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Organizing The Unorganized, An Opportunity In Crisis

It is an opportune & critical time to build and evolve this platform and roll it out pan India. It needs to be done on a mission mode and the timelines should be in days and weeks and not months and years.

Photo Credit : Reuters


The World Bank Group recently said, coronavirus (COVID-19) is a crisis like no other the world has faced estimating that the pandemic could push about 49 million people into extreme poverty in 2020. A large share of the new poor will be concentrated in countries that are already struggling will increase with estimated 16 million in South Asia. 

With 90% of our people working in the informal economy, India is grappling with a herculean task of protecting these workers, their livelihoods & households. One does need to congratulate the Government for all the timely interventions & support and what most see as a proactive action to suppress the potential health disaster, something that is reflected in the overwhelming approval rating of the Prime Minister.

Having said that the economic challenge is possibly a challenge that would be more difficult to address. The disaster has brought to centre stage the colossal underinvestment India has made in key areas of social policies, labour reforms, support systems and convergence of all these efforts.

In this article, I want to talk about data (which we often call the new oil). I opine that one of the reasons we are unable to create a targeted response (for the most impacted segment – migrant labour) is that India lacks a robust system of credible, updated and relevant data. This is perhaps most pronounced for unorganized labour. 

We still don’t have any clear answers to the questions around the size and scale of informal or unorganized labour workforce. Just so that we are clear, an informal or unorganized sector worker can be the one who – (i) is contributing to family work or has his/her own informal sector enterprise (ii) doesn’t have a formal contract with employer, (iii) is involved in casual seasonal work/self-work without fixed salary, (iv) is working with an employer who is not registered with the government and doesn’t pay tax. While there are many other definitions, but the ones mentioned above cover most of the workers in the sector. 

These workers are hotel staff, drivers, construction workers, domestic workers, potters, agriculture workers, rag pickers, street vendors and so on. The list just goes on, but one thing is for sure, we have all seen them and they have impacted our lives in a very positive way and contribute to every sector that contributes to our GDP. 

While everyone agrees that most of Indian workforce today works in the informal or unorganized sector, but absence of a national database or a single platform makes it difficult to identify them and understand the exact and accurate size. The Economic Survey of 2018-19 says that almost 93% of the total workforce in India is informal. On the other hand, Niti Aayog's “Strategy for New India at 75”, released in November 2018, says: "by some estimates, India's informal sector employs approximately 85% of all workers". Thus, estimates and numbers vary widely.

Let us take one of the categories of informal workers - Building and Other Construction Workers. Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act of 1996 (BOCW) and the BOCW Welfare Cess Act of 1996, are two key Acts that provide for a welfare fund created by levying a cess of 1-2% of the cost of construction incurred by an employer, applicable to any establishment employing 10 or more workers and to projects costing more than Rs 10 lakh. The States, through their respective State Building and Other Construction Workers Welfare Boards, constituted under BOCW Act, need to utilize the cess fund in terms of Section 22 of BOCW Act, 1996. The benefits include pension, assistance in case of accident, housing loan, education, group insurance premia, medical expenses, maternity benefits, and so on. According to Ministry of Labour and Employment, as on 30th Sep 2018, an amount of Rs. 45,473 Cr was collected by various States/UTs, out of which only Rs. 17,591 Cr (mere 38.6%) was spent while Rs. 27,882 remained unspent. So, even with the availability of funds, the spending on them has been low due to lack of a database or platform identifying these workers. 

While the Central and State Governments have provisioned various social schemes, relief measures, minimum wage protocols, health insurance and various other benefits, there is a need to maximise the reach and impact. In the current scenario it is not just difficult for the Government to create an estimate of the number workers in the Informal sector, but actually identify each member of this informal workforce uniquely, consistently and keep the information up to date. Today, no such single database exists and hence the impact of all Government support to this sector of workers is minimal. Creating this database has been challenging for successive governments as the informal workforce works without a contract, change jobs over short periods of time, there is seasonality in their jobs and there is a large number of migrant labours. While Government of India had initiated a project few years back to create a “single unified sanitised database” and assign a ten-digit UWIN (Unorganised Workers Identification Number) to every worker, however, we have not seen the progress that is visible. A few days back we also heard about a database of migrant workers being populated across the country. 

What we now need is a focussed approach on ONE National Portal for Unorganised, Informal and Migrant Workers with uniformity, accessibility and portability across States to support and reach the estimated 40 Crore workers in India’s unorganised sector. Labour Welfare is in the Concurrent List as per the Seventh Schedule of the Constitution and therefore both Central and State Governments need to participate in sync to make this a success. 

The National portal would act as a single platform for all unorganized and informal workers with a comprehensive database of people, skills, sectors and labour markets enabling evidence-based decision & policy making. The portal would enable a). Registration of all Unorganized and Informal workers through Aadhaar based eKYC, including details of their profession and skill set. Registration process has to be carried out near the workplace of the worker also ensuring compensating for any loss of wages on account of being away from work for registering on the portal. b). Benefit Management through Aadhaar based authentication that enables Direct Benefit Transfer for various schemes including Jan Dhan, Ayushman Bharat and many others. c). Skilling and Livelihood Enhancement by enabling skill assessments and training facilitation for jobs with Indian as well as international employers.

An ideal approach to implement this platform will be a mix of Centralised and Decentralised mechanisms. National standards for worker categories, job codes, data requirement will need to be designed and formalised at the Central level, while the data capture will have to happen in decentralised ways all culminating into one Comprehensive Platform for unorganised workforce in the Country. The documentation need should be simple and minimal so as to enable easier and hassle-free registration. It will be absolutely necessary to onboard and work alongside multiple Ministries (e.g. the MSME ministry may enable connecting with companies under their aegis), Nodal Agencies, State Government Departments, Trade Unions, Industry Bodies, NGOs to enable faster capture of data at distributed levels to roll up the data at a national level. 

It is an opportune & critical time to build and evolve this platform and roll it out pan India. It needs to be done on a mission mode and the timelines should be in days and weeks and not months and years. The rollout needs to be in a comprehensive and cooperative way between States and Central Government. We definitely owe it to all our informal sector workers to enable them to lead a better life. And the time to act is NOW!!

(The author has been assisted by his colleague Purva Chaddha, Vice President)

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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Devroop Dhar

Devroop is a cofounder and Managing Director with Primus Partners, an India focused Consulting and Professional Services firm themed on the unique concept of Idea Realization. He has 17 years of professional experience of having worked with various large Consulting firms in the past and is an alumnus of IIM Kozhikode.

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