Skip to main content

New labour reforms: What safety net for workers in urban informal economy?

By Arup Mitra, Mayumi Murayama* 

Considerable overlaps exist between rural and urban poverty through migration and employment in the informal economy. However, several of the low-income households have been residing in the urban space for a very long time and it would be misleading to interpret them as a fresh spill-over from the rural areas.
In fact, the elasticity of urban poverty with respect to rural poverty is very low. In spite of the fact that parts of the informal economy share close links with the formal sector, residual activities conducted on a large scale within the informal economy cannot be overlooked. Further, many of these low- income workers reside in slums and squatter settlements.
Rural transformation has not been accompanied by the growth of demand induced activities. So, the rapid population movement from the rural space occurs in relation to the large cities, if not all the urban areas. But an exclusionary urban policy is not the right method of reducing the city burden; rather creating amenities and empowering the poor to take advantage of the agglomeration economies should be a cost reducing way of generating inclusive growth.
Several of the low-income households in cities create a great deal of value addition though they earn much less than the contribution they make. Infrastructure and income support measures are indeed required for their well-being.
The recent pandemic and the subsequent lockdown wiped away the sources of livelihood, particularly in the urban space, and more so in large cities, which comprised many migrants. The return migration occurred, raising the vulnerability of the workers. The complete lockdown forced millions of workers to become openly unemployed and could explain considerable overlaps between unemployment and poverty.
There has been a severe stress in the rural sector: those who have returned to the rural areas could not get absorbed in gainful activities as the rural non-farm sector hardly comprises demand induced activities. On the other hand, the agricultural sector has already been in a state of excess-supplies of labour.
The importance of public provisioning of work opportunities in the urban context must be felt at the policy circles. Though some of the jobs in the urban informal economy help reduce poverty, the recent pandemic has affected those processes miserably.
The implementation of rural employment programmes does bring respite to the rural population including the migrants who returned to the rural areas following the lockdown. But it is not sufficient because many urban low income households have foregone their rural contacts and cannot return to the rural areas despite the shrinking employment prospects in the urban areas.
What safety-nets can be provided to the workers in the urban informal economy to create sustainable sources of livelihood is an important question. Identifying the gainful activities within the informal economy, removing the operational constraints and information asymmetry, providing credit and marketing assistance and improving the existing practices of business sub-contracting and regulating the exploitative role of the labour contractors are some of the few obvious suggestions.
The lack of legal security of space for the operation of the informal enterprises is a major problem which has resulted in poor marketing of goods and profitability. The rent seeking attitude of the government and the local government employees will have to be ended. The employability of the workers through training and skill formation will facilitate upward mobility. Like the rural employment guarantee programmes the urban areas also need to receive allocations for such initiatives.
How the exploitative roles of the business and labour contractors can be changed is a critical question
Though the recent reforms of labour codes say goodbye to the inspection raj in the organised/formal sector, how the exploitative roles of the business and labour contractors can be changed is a critical question. On the whole, both the rural non-farm and urban informal sectors will require special attention of the policy makers and for the post pandemic and lockdown period sincere efforts will have to pursued to develop these sectors and create potentiality for sustainable livelihood.
The recent labour reforms have a connection to the constitution of Second National Commission on Labour by Atal Bihar Vajpayee’s government in 1999. There are 44 Central laws and more than 100 state laws. About 100 changes were suggested by the committee of which 74 have been amended. The Centre plans to subsume 44 Central laws into four broad codes on
  1. wages;
  2. industrial relations (restriction on strikes, only units employing more than 300 workers will have to take permission from the government for retrenchment); 
  3. social security (reskilling fund to be used for reskilling of workers retrenched; National Social Security Board to recommend to the Central government for formulating schemes for different sections of unorganised sector workers, gig workers, platform workers; aggregators to contribute 1 to 2 per cent of the annual turnover); and
  4. occupational safety, health and working conditions (OSH): (migrant workers earning up to 18,000 a month will receive journey allowance etc. to be paid by the employers).
While a large number of practical problems are associated with each of these codes, some stand out sharply. For example, how the fourth code is to be implemented, what mechanisms will be at place to tackle the major deviations, what provisions will be made for dwelling conditions of the workers to improve, whether the slums will receive protective measures and amenities to lead a healthy life are some of the key questions.
---
*Arup Mitra is Professor, Institute of Economic Growth, Delhi; Mayumi Murayama is Executive Vice President, Institute of Developing Economies, Japan External Trade Organisation (IDE-JETRO)

Comments

Anonymous said…
India will never change. The politician or the crony industrialist. The only way to change this entire story is if a law is enacted to put all employees on a hire and fire basis with no increment story or retirement benefits story. Then the country may realize the unemployment story of india. Then all workers - office or factory or farmers will work together for an employees benefit. Today the city based people think they are gods gift to mankind.

TRENDING

'Enough evidence' in Indian tradition to support legal basis for same-sex marriage

By Iyce Malhotra, Joseph Mathai, Sandeep Chachra*  The ongoing hearing in the Supreme Court on same-sex marriage provides space for much-needed conversations on issues that have hitherto remained “invisible” or engaged with patriarchal locker room humour. We must recognize that people with diverse sexualities and complex gender identities have faced discrimination, stigma and decades of oppression. Their issues have mainly remained buried in dominant social discourse, and many view them with deep insecurities.

Buddhist shrines were 'massively destroyed' by Brahmanical rulers: Historian DN Jha

Nalanda mahavihara By Our Representative Prominent historian DN Jha, an expert in India's ancient and medieval past, in his new book , "Against the Grain: Notes on Identity, Intolerance and History", in a sharp critique of "Hindutva ideologues", who look at the ancient period of Indian history as "a golden age marked by social harmony, devoid of any religious violence", has said, "Demolition and desecration of rival religious establishments, and the appropriation of their idols, was not uncommon in India before the advent of Islam".

Savarkar 'criminally betrayed' Netaji and his INA by siding with the British rulers

By Shamsul Islam* RSS-BJP rulers of India have been trying to show off as great fans of Netaji. But Indians must know what role ideological parents of today's RSS/BJP played against Netaji and Indian National Army (INA). The Hindu Mahasabha and RSS which always had prominent lawyers on their rolls made no attempt to defend the INA accused at Red Fort trials.

Victim of communal violence, Christians in Manipur want Church leadership to speak up

By Fr Cedric Prakash SJ*  The first eleven days of May 2023 have, in many ways, been a defining period of Indian history! Plenty has happened in a rapid-fire stream of events. Ironically, each one of them are indicators of how crimes and the criminalisation of society has become the ‘new norm’; these include, the May Day rallies with a focus on the four labour codes which are patently against the rights of workers; the U S Commission on International Religious Freedom (USCIRF) released its Annual Report on 1 May stating that conditions for religious freedom in India “continued to worsen in 2022”; the continued protest by the Indian women wrestlers at Jantar Mantar for the expulsion of the chief of the Indian Wrestlers Federation on very serious allegations; the Elections in Karnataka on 10 May (with communalism and corruption as the mainstay); the release of the fake, derogative and insensitive film ‘The Kerala Story’; the release of World Free Press Index on 3 May which places India

Swami Vivekananda's views on caste and sexuality were 'painfully' regressive

By Bhaskar Sur* Swami Vivekananda now belongs more to the modern Hindu mythology than reality. It makes a daunting job to discover the real human being who knew unemployment, humiliation of losing a teaching job for 'incompetence', longed in vain for the bliss of a happy conjugal life only to suffer the consequent frustration.

Delhi HC rules in favour of retired Air Force officer 'overcharged' for Covid treatment

By Rosamma Thomas*  In a decision of May 22, 2023, the Delhi High Court ruled in favour of petitioner Group Captain Suresh Khanna who was under treatment at CK Birla Hospital, Gurugram, between April 28 and May 5, 2021, for a period of eight days, for Covid-19 pneumonia. The petitioner had to pay Rs 3,55,286 as treatment costs, but the Ex-Servicemen Contributory Health Scheme (ECHS) only reimbursed him for Rs 1,83,748, on the basis of government-approved rates. 

Unlike other revolutionaries, Hindutva icon wrote 5 mercy petitions to British masters

By Shamsul Islam*  The Hindutva icon VD Savarkar of the RSS-BJP rulers of India submitted not one, two,or three but five mercy petitions to the British masters! Savarkarites argue: “There are no evidences to prove that Savarkar collaborated with the British for his release from jail. In fact, his appeal for release was a ruse. He was well aware of the political developments outside and wanted to be part of it. So he kept requesting for his release. But the British authorities did not trust him a bit” (YD Phadke, ‘A complex Hero’, "The Indian Expres"s, August 31, 2004)

Polygamy in India "down" in 45 yrs: Muslims' from 5.7 to 2.55%, Hindus' 5.8 to 1.77%, "common" in SCs, STs

By Rajiv Shah Amidst All India Muslim Personal Law Board (AIMPLB) justifying polygamy, saying it “meets social and moral needs and the provision for it stems from concern and sympathy for women”, facts suggest the the practice is down from 5.7 per cent of Muslim families in 1961 to 2.55 per cent in 2006.

India joining US sponsored trade pillar to hurt Indian farmers, 'promote' GM seeds, food

Counterview Desk  As many as 32 civil society organisations (CSOs), in a letter to Union Commerce Minister Piyush Goyal on the Indo-Pacific Economic Framework (IPEF) and India joining the trade pillar, have said that its provisions will allow the US to ensure a more favourable regulatory regime “for enhancing its exports of genetically modified (GM) seeds and GM food”, underlining, it will “significantly hurt the livelihoods of Indian farmers.”

Modi govt 'wholly untrustworthy' on Covid data, censored criticism on pandemic: Lancet

By Rajiv Shah*   One of the world’s most prestigious health journals, brought out from England, has sharply criticised the Narendra Modi government for being “wholly untrustworthy on Covid-19 health data”, stating, the “official government figures place deaths at more than 530 000, while WHO excess death estimates for 2020 and 2021 are near 4·7 million.”