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Unorganised Workers

Provision of social security to the unorganised workers is currently receiving the urgent attention of the central government and some of the state governments. This paper, based on a large sample of unorganised workers - construction workers, domestic workers and agricultural labourers - from Karnataka, presents indices of their economic conditions and deprivation to show how inadequate it is to use the below poverty line criterion for providing benefits to unorganised sector workers. The priority social security needs are analysed to show the diversity within and across sectors, and to review the policy measures - existing and those on the anvil.

Unorganised Workers Deprivation, Social Security Needs, Policy Implications

Provision of social security to the unorganised workers is currently receiving the urgent attention of the central government and some of the state governments. This paper, based on a large sample of unorganised workers – construction workers, domestic workers and agricultural labourers – from Karnataka, presents indices of their economic conditions and deprivation to show how inadequate it is to use the below poverty line criterion for providing benefits to unorganised sector workers. The priority social security needs are analysed to show the diversity within and across sectors, and to review the policy measures – existing and those on the anvil.


I Introduction

norganised workers form over 90 per cent of India’s workforce. The prevailing trends in employment in the organised sector indicate that this proportion is unlikely to decline over the coming years and could even increase. Downsizing of the government and emergence of e-governance would have the effect of shrinking the base as well as the superstructure of the administrative pyramid. Public sector units would have to reduce their surplus staff in the course of implementing measures to modernise and become globally competitive. Labour reforms and technologies promoting growth without proportionate increase in employment would restrict employment growth in the organised private sector. There are already indications that some of the employment growth in the organised sector – like expanding employment in call centres and transfer of functions like security, maintenance of buildings and gardens, etc, to outside contractors – resembles the unorganised sector in working conditions, wage levels, security of employment and social security benefits. The overall effects of these trends would be particularly adverse at the lowest levels in the employment structure in the organised sector which has so far been absorbing the upwardly mobile among the unorganised workers like first literates, neoliterates, and trainees of programmes like Training Rural Youth for Self-Employment (TRYSEM). One must also mention here the uncertain – some may even say discouraging – prospects for small-scale and village industries combining labour intensity with competitiveness in the market.

Given the continuing predominance of the unorganised workers in the workforce in the emerging scenario, their skills, efficiency, wages, working conditions and welfare should figure high in the policy agenda oriented towards accelerated growth in a globalising economy. Without substantial improvements in these parameters, the goal of reaching the status of a developed economy would remain a mirage for India. It is not a coincidence that during the last decade or so, the central government as well as some state governments have recognised this need and are formulating legislations to meet it. However, it is not clear that these efforts are guided by a perspective recognising adequately the scale and complexity of the tasks involved in improving the conditions of unorganised workers. This is a vast uncharted area between the anti-poverty programmes with which we have considerable experience and the strategies and tactics adopted by organised and unionised workers, of which, again, there is a fairly long history of evolution and adaptation. The anti-poverty programmes depend on the initiative and resources of the government with the poor remaining relatively passive. These programmes have not moved much beyond ad hoc relief measures. At the other end, the organised workers, allied with political parties, use the tools of collective bargaining and strikes vis-à-vis their employers to protect and improve their economic conditions. The middle ground between the two needs to be explored carefully to think out a strategy appropriate to its conditions. It is helpful to consider three broad types for this purpose. First, there are sections among unorganised workers, which, with some support from the government, non-government organisations (NGOs) and political parties, could get organised enough to learn and adapt the tools used by the organised workers to improve their conditions. Second, there are those with a strong and growing demand for their services but where the worker-employer nexus does not provide enough room for mechanisms like collective bargaining which work well in the organised sector. The third type, numerically predominant among unorganised workers, covers those in low-productivity sectors with widespread casualisation of labour and with employers as dispersed and poor as the workers. Here, the approach would have to be similar to that of anti-poverty programmes forming part of a broad strategy to develop the sector as a whole and to provide equitable benefits of development to the workers as well as employers. This threefold typology is only illustrative but still useful enough for a first look at the middle area of unorganised workers mentioned above.

This paper is based on the data covering 910 households belonging to three sub-sectors of unorganised workers – construction workers (CW) and domestic workers (DW) in urban areas and agricultural labourers (AL) in rural areas – selected as representative of the three types described above. The urban areas and villages selected for the study were located in four

Economic and Political Weekly May 13, 2006 districts in Karnataka – Mysore, Dakshina Kannada, Bangalore and Gulbarga.

Section II provides indicative measures of deprivations suffered by the worker households in the three sub-sectors. These have been conceptualised in terms of three indices. The Livelihood Security Index (LIVS) is based on access to the public distribution system (PDS), access to land, adequacy of employment and dependence on moneylenders for essential consumption. The Human Development Index (HDI) is based on schooling of children, literacy status of adults and access to health facilities. The Poor Life-style Index (LS) is based on type of house, access to drinking water and balanced diet. These indices take values between 0 and 100. The norm underlying the indices is the economic status of the lowest category in the organised sector, viz, class IV government employees (peons, delivery boys, etc), which is taken as 100. In other words, we propose that the livelihood security, the opportunities for human development and the life-style of this stratum in the organised sector would be a reasonable norm to assess the economic status and poverty of the unorganised worker. We call this the Lowest Organised Sector Worker (LOSW) norm. Classifications, gradings and their nomenclatures used in this paper are with reference to this norm. The deviations of index values from 100 are interpreted as gap between the unorganised workers and the lowest strata of employees in the organised sector. A significant insight we get is that even the unorganised workers above the poverty line are characterised by wide shortfalls when compared with the economic status of the lowest strata of employees in the organised sector. An important implication which follows is that poverty line is an inadequate measure of deprivations which needs to be removed if India is to move towards a just and equitable society. The poverty line is based on the premise that the major deprivation suffered by the poor is overt hunger. Our approach to measuring deprivation is based on a wider view, which is more appropriate and relevant at the present stage of India’s development and aspirations to acquire the status of a developed economy. It is, however, necessary to remember that the LOSW norm is still a minimal norm which would have to be upgraded as the economy moves up to ensure that both growth and equity improve and not one at the cost of the other.

Section III reports the priority social security needs as ranked by the workers, the expenditures incurred by them on workrelated accidents, sickness, etc, and the sources on which they depended to meet the expenses. This section III also presents the responses of workers to the question regarding their ability and willingness to pay for the security cover. However, it is also emphasised that meeting these needs cannot be left entirely to demand-driven markets for insurance services. In the case of the poorer among the unorganised workers, the burden would have to be shared by the government, and wherever feasible, by the employers. Section IV comments on the existing social security measures for unorganised workers and those on the anvil in the light of our findings.

II Deprivations

We begin this section with an explanation of the choice of the LOSW norm to assess the status of unorganised workers. The class IV category of workers in government offices and public sector undertakings (LOSW) form an interesting stratum differentiated from both middle classes above them and unorganised workers below. It is usual to treat them as a lowincome category relatively free from the consumerism of the middle classes and elite. It seems reasonable to assume that a typical LOSW would enjoy the following features of employment and working conditions.

  • Full employment security and post-retirement benefits
  • Emoluments adjusted for price rise
  • Provisions to meet health needs and crises occasioned by sickness
  • Access to modest but reasonable amenities like housing electricity, drinking water
  • Adequate food security and affordability of balanced diet
  • Ability to provide full schooling to children
  • Access to institutional finance for a variety of purposes
  • Work free from risks, hazards, drudgery
  • Reasonable working hours, adequate leave facilities.
  • It is easy to recognise this list as minimum entitlements of all workers in a democratic society wedded to the goal of social justice and equity. The three indices used by us – LIVS, HD and LS – are far too modest to cover these entitlements:

    The LIVS index assumes the value 100 for a household when it: (i) has adequate access to PDS; (ii) is under no compulsion to borrow from informal sources to purchase foodgrains; (iii) has access to owned land; (iv) has income greater than 125 per cent of poverty line income.

    The HD index assumes the value 100 for a household when:

    (i) All children in the age-group six to 10 years attend school regularly; (ii) All adults in the household have completed secondary schooling; (iii) the household has adequate access to PHC or equivalent health facilities.

    The LS index assumes the value 100 for a household when it: (i) has a pucca house; (ii) gets adequate drinking water throughout the year; (iii) can afford a diet consisting of meat (the unorganised workers belong to castes usually nonvegetarian in their food habits).

    It is clear that our indices would understate the gap between the unorganised worker and the LOSW getting the benefits mentioned earlier. It may also be mentioned here that the highest values of the three indices over the entire sample were 72 for LISV, 78 for HD and 67 for LS. Thus, the unorganised worker having more skills, and working much harder and for much longer hours than a LOSW, suffers from a miserably low economic status as compared to his or her cousin in the organised sector. What is presented in this section is a comparative analysis across the three sub-sectors and within each sub-sector to bring out the relative highs and lows within our large sample of unorganised workers.

    Table 1 provides some interesting clues to the forces behind the current status of the unorganised workers. First, keeping India’s historical background in mind, a significant feature shown by the table is that over 40 per cent of the unorganised workers belong to the SC and ST categories which have for centuries remained on the periphery of the mainstream high-caste society as victims of exploitation and neglect, with little opportunity to participate in the mainstream activities and opportunities for growth. The next important category is the service castes which were essential components of localised village economies of the past whose occupations and skills lost their relevance as the village economies disintegrated under external forces and pressures. It also needs to be noted that the unorganised workers are

    Economic and Political Weekly May 13, 2006

    almost wholly landless reflecting, very plausibly, their low historical status reinforced by the post-independence marginalisation of small owners in agriculture. The percentage of Below Poverty Line (BPL) households which is low among the construction workers, could be indicative of the “trickle down” effect of fast and sustained urban growth. The last two rows in the table suggest that the anti-poverty programmes – specifically housing programmes and efforts to promote school education – seem to have helped the unorganised workers. However, the overall message of Table 1 is that the post-independence growth and development have done little to free the unorganised workers from the accumulated burden they carry from the long historical past of discrimination, injustice and neglect.

    Despite the historical background that they share, it would be a serious mistake to treat the unorganised workers as a homogeneous group for the purpose of formulating strategy and programmes for their development. It is important to bear in mind that the numerically very large and widely dispersed group of unorganised workers could differ markedly in skills, caste and kinship networks, features of the communities in which they live and the speed with which and the extent to which they can cope with the challenges they face in their struggle for development. Owing to constraints of space and limitations of data, here, we focus only on the variations in economic status, which is a dimension important in itself as well as a proxy for other dimensions.

    The following three classificatory characteristics have been used for this purpose: First, on the basis of visible indicators of poverty observed by the field investigators, the households are classified into three groups: poor, very poor and near destitutes. Second, the income status is brought into the picture by a threefold grouping: +PLI: households with income more than 125 per cent of poverty line income (PLI); PLI: households with income between 75 per cent and 125 per cent of PLI income; and –PLI: households with income less than 75 per cent of PLI income. Third, in terms of asset ownership, the households are divided into four groups: those with negligible assets; those owning some assets but with total value less than Rs 1,000; those owning assets with total value between Rs 1,000 and Rs 5,000; and those owning assets more than Rs 5,000 in value.

    Table 2 is based on the visible indicators of poverty. In all the three sub-sectors, “very poor” is the modal category but domestic workers and agricultural labourers have significant number of “near destitutes” while construction workers have some presence in the category of “poor”. It is tempting in the light of Table 2 to rank the sub-sectors in the descending order: construction workers, domestic workers and agricultural labourers. Table 3, based on the poverty line (PL) norm, has similar ranking except that domestic workers rank lower than agricultural labourers. More relevant to note, Table 3 should serve as a caution against using PL norm in assessing the status and needs of unorganised workers. The PL norm came into vogue along with the dole type anti-poverty programmes. Judged by this norm, nearly two-thirds of the construction workers and nearly half of the agricultural labourers would be assessed as non-poor! Assessing the social security needs of unorganised workers and their other development needs requires a more appropriate and relevant norm like the LOSW norm used in this paper. Given the wide gap in economic conditions between the unorganised and organised workers, raising the former above the poverty line would, by itself, be a grossly inadequate step in meeting the needs of the unorganised workers.

    Since our data on value of assets are confined to consumer durables, not much can be read in Table 4. Taking Tables 2, 3 and 4 together, the proposition emerging clearly is that among the three sub-sectors, construction workers are ahead of the other two and that the domestic workers and agricultural labourers are relatively worse off. The agricultural labourers are practically assetless.

    Table 5 presents sub-sectorwise average values of the three indices. Underlying the three indices is a conceptualisation of the development process working in the following manner. The livelihood security motivates and enables a worker to invest in his/her own development – skills, education, health – which, in turn, improves income and human development. The enhanced income, livelihood security and human development provide the foundation for the enrichment of life-style – the ultimate goal of the development process – and an opportunity to work for a further round of the development process. An important feature of this process is the presence of threshold at each link. Improvements in livelihood security and income need to reach a critical level to have an impact on human development, which, in turn,

    Table 1: Key Household Indicators

    Key Indicators Categories of Workers (Per Cent) CW (301) DW (104) AL (505)

    BPL households 22 41 34 Landless households 88 95 94 SC/ST households 43 46 42 Backward caste households 16 13 11 Katcha households 16 13 27 Households where highest literate member has completed at least secondary school 80 75 68

    Notes: Figures in parentheses are total number of sample workers belonging to each category. CW = Construction workers, DW = Domestic workers, AL = Agricultural labourers.

    Table 2: Distribution of Households (Per Cent) by Visible Indicators of Poverty

    Categories of Workers Visible Indicators of Poverty Near Destitute Very Poor Poor
    Construction workers Domestic workers Agricultural labourers 9 23 27 63 70 65 28 7 8

    Table 3: Distribution of Households (Per Cent)by Income Categories

    Categories of Workers Income Categories – PLI PLI +PLI
    Construction workers Domestic workers Agricultural labourers 9 30 17 28 27 35 63 43 48

    Table 4: Distribution of Households (Per Cent) by Value of Assets

    Categories of Workers Value of Assets (in Rs)
    0 <1,000 1,000 – 5,000 >5,000
    Construction workers 13 32 13 42
    Domestic workers 31 32 7 30
    Agricultural labourers 42 47 2 9

    Economic and Political Weekly May 13, 2006 leads to an improvement in life-style after crossing a threshold. In other words, the mathematics of marginal improvements and smooth accumulation of incremental changes – a tool dear to economists – may not be applicable to the analyses of development processes. It also needs to be remembered that such processes resemble organic processes – like a baby growing from infancy to adulthood – which can get blocked or aborted in the absence of a supporting environment. We mention these points because the development process in the case of unorganised workers seems to be too weak to progress in a sustained manner. Viewed from this perspective, Table 5 could be taken as reflecting a truncated and blocked development process. What is noteworthy in the table is that the values range from 39 to 54 with only two values crossing 50. Considering that the development process in India has been in operation for nearly six decades, it seems reasonable to take Table 5 as indicative of the bypassing of the unorganised workers by the development process. There is also a hint in the table that improvements in education and health, which raise the human development index, have to remain in alignment with the other two indices. Except in the case of the CW, HD values are seen to be higher than LIVS and LS values. The tentative proposition we suggest is that the substantial investments made in education and health, while they improve human development, fail to bring about improvements in livelihood and life-style.

    Table 6 presents the LIVS, HD and LS index values by subsectors and categories by income (– PLI, PLI and +PLI). An interesting pattern can be seen in this table. The LIVS values show a substantial increase over income categories for all subsectors. This is only a clue, as the processes giving rise to the association between LIVS and income need to be identified. Further investigation would be needed to discover the manner in which the process works. A more interesting clue given by Table 6 is that the association between income on the one hand and HD and LS on the other is either absent or very weak. This could be due to the threshold factor mentioned above. When income increases occur at very low levels, they could remain below the threshold needed to raise HD and LS. These are very tentative propositions as the variations in Table 6 are crosssection variations at a given point in time and not variations over time. A table similar to Table 6 was also prepared for categories by visible indicators of poverty and by value of assets. This has not been included here as no consistent patterns of variation were seen in them.

    The following implications are suggested by our analysis of deprivations suffered by unorganised workers. The anti-poverty programmes based on PL norm are not, by themselves, adequate to meet the development needs of unorganised workers. In fact, any strategy to devise programmes for unorganised workers without major changes in the present mainstream economy and the processes of growth and development operating in it would be inadequate. The second major implication is that the unorganised workers and generally the poor and disadvantaged in the society need to have a role in policy-making as well as its implementation, monitoring and evaluation. These are the themes too large and complicated to be taken up here. If the panchayati raj institutions (PRI) model is implemented in letter and spirit, the ground level situation could considerably improve for the poor and disadvantaged. More concretely, the current efforts to devise social security measures for unorganised workers are commendable and need to be pursued with vigour and a sense of urgency. This theme is taken up in the final section of the paper. Equally important is the rationalisation and effective implementation of programmes for food security, employment guarantee, generation of skills, improvements in education and health facilities and making villages and urban slums more comfortable as residential and work places with better connectivity with centres of economic activities. It must be remembered that the poor and disadvantaged including the unorganised workers carry the major burden of distress caused by the failures of these programmes.

    III Provision of Social Security

    Unorganised workers receive low incomes that are also uneven and uncertain in their flow. This is typically the combination characterising the unorganised workers who desperately need social security cover but lack saving to make the necessary provisions. The needs could be grouped under three headings. First, unemployment in the sense of long gaps in income receipts which also reduces the total income received during a period; second, sudden and unexpected crises like accidents and sickness which can wipe out the meagre savings which an unorganised worker has and impose the burden of usurious loans which bind him/her to the moneylender and, third, the inevitable old age and death which overtake the unorganised worker before s/he makes any provision for them. Table 7 indicates the distribution of workers by the needs which were assigned the highest priority by them. In all the three sub-sectors, unemployment and old

    Table 5: Average Index Values

    Categories of Workers Indices
    Construction workers 48 48 44
    Domestic workers 40 50 42
    Agricultural labourers 43 50 39

    Table 6: Average LIVS, HD and LS Indices by Income Categories

    Categories of Workers Income Categories
    – PLI PLI + PLI
    Average LIVS Index
    Construction workers 28 38 56
    Domestic workers 27 38 51
    Agricultural labourers 29 40 51
    Average HD Index
    Construction workers 46 46 52
    Domestic workers 48 48 52
    Agricultural labourers 48 49 52
    Average LS Index
    Construction workers 41 42 45
    Domestic workers 42 43 41
    Agricultural labourers 37 39 40

    Table 7: Distribution of Workers (Per Cent) by Top Priority Given to Social Security Needs

    Categories of Workers Social Security Needs Sickness Employment Un-Old Age Death Injury employment

    Construction workers 13 24 31 26 6 Domestic workers 13 6 28 41 12 Agricultural labourers 11 7 36 39 7

    Economic and Political Weekly May 13, 2006

    age were ranked the highest by nearly 60 per cent or more of the workers. Clearly, programmes to provide social security to unorganised workers should be focused on these needs. However, caution is necessary in interpreting the relatively small number of workers assigning the highest rank to the other needs. Accidents and death may be rare events for the worker to worry about though this is not entirely true of the construction workers for whom injuries at workplace are not uncommon. It can be observed in Table 7 that nearly a quarter of them assigned the first rank to injury at workplace. As regards sickness, it is not unusual for those preoccupied with the struggle for survival to treat it as too minor an event to need prior provision. Often, workers simply continue with their usual routine when sick or depend on home remedies or self-medication. It is also possible that the workers believe that if adequate cover against unemployment and old age were available to them, they would have adequate means to get treatment when sick. The point is that the perceptions of the workers in this matter do need to be considered by the policymaker but the goal should be to work out a feasible package keeping as a norm the provisions made for the organised worker. For example, a reasonable cover against sickness should be provided to unorganised workers even if they assign a low rank to sickness. Their perceptions would be relevant not so much in fixing the norms as in taking decisions on sequencing of programmes and the element of subsidy to be provided in them to reduce the burden of payment to be made by the workers.

    Table 8 presents data on expenditures incurred by the workers owing to accidents at work place and work-related health problems. The reference period is one year preceding the date of interview of the worker. During this period, 18 per cent of the construction workers spent amounts ranging from Rs 1,700 to Rs 6,000 per reporting worker. About a half of them suffered from accidents and the rest from health-related problems. When related to all construction workers, the average amount spent adds up to Rs 621 (the sum of Rs 375, Rs 107 and Rs 139). Among the three sub-sectors, the construction workers seemed to have the greatest eligibility for social security arrangements similar to those provided for the organised workers. Not only were the expenses incurred over the period of a year quite high indicating capacity to pay but the contribution from the employers who could certainly contribute much more along with the government in a tripartite arrangement for providing social security to construction workers was also negligible. It is also possible that insurance companies could offer commercially viable policies which, at the same time, are attractive to workers. Borrowings from informal sources such as moneylenders accounted for nearly two-thirds of the expenses incurred by the construction workers (Table 9). They were also compelled to resort to the sale of assets to meet a part of these expenses. These are clear signs of financial distress caused by accidents and sickness. In the event of their being covered in institutionalised social security arrangement, not only would this distress be eliminated but the resulting savings could enhance the amounts they would be willing and able to contribute to enjoy the benefits of a cover against accidents and sickness.

    The position in this respect appears to be much weaker in the other two sub-sectors. Over a fifth of domestic workers reported expenses on health-related problems. The amounts spent were much lower than the construction workers. Considered along with their lower dependence on borrowings, possibly due to their poor rating with informal sources, it would be reasonable to interpret their situation as one of poor capacity to incur expenses when affected by health-related problems. Nearly half of their expenses were accounted for by help from friends, past savings and sale of assets. The position appears to be even weaker in the case of agricultural labourers as only 10 per cent among them – the lowest among all the three sub-sectors – reported expenses occasioned by accidents and health-related problems and the per worker amounts were the lowest across the three sub-sectors. Their dependence on borrowings was only 30 per cent – very likely for the same reason as in the case of domestic workers. Interestingly, employers met 10 per cent and 28 per cent, respectively, of expenses incurred by domestic workers and agricultural labourers. However, it is necessary to remember that the employers in these sub-sectors were mostly households, large in numbers, dispersed in location and not necessarily affluent enough to be the members of any tripartite arrangement. Thus, the indications are that any social security arrangement for these workers would have to be the responsibility of the government. There needs to be clarity about which government, central or state governments, carries the primary responsibility and how they cooperate in

    Table 9: Sources of Meeting the Expenditure (Per Cent)on Work-Related Risks

    Sources Categories of Workers

    Construction Domestic Agricultural Workers Workers Labourers

    Assistance from family and friends 16 20 21 Falling back on savings 10 18 17 Borrowing 65 43 30 Sale of assets 6 9 2 Employer covered expenses 3 10 28 Other 0 02

    Table 8: Types of Work-Related Risks and Average Expenditure

    Categories of Workers Per Cent Reporting Types of Risks Faced^ Average Expenditure Average Expenditure Risks Faced* (Per Cent) per Reporting Worker (in Rs) per Worker (in Rs)

    Construction workers 18 Accident at worksite = 53 3,895 375 Work-related health hazard = 35 1,690 107 Prolonged illness due to nature of work = 12 5,990 139

    Domestic workers 22 Health problems due to nature of work = 86 363 66 Prolonged illness = 14 1,167 34

    Agricultural labourers 10 Accident while using implements = 38 1,690 60 Health problems related to chemical use = 33 782 25 Prolonged illness = 15 1,250 17 Other = 14 890 12

    * The percentages in this column indicate the proportion of total workers in each category who reported having faced risks. ^ The percentages in this column are internal to those workers in each category who reported having faced risks.

    Economic and Political Weekly May 13, 2006 setting up a practicable system. Equally important, any system for domestic workers and agricultural labourers would have to involve NGOs and the workers’ own groups to deal with innumerable problems the system would face in providing adequate social security to them in a cost-effective manner. Another challenge that the system and the insurance companies face is to tap as fully as possible the contributions, which the workers can make. A somewhat surprising finding based on a direct question about their capacity and willingness to pay to obtain social security cover is that significant capacity exists in all the three sub-sectors (Table 10).

    However, the numbers of those unable to contribute are not insignificant. The approach would have to be two-pronged accommodating both types of workers. Thus, economic criteria would have to be combined with a deep sense of commitment to help the unorganised workers, particularly, categories like domestic workers and agricultural labourers whose social security needs have been grossly neglected so far.

    IV Social Security Schemes

    This section reviews the existing social security policies for the unorganised sector workers in the light of the findings of the paper. The central government intends to introduce the Unorganised Sector Workers’ Bill, 2005, in the 2005 winter session of the Parliament. We review the key provisions under this bill also to understand the extent to which they address the concerns expressed in this paper. Existing social security schemes: The existing social security policy for the unorganised workers includes a range of statesponsored schemes including pensions, maternity benefits, family benefits, etc. Four points are made below as a critique of the existing social security schemes:

    First, the main eligibility criterion for availing of the benefits under these schemes is the BPL criterion. This approach, as we have shown in this article, is grossly inadequate. Nearly 70 per cent of the sample households were found to have incomes above the BPL cut-off; yet, they faced severe vulnerabilities. The point that emerges from the paper is that a large proportion of unorganised workers obtain incomes above the official BPL cutpoint, and hence, would not be eligible for obtaining assistance from the existing schemes. This does not, however, mean that they do not need social security cover. Severe deprivations that the unorganised workers face with respect to livelihood, human development and poor life-style call for the extension of social security for all unorganised workers. The policy implication is, therefore, to modify or drop the BPL criterion while considering the provision of social security benefits for the unorganised workers.

    Second, not all the social security needs of the unorganised workers are covered by the existing schemes. The National Social Assistance Programme of the central government is divided into three schemes – old age pensions, maternity benefit and family benefit. Protection from non-availability of employment is in the form of rural employment generation programmes like the Sampoorna Grameen Rozgar Yojana (SGRY) and Swarnajanti Gram Swarojgar Yojana (SGSY), which, many studies show, have been poorly implemented. It is only recently that the central government has passed the National Rural Employment Guarantee Act, which imposes a legal responsibility on the state to guarantee at least 100 days of employment to those seeking it. There are no schemes of the central government to address the health and employment injury contingencies of the unorganised workers. It is necessary, therefore, to extend protection to the workers against all these contingencies.

    Third, the existing social security schemes are specific-purpose schemes and do not combine contingencies. Our findings show that the workers have preferences for an entire range of contingencies. The need is to come up with a package that combines two or more contingencies.

    Fourth, the existing schemes are based on an assumption that the unorganised sector workers cannot contribute towards their social security schemes, and most of them are in the form of doles. Exceptions are: the Janashree Bima Yojana and the Krishik Shramik Samajik Suraksha Yojana of the central government, which are contributory insurance schemes, but these are targeted only at the BPL households, and therefore inadequate. The findings of this paper show that workers are willing to make contributions towards their social security, which are far from insignificant. It would be important for social security schemes to mobilise these contributions. Implications for the legislation on unorganised sector workers: The key features of the Unorganised Sector Workers’ Bill, 2005, are:

    (1) Two criteria are put down to identify an unorganised worker

    – (a) the listing of occupations that fall under the unorganised sector, and (b) the worker (engaged in any of these occupations) whose salary does not exceed Rs 5,000 per month. There is also a mention in the bill of the “informal workers in the organised sector” being covered.

  • (2) The bill proposes to introduce a contributory social security scheme, whereby each worker will be registered and provided a social security number. Workers are expected to contribute Re 1 per day, as also the employers wherever identified. The government will contribute Rs 3 per day per worker, to be shared in the ratio of 3:1 by the central and state governments.1
  • (3) The implementation of the scheme is to be decentralised. Workers’ Facilitation Centres (WFCs) will be set up at the “local” levels2 and the main responsibilities of the WFCs will be registering the workers, providing them with social security numbers and cards, accepting contributions and disbursing benefits.
  • (4) The bill proposes to cover four contingencies – health, old age, maternity and death. Every unorganised worker is eligible to register himself/herself at the centres and avail of the benefits.
  • Table 10: Average Expenditure on Work-Related Risks andProportion of Workers Willing to Contribute More Than That

    Categories of Percentage Average Average Percentage Percentage Workers of Workers Expen-Expen-of Workers of Workers

    Reporting diture diture Willing to Willing to Expen-(Rs) per (Rs) per Contribute Contribute diture Reporting Worker More than More than

    Worker Average Rs 300 Expenditure per Worker

    Construction workers 18 3,469 634 59 90 Domestic workers 22 1,302 100 100 80 Agricultural labourers 10 473 124 92 69 All workers (910) 14 2,110 290 84.8 78.1

    Economic and Political Weekly May 13, 2006

    These features indicate that while the proposed bill addresses some of the shortcomings in the existing policy, it still suffers from the following grey areas:

    First, an important finding of the paper is that the degree of heterogeneity among the categories of unorganised workers is too important to be neglected. However, the bill continues to “lump” the various occupations. The definition of “unorganised worker” needs to be revisited. For one, the occupations listed in the annex of the bill is a list of the establishments belonging to occupations that would be categorised as being unorganised (except in the case of self-employed workers), and this list is not exhaustive. What then of the workers belonging to those occupations that do not feature on the list, who also earn less than Rs 5,000 per month? What also of the millions of involuntary unemployed?

    Second, the bill continues to use an income criterion similar to the BPL criterion. Although the cut-off monthly income of Rs 5,000 is perhaps more inclusive, it is more problematic considering the nature of the unorganised sector. Given that most of the workers under consideration are either wage-employed or self-employed, and do not have the guarantee of regular employment, such a criterion is presumptuous and quite meaningless. Presumptuous because it assumes that all workers are employed continuously throughout the year. Meaningless because except perhaps in the case of certain occupations where records of income are likely to be maintained, it is difficult to ascertain the monthly income of a majority of the unorganised sector workers.

    Third, the sector-specific needs of the workers are too important to be ignored and the bill needs to guard against treating the entire unorganised sector as one homogeneous unit with respect to this as well. For instance, we have observed that for the construction workers, the need for insurance against employment injury is significant given the nature of the work.3 This contingency is not covered under the benefits of the bill.

    Fourth, the heterogeneity in the contribution capacities (Table 10) calls for the combining of social assistance, subsidised schemes and fully contributory social security schemes, with an arrangement that those who can contribute are not eligible for fully subsidised social assistance. There are a few workers who stated that even basic needs are not met in their case, and hence, they cannot contribute. For this category, fully subsidised social assistance programmes are to be introduced. Around 22 per cent of the workers (30 per cent in the case of agricultural labourers) cannot contribute more than Rs 300 per annum towards their social security benefits. In the case of these workers, subsidised schemes are to be introduced. In contrast, around 90 per cent of the construction workers are willing to contribute much larger amounts, the average willingness to contribute among the construction workers being around Rs 1,100 per annum. Fully contributory schemes can be linked to private service providers such as insurance companies.

    Finally, despite the noble intentions of the policy-makers, two issues that have dogged most policies similar to the one being proposed are: (a) poor dissemination leading to poor awareness among the intended beneficiaries, and (b) the overlapping of new schemes with the existing ones, resulting in considerable chaos in the implementation. These need to be given importance to avoid piecemeal and haphazard implementation. To ensure the proper dissemination of the schemes and convergence of the proposed schemes with the existing ones, gram panchayats can be entrusted with the responsibility of registration of workers and implementation of schemes. Gram panchayats have comparative advantages in terms of information about worker needs, convergence of schemes as these are the implementing agencies for several existing schemes like pensions and they also enjoy constitutional status. The SHGs consisting of different categories of unorganised workers can be linked to gram panchayats.


    Provision of social security to unorganised workers is currently receiving urgent attention of the central and some of the state governments. Based on a large sample of unorganised workers

    – construction workers, domestic workers and agricultural labourers – from Karnataka, this paper analyses deprivations and priority social security needs. Although the paper is based on data collected from Karnataka, the emphasis is on findings and propositions of wider interest.

    By presenting indices of economic conditions and deprivations, the paper makes three points. First, there is considerable heterogeneity across and within the three sub-sectors of unorganised workers. It would be, therefore, a serious mistake to treat the unorganised sector as homogeneous for the purpose of formulating strategy and programmes for their development. Second, the BPL norm is inadequate in providing social security benefits to the unorganised workers. Third, the unorganised workers tend to be localised in the sense that improvements in their conditions need major infrastructural and related improvements in the villages/ urban localities in which they live.

    The need for social security benefits among the unorganised sector workers is pressing as their economic status is much lower than that of the lowest strata of employees in the organised sector. Reaching development to these workers is a challenging task, but not an impossible one. The approach would have to be a decentralised one beginning with modest and feasible social security measures as a part of broader strategy to bring the marginalised groups closer to the mainstream. rr;



    [This paper uses the data collected for the study, “Design and Management of Social Security Benefits for the Unorganised Workers in Karnataka”, undertaken by the Institute for Social and Economic Change, Bangalore, in collaboration with the department of labour, government of Karnataka, and the German Development Cooperation (GTZ). The authors thank the anonymous referee for their useful comments.]

    1 The financial implications of the scheme have also been worked out. An estimated 30 crore workers are estimated to be covered under this scheme, which implies an expenditure of around Rs 22,500 crore by the governments. Including the administrative and other costs, this amount is likely to be not more than 1 per cent of India’s GDP in 2004-05.

    2 What is meant by local level is yet unclear. According to the bill, the statelevel social security boards to be created will decide where these centres should be set up.

    3 Although there is a separate act pertaining to the needs of the construction workers according to which the employer is expected to provide for the employment injury benefits of the workers, this is enforced to some degree only with respect to relatively organised establishments, such as construction companies. The ordinary wage-earning construction worker employed by a contractor seldom enjoys such luxuries.

    Economic and Political Weekly May 13, 2006

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