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Gravest shortcoming of labour welfare: 90% unorganised workers outside social security

By Bharat Dogra* 

Although almost two decades have passed since the Second Labour Commission submitted its report, some crucial aspects of its recommendations are still very relevant particularly in the context of the need for umbrella legislation for unorganized sector workers. This is of great significance for the welfare of nearly 270 million workers, including same of the poorest people in India. One of the gravest shortcomings of labour welfare in India has been that while as many as 90 per cent of the workers are in the unorganised sector, most of the welfare laws have not been applicable to them.
In some cases this happened because large sections of unorganised sector workers were outside the purview of these laws, and in other cases because in practice the laws could not be applied to unorganised sector workers.
Enacting protective umbrella legislation which can apply to all sections of unorganised workers is not easy as a very wide range of works and occupations have to be covered. Some of these leading occupations are - agricultural workers, forest workers, rickshaw pullers, vendors, domestic workers, home based workers, construction workers, scavengers and rag pickers, wholesale/retail trade workers and numerous others. Nevertheless, it is important to have a comprehensive law that provides at least some protection for all unorganised workers as the alternative is to have separate laws for too many categories of workers - a task which is even more complicated and time-consuming.
As welfare and social security laws will lose all credibility and utility if the overwhelming majority of workers do not derive any benefits from them, various reports of the labour ministry have been emphasising the need for comprehensive protective legislation for unorganised sector workers, but despite this this work of crucial significance was delayed for too long. Finally, the Second National Commission on Labour (NCL) was asked, as perhaps its most significant task, to propose an umbrella type legislation for workers in the unorganised sector.
This legislation and the system that is to be built around it, the commission was told, should assure at least a minimum protection and welfare to workers in the unorganised sector.
The NCL presented the latest available data to show huge number of workers involved in the unorganised sector -
a) Out of the total work force of 314 million, 286 million are main workers. Out of the 286 million main workers, 259 million are in the unorganised sector.
b) In relative terms, unorganised labour accounts for 90.6% of the total workers.
c) Out of 191 million workers engaged in agriculture, forestry, fishery and plantations, 190 million (99.2 %) are in the unorganised sector.
d) Out of the 28.92 million workers in the manufacturing sector, 21.62 million (75%) are in the unorganised sector.
e) In building and construction, 78% of workers are in the unorganised sector.
f) In trade and commerce, 98% are unorganised workers.
g) In transport, storage and communication, there are 4.9 million (61.5 %) unorganised workers.
Elsewhere the second N.C.L. report says that, in a sense, all workers who are not covered by the existing Social Security Laws like Employees State Insurance Act, Employees Provident Fund and Misc. Provisions Act., Payment of Gratuity Act and Maternity Benefit Act, can be considered as part of the unorganised sector.
The gender aspect is also important. As the NCL report points out, proportionately the unorganised component is higher among the female work force compared to what prevails among males. This trend of increasing women labour in the unorganised sector is growing with the casualization of labour, and the increasing number of employments coming into the home-based sector.
The NCL Report then explained why it is important to have new legislation to cover various categories of unorganised workers, and the scope and aims of this legislation:
"Most of the labour laws that we have today, are relevant only to the organised sector. Furthermore, the laws in the statute book that relate to some sectors of the unorganised sector are too inadequate to give protection or welfare for the vast majority of workers in the unorganised sector. The schemes of Welfare Funds and Welfare Boards are also confined to a few states and specific categories of workers in the unorganised sector. It is in this context that we have to look at the need for new legislation that will have general applicability and will provide essential protection.
"The way to extend legal protection to the employments and vocations in the unorganised sector is not by legislating separately for each employment or vocation. This will only multiply the number of laws when one of our goals is to simplify and reduce the number of existing laws. It is, therefore, logical and wise to enact an umbrella type of law for the unorganised sector which would guarantee a minimum of protection and welfare to all workers in the unorganised sector, and would leave it open to the Government to bring in special laws for different employments or sub-sectors if experience indicates the need for it, provided that the sub-sectorial laws do not take away any of the basic rights or the access to social security that the umbrella legislation provides. Such an arrangement will give full respect to the federal nature of our Constitution as well as the different needs of diverse groups of workers. It will also be open to Governments to repeal existing sub-sector laws or merge existing (welfare) Boards with the Boards or Funds that we are suggesting in the Umbrella Legislation.
"The unorganised sector accounts for over 90% of our work force. Their percentage is likely to increase. They are as entitled to protection and welfare/security as workers in the organized sector, who are often described today as the privileged sector of the work force. The laws that exist today hardly touch the work force in the Unorganised Sector. It is therefore necessary to enact new legislation to cover workers in this sector. There is a wide variety of employments in this sector. Conditions vary, levels of organisation vary. The nature of the relations with employers varies. There is an expanding sector of those who are self-employed, or are on contract, and work from homes. It is difficult to have separate laws for each employment. This will only result in endless multiplication of laws, and hence there is need for one umbrella-type legislation that covers whatever is basic and common, and leaves room for supplementary legislation or rules where specific areas demand special attention. But we cannot overlook the fact that all such legislation is enacted with the twin purposes of extending protection, and welfare/security.
“Protection includes security of employment, identification of minimum wages or fair wages, making the minimum known to workers, ensuring the full payment of these wages without unauthorized deductions, and a machinery at the threshold of his/her work place to enforce the law on minimum wages and working conditions. Welfare/security has to include medical services, compensation for injury, insurance, provident fund and pension benefit etc. We have also tried to keep in view the need to ensure that the machinery proposed for enforcement of benefits is not vitiated by distance, centralization, top heavy structure, inaccessibility, multiplication of administrative set-ups etc.
"In specific terms, the objectives of the legislation will have to be:
a) To obtain recognition for all workers in the unorganised sector.
b) To ensure a minimum level of economic security to these workers.
c) To ensure a minimum level of social security to these workers.
d) To facilitate the removal of the poverty of these workers.
e) To ensure future opportunities for children by eliminating child labour.
f) To encourage formation of membership based organisations of workers including Trade Unions.
g) To ensure representation of workers through their organisations in local and national economic decision making.
"The Social Security measures for the Unorganised Workers should include:
a. Health Care
b. Maternity and early Child Care
c. Provident Fund Benefits
d. Family Benefits
e. Amenities/Benefits including Housing, Drinking Water, Sanitation, etc.
f. Compensation of Employment Injury benefits (including invalidity benefits and survivor's or dependent's benefits)
g. Retirement and post-retirement benefits (Gratuity, Pension and Family Pension)
h. Some cover in cases of loss of earning or the capacity to earn
i. Besides these, there should be schemes, either independent or in association with the Government, Welfare Bodies, NGOs and Social Organisations, for the upgradation of skills and the education of workers, and for the elimination of child labour, forced labour, and unfair labour relations and practices."
After holding discussion with a large number of concerned persons and considering the recommendations of a study group on this issue, the National Commission on Labour suggested a draft of this legislation in which apex boards for unorganised sector workers will be created in all states by the respective state governments. This apex board in consultation with the state government will create state welfare boards for various categories of workers. The State Board in consultation with district panchayats will also constitute district boards.
In this draft Worker Facilitation Centres (WFCs) are local centres of activities of the Board co-ordinated by respective District Boards. The District Board in consultation with local panchayats will constitute them, WFCs will work in panchayats and areas of workers' concentration. Workers will be enrolled by the WFC and welfare benefits to them will also be provided by WFCs.
The Central and State Boards will raise funds by way of contribution, cess, assistance, grant from Government through budget allocation or donations from employment providers, private sector, workers and other legally permitted sources.
The Board will encourage the growth and formation of organisations of workers. A legal minimum wage will be fixed without any gender discrimination. Non-payment of minimum wage shall be punishable. Women workers will be given due representation at all levels.
The Central and State Government shall order dearness allowance on minimum wage linked to All India Consumer Price Index Number at least once in every six months and where the dearness allowance is ordered on the above lines the minimum wages shall be revised once in five years and in other cases once in two years.
Workers will be covered by social protection measures as may be prescribed by the Central or State Government. The worker shall be eligible to social security protection, namely, old age, invalidity, group insurance, sickness, medical and employment injury benefits. The woman worker shall be eligible for maternity benefits and childcare/day-care facility while on work. The local authorities will create and invest their resources to develop better living conditions for the workers by providing amenities like housing, safe drinking water, sanitation etc. The State Board shall encourage alternate insurance for employment injury to cover employer's liability under Workmen's Compensation Act.
Work shall be permitted only in safe and healthy environment and working places. The State Government may frame appropriate rules in this regard. Workers shall have sufficient rest, leisure, holidays, leave and optimal working hours. Workers shall be given one holiday in each week.
Following the submission of the report of the National Labour Commission, the Ministry of Labour organised a National Seminar on Unorganised Sector Labour in November 2002. This seminar set up a technical group on legislative aspects. According to the recommendations of the Technical Group on Umbrella Legislation for unorganised sector:
"The approach of the legislation both for the Unorganised Sector and the Agricultural workers should not merely be welfare oriented but also provide for regulation of employment, provision of minimum employment earnings guarantee wherever practicable, as well as a role of the workers for proper enforcement of the law and the schemes. Attempt must be made to ensure workers participation in formulation and implementation of the scheme.
“The role of the Central Government should be generally to provide leadership and coordination. The scheme should be generally operated at the State and at the Union Territory levels. The Central Government has to play an important role in the collection of funds and the disbursement auditing of the funds through various state boards."
Provision must be made in the law for payment of minimum wages. There should be a National Minimum Wage below which no state level Minimum Wage can go.
The proposed law shall be in addition to other laws which are in the statute books such as Trade Unions Act, Workmen's Compensation Act, Equal Remuneration Act and so on. Therefore, there is no need for this law for reproduce those provisions.
"Without prejudice to the conclusions of the other group dealing with social security, it was felt that minimum levels of social security particularly in the areas of health, maternity benefits, disability and old age benefits must be provided, if necessary through public assistance also. The existing schemes of ESI and Provident Fund may also be extended to this sector. Different provisions may be necessary for the self-employed and appropriate scale of contribution for benefits will have to be worked out.
“Considering that this sector represents 92% of the work force, it will require that an adequate percentage of the revenue of the Central and State Governments be set apart for providing social security to this category of workers and their families. A system of levy of cess on activities, coupled with contributions both from the employers and the workers would also be an additional sources of funding.
“The burden of proof of making payment to the workers wherever there are dues must be on the employers. This will also ensure proper maintenance of record. At the same time care must be taken to see that employers are not over-burdened with multiplicity of forms and registers. A single register and single annual return will suffice for the purposes of law enforcement and of statistics.
“Representation of both the employers and the trade unions must be equal in number on all bodies. Representation of NGOs, expert, academics and other interest groups should also be given in adequate numbers."
The Union Ministry of Labour then circulated various revised versions of the draft of legislation for unorganised workers. A critique of these by the National Campaign Committee for Unorganised Sector Workers (NCC-USW) said that significant provisions to ensure socio-economic security to workers suggested by the NCL as well as the Technical Committee have been ignored in these drafts. This review said: 
"The Bill must clearly contain the elements of social security and welfare that will be provided at the minimum level. Besides, the Bill must ensure provisions for regulation of employment and minimum guarantee of earning calculated on the principle of need based minimum wage. The Bill must also provide for levy or cess, up to a maximum limit, on the activities in which the workers are engaged. Considering that more than 50% of the work force is self-employed, the Bill must specifically indicate the pattern of contributions that such self-employed persons should make to the cess.
“Unless these are specifically spelt out in the law, it will lack the necessary elements of legislative policy and will amount to abdication of that policy to delegated legislation. Mere establishment of Boards at the Central and State level will not be enough. As the law is for the benefit of the workers, who with their families and dependants will constitute almost the entire participants, workers and their organizations must get the pride of place in the law.
“As women account for a significant share of the work force in the unorganised sector, more particularly in home based activities and the like, there must be at least one third representation to women workers at all levels. Domestic service must be included as one of the occupations to be covered by the law, the law must have clear and unambiguous provisions for maternity benefits (on the lines of the Maternity Benefit Act 1961) and equally importantly for creches at commercial places where the women workers can leave their 0-6 years old children to be taken care of, in their absence, by trained functionaries in a clean and healthy environment.
“Where bulk of the funds of a Board is generated through a levy or Cess on the activity, then the nature or activity and its inherent capacity to bear a level of levy/Cess become important. These considerations may result in some of the established funds being affluent compared to others, resulting in different levels of welfare and social security protections that the workers can receive. However, a pattern of public assistance could be evolved through which disparities in benefits can be minimized."
Although new national level legislation for unorganised workers in badly needed, at the same time the fact remain that several legislations already exist for some categories of workers, particularly in a few states like Kerala, Tamil Nadu and Maharashtra. Several welfare funds have already been created. Therefore there should be a provision in the new legislation that nothing present in it should adversely affect the operation of any existing law providing more/better benefits to any category of unorganised workers.
Thus it is possible to have umbrella legislation from a broad range of employments and occupations in the unorganised sector. However one important school of thought says that there should be separate legislation for agricultural (and related) workers. If this suggestion is accepted, then we'll need two separate laws.
Clearly progress on this front is possible only by much stronger organization efforts among unorganized sector workers and linking these with a wider mobilization. As the NLC noted:
"The laws or welfare systems that we propose for them cannot be effective unless they themselves are conscious of the laws, and acquire the strength to ensure that laws are brought into force; unless there are effective means to implement, monitor and provide quick redress, unless breaches of the law are punished with deterrent penalties, and unless the organs of public opinion and movements and organisations mount vigil, and intercede to ensure that the provisions of the laws and welfare systems are acted upon."
Of course in these two decades the situation has changed in important ways and now the official agenda is heavily in terms of the labour codes while the trade unions have been opposing these. Nevertheless the recommendation of the second NCL in terms of an umbrella legislation for unorganized sector workers remains important and interest in this should be revived.
*Honorary convener, Campaign to Save Earth Now; has received the Ganesh Shankar Vidyarthi Award for Labour Reporting and brought out several booklets in support of labour struggles, apart from contributing many articles and reports on this issue



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