• Shubodh HM

Social Security in Informal Sector

It is pretty well known that there are social security schemes like life insurance, provident fund, post-retirement schemes for those working in the organised sector. However, workers belonging to the unorganised sector are not adequately covered with similar cushions even though they are essential constituents of an organisation or company’s growth. Informal workers do not get facilities like organised workers even though they are as important as the latter. The Indian labour force is mainly composed of informal labours who are very poor and dependent on daily wages to eke out a living. During the pandemic, the labour class was most affected as companies had to close down. Labourers had essentially no work and therefore could not collect any more wages to carry on their living, in addition to fear of contracting the virus and the imperative of returning to their native place. When they did intend to return to their native place, they encountered problems such as no transportation, and hence they could not stay in that particular place and had to stay there in camps or tents.

According to the International Labour Organisation, social security is a comprehensive approach designed to prevent deprivation and give assurance of basic income to individuals and shield them from any uncertainties. It consists of a basic standard of living according to which every individual should get basic needs like food, shelter, medical care and all other essential things to lead life. With the closure of factories and some of the labourers getting sick or ill at work, basic income has been an elusive entity for most labourers across the country.

Recently, the Parliamentary standing committee on labour released a report highlighting the impact of the pandemic and increasing unemployment among the labour class and has called upon the Government to improve social security among informal workers. It has recommended the direct transfer of money and urban rehabilitation scheme as many labourers lost jobs when factories, industries, hotels etc. closed due to the pandemic.


(Photo - Reuters/Adnan Abidi)


The Rationale for Social Security:


Citing a periodic labour force survey, the report underlined that about 419 million workers are informal in nature out of the 465 million workforces. The pandemic has imparted clear lessons to be inclusive and recognise informal labourers, giving them some job security during the closure of factories or companies. The factory owners fired labourers as they suffered heavy financial losses stemming from the closure of factories; the labourers are still suffering, and their predicament is to a far worse degree. Even after factories opened initially, there was a cap of 50 per cent of workers and other measures taken to prevent the spread of the virus. Another reason for owners to fire workers is the sluggish demand in the economy. Consequently, they don’t have a job and are in a state of uncertainty.

Both urban and rural area workers have been severely hit during the pandemic as many of them lost jobs and are striving for basic needs like food, shelter, medical care, and other essential services to carry on their living. The crucial and unavoidable fact is that even before the pandemic hit, the economy was languishing in a bad state, and jobs were declining. All of these taken together has pushed the labour class into a sense of insecurity about their future and hence, they have become poorer than before.

Committee Recommendations:


The committee recommended the direct transfer of money to workers during the pandemic so that they could use this money to meet their immediate needs and carry on their living. Instead of giving loans to facilitate street vendors to carry on their business, the Government should directly transfer money as it is highly unlikely that they would pay back the loans; in fact, it would be a burden upon them to pay this money as they are already suffering from loss. The committee recommended that universal health be made a legal right as the pandemic has brought back the importance of health facilities in our lives and immediate treatment, especially during emergencies like that of a pandemic or any health crisis. As there was reverse migration of workers to villages due to the closure of factories, not all labourers returned to the urban areas owing to fears about the virus and found villages to be more secure, and if there was any problem, they could take care of their family. Another reason could be bad experiences which they experienced when there was sudden lockdown. To facilitate those people living in rural areas, MGNREGA working days should be increased by two folds so that labourers staying in villages have a livelihood. There should be more investment in traditional sectors and production units like factories, industries etc in rural areas should be expanded so that labourers can get jobs in and around their native place.


By Shubodh HM

shubodhhm@gmail.com