Formalising the Informal Work

Context: Covid-19 has opened an opportunity to establish an economic philosophy grounded in India’s social and cultural context.

Challenges to work:

• Impact of COVID: The migrant workers’ crisis during the pandemic has brought into sharp focus the significance of the casual, contract and daily wage workers in the organized sector,
• Low formal-informal ratio: The ratio between the two needs to be at least 50:50, from the current estimates of 15:85 or 20:80.
• This signifies a low level of social security coverage.
• Inadequacy of enrolment drive under the Employees’ Provident Fund (EPF): several workers will remain informal either because their employers don’t consider them critical, or because they are home-based, self-employed or wage workers.

Way Forward: 

• Convergence between the wages of, and social protection to, formal and informal workers: including the critical pool of contract, casual, daily wage, and construction workers
• For e.g. through the portable enrolment under Universal Account Number of the EPFO, workers can be identified, and social protection can be provided.
• Convergence between wages and competitiveness: by providing leverage to the industry in the form of safety net offered by the Centre.
• Labour reforms to be initiated by the states in collaboration with the Industry.
• Providing portable identity:  
• For, E.g. A few states had initiated a process for unorganized workers by taking up registration with allocation of Unorganized Workers’ Identification Numbers (UWIN) and the seeding of JAM (Jan Dhan, Aadhar, Mobile).

Conclusion: The convergence of interests of industry, workers and states provides a short, but very potent, window of opportunity for India to create its unique model of development with efficiency, equity and resilience.