Ø       Self-employment in informal enterprises (unregistered or unincorporated enterprises, including employers, own account operators and unpaid family workers in informal enterprises)

Ø       Paid employment in informal jobs (for informal enterprises, formal enterprises, households or no fixed employer) including casual labourers, industrial outworkers, industrial workers, contract workers and unprotected temporary and part-time workers

Almost in tune with these developments in the labour market, the concept of social security is broadening to a concept of social protection. Traditionally, social security referred to nine core contingencies related to long-term health care, illness, employment injury, invalidity, unemployment, maternity, old age, death of the breadwinner and child care, and was provided by the government to the formal workers. These contingences appeared due to random shocks and led to either complete or substantial loss of income. Traditional social security is based on the assumption that most members of society have achieved a satisfactory living standard, have access to regular work, and social security was only required to meet contingencies.

Informal workers in the economy today face not just income insecurity but vulnerability due to high exposure to risks given the conditions under which they live and work. They also tend to have low levels of income and are less likely to save for contingencies. They have less access to formal mechanisms of managing risk such as insurance, pensions and social assistance.  The term social protection is a broader concept that covers the risks and economic insecurity faced by such workers. Besides the state, a wide range of actors are involved in the production of social protection.

National Rural Employment Guarantee Act

The National Rural Employment Guarantee (NREG) Act caters to only one segment of the informal workforce, the casual workers in rural areas. It is a self-selective targeted programme mainly addressing the wage workers who are closer to the poverty line due to the nature of the hard manual labour involved in these works. The Act provides only for unskilled labour; it naturally excludes even the rural workers who are skilled in either artisanal or other activities. Thus, even among the paid employees in informal jobs, only a small segment is likely to access employment provided under the NREG. The self-employed workers in informal enterprises are likely to be excluded unless they are in dire poverty and opt to undertake such manual work.

The concept of a minimum income needs to be developed for the informal workers so as to take care of income insecurity. In the case of wage workers, the Minimum Wages Act only partly fulfills this requirement, because without a stipulation for the minimum days of work, the minimum wages cannot guarantee minimum incomes. The National Rural Employment Guarantee Act also falls short of this requirement since only 100 days are guaranteed to the family and this is not sufficient to pull the family out of poverty (See Kannan, K.P. 2005. `Linking Guarantee to Human Development`, Economic and Political Weekly, 40(42), October 15).

Unorganized Sector Workers Bills

The National Commission for Enterprises in the Unorganised Sector has addressed the question of social protection to informal workers through two Bills: Unorganised Sector Social Security Workers Bill, 2005 and the Unorganised Sector Workers (Conditions of Work and Livelihood Promotion) Bill, 2005 (www.nceuis.nic.in). These should be seen as complementary to the NREG Act and address the issue of social protection in a broader sense to all segments of the informal workforce. The advantage of a Bill to be legislated in Parliament is that, this works as a legal entitlement and does not allow the government to change or close the scheme without the necessary legislative amendment.

The proposed Unorganised Sector Social Security Workers Bill, 2005, addresses a universal social security programme. The core social security concerns that are addressed in a national programme for the unorganized sector workers comprise the following national minimum social security benefits:

l Old age pension to all workers above the age of 60 years

l Health insurance for self, spouse and children below the age of 18 years

l Maternity benefits for women workers or spouse of men workers

l Insurance to cover death and disability arising out of accidents

Many schemes of the Central and State governments currently address these issues of social security in a piecemeal fashion. However, without legislative backing, these schemes tend to get withdrawn as and when the concerned government faces a crunch of resources. There are also a number of Welfare Boards set up for various segments of the workforce. The advantage of these boards is that most of them are statutory bodies backed by appropriate legislation.

The protection and promotion of the livelihoods of self-employed workers in the unorganized sector forms a part of the Unorganised Sector Workers (Conditions of Work and Livelihood Promotion) Bill, 2005. It states that “the appropriate state government shall seek to safeguard and promote the livelihood of the self-employed workers in the unorganized sector” through certain measures. The measures include provision of credit, adequate raw material supply and marketing facilities, access to banking institutions, ensuring that city plans and rural development plans pay adequate attention to the concerns of the street vendors, and the right to livelihood including right over common properties and natural resources through traditional rights and sharing of public spaces.

These are a well-thought out set of provisions that will enable self-employed workers to enhance their opportunities for work and livelihood and hence improve incomes. A State Advisory Committee set up in each State will advise the government on these issues. Since no concrete proposals have been put forward in this draft Bill, it is not clear to what extent this will fulfil the purpose of protecting and promoting the livelihoods of these workers.

Of the two bills, the Social Security Bill is under active consideration of the Central government. The second Bill that addresses the conditions of work of the wage workers and protection of livelihoods of the self-employed workers is equally important for a comprehensive social protection cover for all segments of the informal workforce.

NREGA and Social Protection

The employment guarantee for the wage workers under the NREGA is an assurance of 100 days of work in designated districts and in case of inability to provide employment, an assurance of an unemployment allowance. The NREGA, therefore, provides for employment security to the poor in the backward regions of the country where employment opportunities are likely to be few. It is also likely to be extended to more districts as the programme gets implemented on the ground. Another major advantage is that it could help to stem migration away from these backward regions.

The Act, however, provides employment only to unskilled workers. Skilled workers even in these backward regions are left out of the employment assurance. Further, even among the unskilled, there is no effort to improve their skills so that they can upgrade to more remunerative activities in future.

Once the NREGA is in full swing, it would be a good idea to consider other self-employment activities under its purview to provide employment guarantee to a larger section of the informal workforce. In fact, some of the provisions of the Unorganised Sector Workers (Conditions of Work and Livelihood Promotion) Bill could be brought under the Act. It could include certain skilled and semi-skilled operations that generate livelihood, for example, work linked to agriculture such as agro-processing (flour mill), food processing (spices, papad- and khakhra-making) and watershed development; artisanal work such as weaving, printing, leatherwork, carpentry, plumbing, stitching and embroidery; and services such as training, health care (selling medicines, counselling, dai`s work), child care and care of the aged. 

Of course, one does not want to burden an already onerous task of providing employment guarantee to the poorest. In fact, one of the early versions of the Act did have provisions for including many of these activities. Perhaps the task at hand was so daunting that they were removed from the final version of the Bill that became the present Act.

Therefore, I argue that one can take a phased approach to the Act and, with a minor amendment, bring in more semi-skilled and skilled activities in its purview at a later stage. A more comprehensive social protection can then be provided to a larger segment of the informal workforce.