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  1. 1. Informal SectorInformal Sector Protecting the vulnerable: Providing social welfare to the informal sector workers Aakriti Chaudhari, Abhishek Shrivastava, Arjun Gupta, Arvind Chhikara, Soumabha Pal Indian School of Business, Mohali Campus
  2. 2. 90% of the Indian workforce engaged in the informal sector with no legislative rights Marginalized Easily uprooted in Agriculture: landless labourers, small farmers, traditional artisans, animal husbandry Industry: workers in brick- kilns, construction, beedi- making, incense stick Challenges faced by unorganized sector Snapshot of the Indian Informal Sector Easily uprooted in search of seasonal jobs Illiterate and poor Irregularly and low paid Work in unsafe conditions and exploited No social security or provision of credit, bank loans Harassed by one and all artisans, animal husbandry Services: workers in local transport, shops, domestic servants, community services like street cleaning, street vendors, garbage collectors Small Workshops: shoe makers, garment makers and embroiderers At Home: garment workers artisans or craft producers On Rivers, Ponds, Lakes, and Oceans: fishermen, shippers
  3. 3. Steps taken in the Welfare of the Informal Sector • Following articles of the Indian Constitution mandate the provision of social welfare to the workers in the informal sector: • 38 (securing a social order for the promotion of welfare of the people), 39 (certain principles of policy), 41 (right to work, education and public assistance in certain cases), 42 (just and human conditions of work and maternity relief), 43 (living wage etc.) • National Commission of Enterprises in the Unorganized Sector (NCEUS) recommended separate consideration for agriculture and non-agriculture and prescribed minimum standard of work and wages, safe work environment, job security, etc. • The Government of India passed the Unorganized Workers Social Security Act in 2008 to provide social welfare to the unorganized sector Constitutional Provisions and NCEUS • Provisions • Registration (at district level) of workers in informal sector. Registered workers will be entitled to PF, injury benefits, housing, educational schemes for children, skill up gradation, etc. Also broadly covers Health and life insurance, old age protection • Formation of National and State Level Social Security Boards to advise the government • Schemes under this act to be funded by state and/or central government • Criticisms • Act does not prescribe minimum wage and working conditions for unorganized sector workers • National or state boards only have an advisory role, no real executive powers • Prerogative of state governments to set up state level boards (only Chattisgarh, West Bengal, Assam and Karnataka have state boards) • Segmented unorganized sector as above or below poverty line, failed to address the unique demands of each major sector, particularly agriculture • No provisions for financing support for the sector (pensions, microfinance) Unorganized Workers Social Security Act – 2008
  4. 4. Rural to Urban Migration : A Key Issue Migration of agricultural labor to informal sector in urban areas (Problem of Marginal Farmers and Informal labor in the agricultural sector, fisheries, forestry) Fragmentation of landholdings Inefficiencies of production, transportation and distribution Minimal credit from institutional sources 80% of farmers hold only 39% of agricultural land Issues Overloading of urban infrastructure and holding capacity of urban areas (Urban Informal sector : street vendors, domestic workers, rickshaw pullers) Creation of agricultural cooperatives for pooling land resources and farm mechanization Creation of credit cooperatives for financial support to marginal farmers Creation of distribution and marketing cooperatives Incentivize private sector to set up irrigation facilities and processing units in agricultural dependent areas. Solutions
  5. 5. Steps for the government implement a cooperative model in the primary sector informal sector – an example from the agricultural sector Identify Location for creation of first cooperative and key stakeholders including NGOs, Panchayat, State Government, Marginal Farmers, Landowners, Laborers ,local representatives, private sector Identify sources of funding for NGOs , advocacy groups and setting up of infrastructure Collaborate with NGOs and media to raise awareness about workers rights, resource consolidation and cooperatives Inform workers of their right to unionize and minimum wage lawsInform workers of their right to unionize and minimum wage laws Collaborate with marginal farmers, landowners and agricultural laborers to implement formation of farm, marketing and distribution cooperatives and farm mechanization Collaborate and incentivize private sector to set up infrastructure facilities like irrigation and farm machines Set yearly targets for production for each cooperative Institutionalize a monitoring and feedback system at the cooperative level constituting representative members from each farmer/laborer category Create and enforce policies to ensure workers rights
  6. 6. Challenges • Resistance from communities such as landowners, employers, contractors to reforms • Indifference from stakeholders • Increased rights of informal sector workers might increase hostility among groups (traffic policemen and street vendors) Social challenges include • Providing minimum wage by employer who are themselves barely making ends meet is difficult • Loss of employment for marginal laborers, farmers, distributors and transporters with increased efficiencies Economic challenges • Loss of employment for marginal laborers, farmers, distributors and transporters with increased efficiencies • Increased pressure on public funds for benefits and facilities provision; • Government will need to prioritize funding and allocate resources to the informal sector; could resist • Informal sector does not have a strong voice both in rural and urban areas; inadequate political representation • Caste conflicts in rural areas among marginal farmers and laborers • Corruption Political • Redressal time taken by court to resolve legal issues • Minimum wage regulations for each category within the informal sector need to be set at the local level • Consolidation of land holdings will affect ownership of property • Appropriate penalties for defaulters need to outlined and detailed Legal
  7. 7. Mitigation Large scale communication and media campaign at the national level Engaging the private sector for rural development in setting up infrastructure for cooperatives Identifying additional employment opportunities in cottage, small and medium industries for those who could lose employment in agricultural sector Awareness workshops in workplaces, RWAs, and schools to raise awareness about the informal sector Creation of advocacy groups with NGOs and civil rights lawyers Conducting workshops among government stakeholders and public servants to sensitize them about the issue Engaging the international community and national/ state departments Ministry of Labor, Agriculture, Urban Development, Human Resource Development , Housing and Urban Poverty Alleviation, Commerce
  8. 8. Proposed Solution “There’s no single pill to cure all maladies” Our solution: broad, yet focused on major industries in the unorganized sector Involve NGOs and volunteers to help set up registration and facilitation centers to implement schemes under the Act (for e.g. GIZ in Karnataka) Agriculture: land consolidation, cooperati ve societies, micro finance Educate the workers about benefits of long term savings (Pension funds, NSC, PPF, FDs) and allow multiple people to contribute to a single fund. The idea is to make the people self sustainable. Create unions to give the informal workers a voice sustainable. Despite its criticisms, Unorganized Sector Social Security Act is a step in the right direction. Major challenge for states that’s hindering implementation of the Act: how to begin? First step is registration of the workers in the informal sector: Data Collection
  9. 9. Data Collection : A Key Challenge Workers in the informal sector are marginalized and do not get their share of rights and are often exploited and mistreatedThe Problem Key Reasons Lack of proper statistics No organized unions Insufficient Awareness Excessive Migration •~90% of the workforce and ~50% of national product comprises informal sector •However, proper assessment of this segment’s interests is a major challenge as there are no proper statistics regarding the number engaged in such activities nationwide • Thus ,building such a database is a necessary step for solving any and every employability issue for this sector. • Another key reason is that the workers do not have a proper voice for themselves due to lack of unions • Challenges in the formation of the same involve legal challenges as many of these workers are outside the legal framework. • Also, the fact that all these workers are scattered and mobile makes it a hard task to organize them into unions.
  10. 10. Our Solution : Key Points Our solution encapsulates use of existing government infrastructure along with a few salient points in order to effectively implement and solve the problem of employability in the informal sector Key Stakeholders NGO’s District Authorities Central Government Use of Existing Resources Key Implementation Points •The provision of UID cards across the country can be used to effectively gather information about workers in the informal sect or. •Funds for this exercise can be generated through allocation of ~4-5% of ward councilor's budget in the region where the solution is being implemented • Additionally, NGO’s should be made responsible for this process as it directly aligns with their objectives of effectively serving the marginalized sections. •The implementation process is to be carried out as follows : Select a suitable area for a pilot project to be carried out •Earmark 4-5% of the budget of the ward councilor of the area for data collection •Publicize the data collection process through distribution of pamphlets by NGO’s operating in the area •Involve volunteers from these NGO’s to encourage the informal workers to come to offices setup for data collection purposes • Once, the data collection process is carried out, use majority of the funds allocated towards increasing awareness among these sections of their rights NGO’s Authorities Government
  11. 11. Impact of the solution Criteria to measure the impact of the solution •Reduction in number of workers below the poverty line •Number of informal sector workers registered. •Number of licenses distributed to entrepreneurial categories like street vending Scalability of the solution •In urban areas : Pilot conducted in a city with high visibility and political willingness will be most replicable •In rural areas : Pilot conducted in a village or ward where Sustainability and Monitoring •The project can become suistainable only if the initial actions are carried out with success •Independent NGOs which are not involved in the data collection process should carrylike street vending •Reduction in average number of hours worked among those employed •Increase in number of reported grievances and those closed with satisfactory results •Percentage of budget allocation for informal sector related activities, benefits •Enactment of policies and benchmarks at the local level to improve the condition of workers at the local level in a village or ward where citizens demand reform and local representatives are willing to implement the solution to ensure success collection process should carry out regular inspections and monitor the progress.
  12. 12. References • • • ecurityAct2008.pdf • •• • : • travail/documents/publication/wcms_155951.pdf