The sorry plight of the labour in India’s unorganised sector, which consists of almost 93 per cent of the country’s workforce, is well known.  Moreover, there is enough evidence to suggest that the new economic policy regime since the early 1990s has had little in terms of positive dispensation either through underlying macroeconomic processes or add-on public policy initiatives.  Collapse in the employment opportunities in the aggregate, in spite of the emergence of some new avenues, has been widely commented upon as among the most dismal outcomes during the reform era.  Also, the worsening social security, in an already dismal context, has assumed further significance. The growing restructuring of the economy and the intensification of the reform process can only accentuate many of these negative tendencies.

Protection is not Charity

Given such a backdrop, the need for some protection to this sector can hardly be overstated. Any substantive intervention to ameliorate the conditions of work and workers’ welfare in the unorganised sector is a welcome step. The Unorganised Sector Workers‘ Bill 2004 has been viewed by several commentators as a significant effort with a progressive orientation.  It appears to have a comprehensive sweep covering the entire unorganised sector and encompasses a wide reach including regulation of working hours, payment of wages in accordance with the Minimum Wages Act 1948, remuneration for overtime, payment of bonus, gratuity, maternity benefits and compensation for injury.  It promises to put in place a number of schemes to ensure safety, social security and welfare of the workers.  The Bill proposes constitution of a Central Workers’ Welfare Board as well as State Boards, and envisages setting up of workers’ facilitation centers for registration of workers and employers in the unorganised sector.  Such centers are supposed to educate the workers about the various provisions being contemplated and their rights.  For the implementation of the schemes proposed under the Bill, a welfare fund is to be created, to which the workers and the employers each contribute 5 per cent of the wages, and the contribution of the central government will be 2.5 per cent of the wages; in case where employers are not identifiable, the appropriate state governments would be required to contribute the employers’ share.  The schedule of employment falling under the purview of the proposed legislation lists 40 economic activities and covers a wide range.

Devil in Detail

Thus, clearly, the proposed Bill appears to be well intentioned with a substantial outreach.  In fact in many ways, the proposed legislation bears a close resemblance to those applicable to factories and enterprises under the Factories Act, including the clause of penalty for contravention of the provisions of the Bill. However, there are several devils in the detail, which give the impression that the Bill in its present form is on a slippery terrain at best and hardly a way forward. The most obvious hole in the proposed legislation is that it does not appear to have given adequate attention to the messy structural features of the unorganised sector.  As per the National Sample Survey estimates in 1999-2000, the unorganised sector consists of 370 million workers, of which close to 240 million were engaged in agriculture, 40 million in manufacturing, and the remaining in trade, construction and a variety of other services.  Each one of these broad heads is characterised by a variety of labour arrangements as well as significant structural differences.  Moreover, an overwhelming majority of these workers across the sectors are casual, footloose labour, sometimes traversing long distances and working in multiple locations, which cut across state boundaries. It is difficult to believe that the net would be cast wide enough to include them and mechanisms put in place in the near foreseeable future so as to provide coverage to such workers under the proposed Bill.

The enforcement of the provisions in the proposed Bill is unlikely to go beyond a segment of informal workers in the formal sector, which is a very small fraction of the workforce.  It is also worth noting here that there are definitional issues – relating to unorganised sector, employer and employees, which require lot more clarity and amplification.

The idea of establishing a single welfare board at the central and state levels may again mean falling into avoidable bureaucratic trap.  It is clear that the top-heavy arrangements often lead to poor quality services, corruption and non-responsiveness.  Hence it is worthwhile to think in terms of using innovatively the already existing institutions or constitutionally mandated structures of local level governance to facilitate realisation of the objectives envisaged in the draft Bill.  Given our history of relatively less ambitious legislations in the past (e.g. Minimum Wages Act) and the functioning of the corresponding administrative structures and state institutions, it would be a Herculean task to convince the workers that top-heavy interventions may have anything positive for them; they can hardly be faulted for their skepticism.  In such a climate, persuading those on the margins of survival to part with a portion of their meager earnings may be a non-starter, if not an unwarranted imposition. However, despite all the problems and difficulties of the draft Bill, the idea itself is an extremely important one and it is critical to work out the logistics to take it forward.