewise, the State governments of Punjab and Gujarat with a very wide diaspora distributed globally provide special Non-Resident of Gujarat cards, in the case of Gujarat and Non- Resident Punjabi Privilege cards in Punjab. Both schemes, in addition to certifying an individual as genuine, also provide support and assistance to all the cardholders at NRG centres established by the government. The schemes have incentivised voluntary enrolment by providing a slew of benefits including additional support for medical services, accommodation, business opportunities and tourism guidance and also discounts on several products and services.
However, it is important to note that this method will have to through a centralized database, which will ensure its smooth functioning and credibility, which is vital to ensure the workers register voluntarily. The card is a novel scheme, meant only for migrants and their families, which can be initially piloted in certain regions and later, depending on its success in getting people to register, can be linked to various other identifications such as the Aadhar card, ration card, if needed.
Along with this, many awareness programmes need to be held to ensure the targeted beneficiaries are able to seek and avail the social security schemes and benefits. Various stakeholders including state and central governments, employers and trade unions need to be actively disseminating this information. Moreover, in times of crises, enrolment of unorganized workers with state authorities can be encouraged by providing monetary benefits through direct cash transfer. In addition to providing immediate financial assistance, this would also allow the government in estimating the number of migrants, informal and self-employed workers in each state, providing a picture that is lacking today.
*S. Irudaya Rajan is Professor at the Centre for Development Studies (CDS), Kerala. He is Chair of the KNOMAD Thematic group on internal migration and urbanization, managed by the World Bank. He is editor of the annual series ‘India Migration Report’ and the founder editor-in-chief of the Journal Migration and Development. Professor Rajan led the Tamil Nadu Migration, 2015 and Kerala Migration Survey 2018 and also Member of the Kerala Government Expert Committee on Covid-19.
This is part of a series of guest posts on social security for self-employed workers in the informal economy organised by the Social Protection Initiative at Dvara Research. All views are those of the author and do not necessarily reflect those of Dvara Research.