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  1. 1. PROVIDING SOCIAL WELFARE TO INFORMAL SECTOR WORKERS Animesh Lahiri Anurag Savarnya Apoorv Jain Bollam Vinay Kumar Sumit Karnani IIT KHARAGPUR
  2. 2. 3% 97% Distribution of Workforce Organized Workforce Unorganized Workforce PROBLEM STATEMENT • From the central point: Significant chunk of the economy invisible:  No tax collection  No institutional support  No benchmark • From the unorganized sector:  Poor living and working conditions.  No social security.  Inadequate employment, low earnings, low health and educational status.  Lack of basic services such as first aid, shortage of clean drinking water and proper sanitation facilities.  Labourers in the unorganized sector are often trapped in a vicious cycle, starting work as children and continuing well into their old age. What needs to be done: • Identifying the unorganized workforce. • Providing a safety and social security to them. • Make them a part of central economy. • Increase India’s labour productivity. • Provide schemes and programs for their benefit.
  3. 3. PROPOSED SOLUTION Approach :  Conducted a survey at IIT Kharagpur for the proposed solution.  Conclusion drawn :  Even at IIT kharagpur which is considered to be the most organized institute has every 5 out of 7 workers in the unorganized sector.
  4. 4. PARAMETERS OF SURVEY AT IIT KHARAGPUR Variables Category Reasons for a particular profession Terms and conditions of job Wages Discrimination on basis of gender Domestic Workers  Only job available near their residence  Economic compulsion  No other skill  No defined rules  Increment in wages/fringe benefits only when working for long period  Negotiable  Wages not enough to satisfy bare minimum needs  No discrimination  Women are more preferred against men for household jobs Construction Workers  No land  No other skills  No other options  Depend upon local contractors for work  No regularity or security of job  Disparity in wages and in nature of work  Ill-treatment and harassment at hands of contractors Garment Workers  Low middle class who want white collar jobs  Can work from home  No significant information  Work based,(commission)  Negotiable /Arbitrary  No incidence reported Petty Traders /Vendors  Find pride in being self- employed  Self-employed  Uncertain  No incidence reported Sales Persons  Economic compulsion  More dignified  Very tedious and also involves risks of personal  Mostly work based,(commission)  No incidence reported
  5. 5. PROPOSED MODEL FOR IIT KHARAGPUR  The unorganized workforce of IIT Kharagpur is divided into 5 Unions namely:  Union of Domestic workers  Union of Construction workers  Union of Garment workers  Union of Vendors  Union of Sales person • The workforce will have to register to the corresponding union and a proper registration ID(each union will have a different ID) will be given to them. • The different Unions will be responsible for deciding the work hour and availability of the workforce. • The money collected as the pension fund in the different unions will be send to the “the Area level body” that is the IIT Kharagpur level body which will be under the Medinipur West district level body. • The Medinipur West district body will be under Kolkata state level body which is connected to the Central level body.
  6. 6. Unorganized workforce In terms of occupation In terms of specially distressed categories Others In terms of Service categories In terms of Nature of employment Small and marginal farmers, landless agricultural labourers, share croppers, fishermen, those engaged in animal husbandry, labelling and packing, building and construction workers, leather workers, weavers, artisans, salt workers, workers in brick kilns and stone quarries, workers in saw mills, oil mills etc. Toddy tappers, Scavengers, Carriers of head loads, Drivers of animal driven vehicles, Loaders and unloaders etc. There exists a large section of unorganized labour force such as cobblers, Hamals, Handicraft artisans, Handloom weavers, Lady tailors, Physically handicapped self employed persons, Rickshaw pullers, Auto drivers, Sericulture workers, Carpenters, Tannery workers, Power loom workers and Urban poor etc. Attached agricultural labourers, bonded labourers, migrant workers, contract and casual labourers. Midwives, Domestic workers, Fishermen and women, Barbers, Vegetable and fruit vendors, News paper vendors etc.
  7. 7. IMPACTOF THE SOLUTION  The pension funds will lead to increase in national income.  Social security to the unorganized workforce.  Incentives like pension, exposure to the different government schemes will be provided that will ensure the financial stability to the workforce even when they are not be able to work physically.  The people at the grass root level will be able to enjoy the benefits of various government schemes because of this decentralization.  Proper infrastructure like supply of electricity and water will be provided by the government at their work stations.  Comprehensive social security coverage coverage entailing Life Insurance, Health Insurance and Old Age Pension for Unorganized Sector Workers.  Encouraging private sector participation in providing social security, including old age pension  Legislation under consideration to enable private sector companies to sell insurance and pension products in the form of deferred annuity, annuity with return of purchase price and the like.
  8. 8. METHODOLOGY USED TO COME TO PROPOSED SOLUTION  Studied the Unorganized Sector using Data Development Analysis to compute technical scores using Linear Programming Model.  “The technical efficiency of a firm is a comparative measure of how well it actually processes inputs to achieve its outputs, as compared to its maximum potential for doing so, as represented by its production possibility frontier” (Barros and Mascarenhas, 2005).  Data Development Analysis was done using the following parameters:  Gross Value added by Unorganized Workforce at IIT Kharagpur  Capital Generated by Unorganized Workforce at IIT Kharagpur  Labour by Unorganized Workforce at IIT Kharagpur  Factor by which the output bundle can be expanded relative to the frontier constructed with input-output bundle of other best performing firm.  The detailed study and paper showinng calculations would be shown at final round of Manthan at Delhi.
  9. 9. CHALLENGES AND MITIGATION FACTORS  As the population of unorganized workforce is quite huge, it becomes a challenge to apply the proposed solution.  It is observed that though the share of agriculture, forestry & logging and fishing sector is decreasing over time, still it has highest share in unorganized sector’s NDP.  It is observed that principal agent problem exists in informal sector. To solve this problem and make hired labour more productive, institutional intervention is required in terms of the implementation of certain rules and regulation regarding the incentives of the hired labourer.  Secondly, lack of market is one of the main reasons of the informal firms inefficiency. Market certainty will make the informal firms more efficient. So diversification of production (i.e., production of those commodities which have high demand both in national and international markets) may solve the problem.  Thirdly, it is observed that perennial firms are less efficient than casual and seasonal firms because they are used to produce their product both in the peak and lean seasons. In the lean season, on the one hand demand for the product is very less and on the other hand inputs are relatively costly.
  10. 10. Appendix: 1. Informal Sector in India: Contribution, Growth and Efficiency (Indrajit Bairagya, Institute for social and economic change,Bangalore) 2. Contribution of the Unorganized sector to GDP (Report of the Sub Committee of a NCEUS Task Force) 3. Measuring the unorganized sector in India by A. C. Kulshreshtha