Formalising the Informal Work

The Economic Times     7th September 2020     Save    
QEP Pocket Notes

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.

QEP Pocket Notes