Hot News

Unorganised Workers

Unorganised Workers

As a part of government’s ongoing drive to create a cashless economy, the Payment of Wages (Amendment) Bill 2017 was passed in parliament and got assent from president. New act enables the employers to pay wages to workers through cheque or by transferring into their bank account without their written authorisation, which was mandatory as per the Payment of Wages Act 1936. The Payment Act is one of the central government’s labour laws, which are also applicable to the unorganised workers of the country in line with the Unorganized Workers’ Social Security Act, 2008.  

After demonetisation there were many reports on the plight of weekly wage workers, farmers, informal workers, rural women, Fishermen, and the like. As a way out for ‘working poor’ in the informal economy, e-payments or cashless transaction system had been strongly suggested then. Apart from the transparency of e-payment system, the reasons given were that the online transactions could subsume the informal economy into the organised space wherein workers would become documented and would benefit in the long run to being under the purview of decent work.

However, simply e-payment documentation is not enough to bring this large segment of unorganised workforce of the country into decent and   formal domain. The International Labour Organization (ILO) terms decent work as “which involves the opportunities for work that is productive and delivers a fair income, security in the workplace and social protection for families, better prospects for personal development and social integration, freedom for people to express their concerns, organize and participate in the decisions that affect their lives”.  To achieve this environment for its informal sector workers, India has to go a long way as of now. The World Employment and Social Outlook Trends 2016 report by ILO declares that the number of jobless in India will increase from 17.7 million in 2016 to 18 million by 2018 where informal sector workers will be growing in numbers.

All the same, the e-payment is an attempt to bring the informal sector workers into documentation and in the line-up of decent work hopeful. It has widely recognised that informal sector is a substantial contributor to the economic development of the country even in this technologically advanced era.

Unorganised Workers’ Administrative System

India’s informal sector is dominated by large number of very small enterprises that consist of self–employed workers as well as hired labourers in agricultural, industrial and service sectors without any employment and social security. Its administration is very feeble in the country, which has Labour Policy based on its Labour Laws. 

According to the latest data by the National Sample Survey Office from its 2011–12 survey of the informal sector, 79 per cent of informal sector workers do not have a written employment contract, 72 per cent of them do not receive any social security benefits, and 71 per cent are not entitled to paid leave.  In 2014, a study of Indian Staffing Federation cited that 43 percent of total government workforce is engaged in temporary jobs.

The National Commission for Enterprises in the Unorganised Sector from 2004 to 2009 through its series of reports have highlighted the struggles of workers in the informal sector.  As per its study these categories are   about 93 per cent of workers in the country.   This finding has been affirmed by ILO as cited labour market flexibility is as high as 93 per cent in India .This means that 93 per cent of Indian workforce any way does not enjoy the protection of India’s about 144 labour laws, which includes both state and central laws.  The exclusions and denial of right for unorganised workers has been continuing even in the post era of   the Unorganised Workers’ Social Security Act, 2008, where it has been trying best for fully digitalised transactions with the onset of labour reforms.  

According to information given by the Ministry for Labour and Employment, the Second National Commission on Labour which submitted its Report in 2002 had recommended that the existing 44 central Labour Laws should be broadly grouped into four or five Labour Codes on functional basis. Accordingly, the Ministry has taken steps for drafting four Labour Codes on Wages, Industrial Relations, Social Security & Welfare and Safety & Working Conditions. It is being said that the proposed labour reforms are efforts of simplifying, amalgamating and rationalizing the relevant provisions of the archaic Central Labour Laws following the steps of ‘Shram Suvidha Portal’- the unified web portal, meant to provide consolidate information of Labour Inspection and its enforcement.

The aim is to have appropriate labour laws that encourage employers to keep more workers in formal roles, with work-linked wages and social security as right of citizens and workers of the country to be administered through tripartite bodies, for each group of employments, at the national, state, district and lower operational levels down to the village. For that, a comprehensive legislation for unorganised workers which take in all aspects of their work and life, including regulation of their employment, wages, social security, safety, conditions of work and so on is very fundamental. All those have been envisaged by the recommendations of the Second National Labour Commission, and subsequently the Report of the Petitions Committee of Lok Sabha, the Report of the Parliamentary Standing Committee for Labour and the Report along with draft laws prepared by the National Commission for Enterprises in the Unorganised Sector. Nevertheless to some extent those have all been ignored or distorted by legislation of the Unorganised Workers’ Social Security Act, 2008. It contains a number of limitations such as exclusion of a large number of informal workers like agricultural workers, construction workers and informal workers in the formal sector, ignorance of the working conditions of the informal workers and the special problems of the women workers including unpaid workers of household. Besides, till today the implementation of the Act is in a severe lacuna.

Despite these facts, there is a proposal to have a well-defined administrative system for informal sector workers, in the various sections of the Unorganized Workers Social Security Act, 2008. Sections 2 and10 defined unorganised workers and their eligibility criteria for registration as also the procedure for registration under the Act.  Section 3 has spoken on formulation of schemes by the Central Government for different sections of unorganized workers, Section 4 cited on funding of the schemes which would be formulated by Central Government. About the constitution of National Social Security Board or Authority has been mentioned in the section 5. And subsequently section 6 has explained the provision for constitution of similar Boards at the State level including its funding pattern. Finally sections 8 and 9 explicated the manner of record keeping functions by the District Administration - District Panchayat in rural areas; and the Urban Local Bodies in urban areas by way of setting up of Workers’ Facilitation Centres.  Its role is to disseminate the information on scheme and facilitate registration of workers into the schemes by the district administration with the help of workers’ organizations.

While analysing these provisions of the Act, the fact can’t be ignored that the various laws related with unorganised workers are not implemented with its intent and being administered effortlessly and extremely scattered without proper verification from the part of competent authority. The Unorganized Workers’ Social Security Act, 2008 defines the term ‘unorganized worker’ as a home-based worker, self-employed worker, a wage worker in unorganized sector and includes a worker in the organized sector who is not covered by any Acts mentioned in second Schedule of the Act. They are the Workmen’s Compensation Act, 1923, the Industrial Disputes Act, 1947, the Employees’ State Insurance Act, 1948, the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, the Maternity Benefit Act, 1961, and the Payment of Gratuity Act, 1972. It indicates there are only very few labour laws related with informal sector workers. 

The Minimum Wages Act, 1948 is to provide minimum compensation for work. The regular scheduling and revision of minimum wage are not happening in many of the States.  MGNREGS wages stature is not corresponding to MWA. The Trade Unions Act, 1926 is meant for enabling workers of a number of small units to form unions, who can bargain wages and other condition of work. But for the unorganised workers to form trade unions there should be at least 100 workers in a same sector at a district, and workers also hold leadership capacity.  Though the Equal Remunerations Act, 1976 is even applicable to informal economy sector, the   equal wages for male and female is a dream in India.  Recent report of UN says over 51 per cent of work done by women in India is unpaid and not counted in national statistics. Under the Payment of Wages Act, 1936 insistences of timely payment and proper payment are being violated very often. The high rates of bonded and child labourers of India are one of its indications. The Contract Labours (Regulation and Abolition) Act, 1970 is very regularly felt as a law itself for the most of the unorganised workers, especially migrant workers. The true contract is not happening in most of the cases.  Because of that, the unorganised workers regularly have experienced non-payment. As per law the contractor is required to pay wages and in case of failure on the part of the contractor to pay wages either in part or in full, the principal employer is liable to pay the same.  Under the Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979 the provisions of home journey allowance including payment of wages during the period of journey, suitable residential accommodation and medical facilities free of charge on mandatory basis and appointment of inspectors to oversee implementation of this Act from the part of Government have been unheard by all or most of the estimated 120 million internal migrant workers of India.

The informal sector workers’ social security system is   also on the blink. The   social security schemes in operation to the benefits for working poor are really strewing and the amount spent by the government on the provision of social security benefits is extremely low i.e. India spends below 2 percent of its GDP on social protection and depends on yearly budget. 

Under the Unorganised Workers’ Social Security Act, 2008 the Government claims the Rashtriya Swasthya Bima Yojana for BPL families (a unit of five), the ‘Aam Admi Bima Yojana’, Indira Gandhi National Old Age Pension Scheme, Handloom Weavers’ Comprehensive Welfare Scheme, Handicraft Artisans’ Comprehensive Welfare Scheme, Pension to Master craft persons, National Scheme for Welfare of Fishermen, National Family Benefit Scheme, Janani Suraksha Yojana and  Janshree Bima Yojana are meant for unorganised workers . Further, of late Central Government has also launched the Atal Pension Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Suraksha Bima Yojana for all citizens especially targeting unorganised workers to provide them comprehensive social security. Most of these schemes are   running without credible administration due to non-institutionalisation.    

In spite of the perceived shortcomings of the Act, it was widely acknowledged that the enactment of such an Act can be seen as one of the pioneering initiatives from the Government to provide platform for unorganised workers’ labour administration with   social security benefits based on legal enforcement. Therefore to conclude, the looking into beyond e-payment for unorganised workers the amendment of the Unorganised Workers Social Security Act, 2008 is highly recommendable in this labour reforms background. Especially because,   since the initiation of the Act there has not been any commendable follow-up in terms of institutionalisation of the Act, or coordination and modification of the existing social security schemes with the exception of the National Social Security Board set up in 2009.

(The writer is Founder Director, Workers’ India Federation (WIF). Email:

#(Published on 13th March 2017, Volume XXIX, Issue 11)