Keywords: Unorganized Sector, International Conventions, Welfare scheme, international laws.
Introduction
The unorganised sector in India, encompassing a vast array of informal labour such as agriculture, construction, and small-scale enterprises, is a critical component of the economy yet faces significant challenges related to social security and health. Despite its substantial contribution to the nation’s economic output, workers in this sector often endure precarious conditions with minimal access to essential benefits and protections.
A comprehensive report on the condition of work and livelihood promotion in the unorganised sector highlights that health-related issues are a major concern. Many workers, particularly those from low-income backgrounds, bear the full brunt of their medical expenses, facing a severe financial strain when illness or injury strikes. The lack of paid leave exacerbates this issue, as workers must balance the costs of healthcare with the loss of income due to missed work. The International Labour Organisation (ILO) defines health security as the ability to guard against various hazards, including illness, yet many workers fall short of adequate protection, especially against catastrophic health costs. In addition to health challenges, maternal mortality remains a grave issue, particularly affecting women in impoverished and unorganised sectors.
The financial insecurity faced by informal sector workers extends beyond health and maternity issues to encompass old age and unemployment. The absence of a robust social security framework leaves many elderly workers and their families struggling with financial instability, while unemployment and underemployment continue to plague the sector, highlighting the need for comprehensive safety nets.
Efforts by the Government of India and the Karnataka state government have introduced various measures to address these challenges, including social security schemes and insurance programs aimed at improving workers' conditions. However, systemic issues such as low awareness, limited coverage, and administrative hurdles persist, undermining the effectiveness of these initiatives. This situation places a limelight that the urgent need for enhanced social security measures, better healthcare access, and improved enforcement of existing policies to protect and uplift the unorganised sector workforce. Addressing these issues is crucial for ensuring equitable and sustainable development within this vital segment of the economy.
Health Related Problems Faced by The Unorganised Sector Employees
As per the report on condition on work and promotion of livelihood in the unorganized sector says that Health care costs are a hardship for workers, particularly for low-income informal labourers and about 79% of workers pay for all of their medical care, which puts them at greater risk, especially when illness means missing work (No paid leave) in addition to paying for medical bills. The ILO defines health security as the ability to protect against various hazards, including illness and the need for medical attention. Major, catastrophic illnesses that necessitate hospitalization are distinguished from minor illnesses that can be managed at home. Catastrophic costs are defined as those that surpass 5% of a household’s total non-food expenses. Approximately 25% to almost 50% of all households had to pay such unaffordable medical expenses in 1999–2000. Rich households are disproportionately impacted; they frequently decide not to receive medical care or incur debt as a result of the expense of care.
Inequality in healthcare is a major issue, with impoverished households frequently facing medical debt or skipping out on necessary care. Refusing treatment is a much more common behaviour among the destitute than among the wealthy. Morbidity that remains untreated is more common among the lowest populations, particularly in women. The overall cost of treatment for low-income groups and the increase in healthcare prices between 1985 and 1996 have made health care increasingly unaffordable for poor households, exacerbating already existing disparities. This makes clear the enormous financial burden that health care costs place on workers, particularly on low-wage informal labour. Despite these efforts, a significant portion of the population, termed the "missing middle" (approximately 400-500 million people), remains without health insurance. Extending coverage to the missing middle poses several challenges. Identifying and enrolling informal workers is difficult due to their diverse economic status, and high identification costs could reduce the financial benefits of expanding coverage. Moreover, public schemes have low participation and utilization, often due to lack of awareness, poor registration systems, and subpar service quality. Private insurance is often unaffordable, and even mandatory schemes face underutilization due to similar systemic issues.
Issues Relating to Maternity Needs
The National Human Development Report prepared by the Planning Commission (GOI 2002) states that, as of 1999 the maternal mortality rate (MMR) was 407 (indicating deaths per 100,000 deliveries based on the Sample Registration System, SRS).
The issue of maternal mortality that still exists in women decades after independence, especially in the impoverished and unorganized sectors. It lists frequent causes of maternal mortality, many of which are avoidable, such as abortion, haemorrhage, toxaemia, and anaemia. One important aspect that is contributing to these deaths after childbirth is the lack of access to expert medical aid.
Due to poor health facilities, maternal mortality risks are higher for impoverished women, particularly those who work in demanding informal jobs. These women have severe financial hardships as a result of their late-pregnancy and postpartum income losses, which adds to the financial burden of maternity.
Life and Accident Security
This has a serious effect on a family when a breadwinner passes away or becomes disabled, especially for informal workers. In addition to causing mental distress, the death of a family breadwinner in the unorganized sector puts the family's existence in jeopardy because of the abrupt and irreversible loss of revenue. After his death, the family is frequently obliged to sell precious possessions, take out high-interest loans, or spend all of their funds in order to pay for funeral costs. Furthermore, accidents irrespective of related to their line of work and present a serious problem for unpaid labourers since they create an instant loss of revenue and additional costs for hospital stays and medical care.
Old Age Security
India's aging population, particularly among former informal workers. As the proportion of elderly people rises, there is growing concern about the lack of social security and institutional support for these individuals, especially the poor. The shift from joint to nuclear families has increased the insecurity faced by elderly people, who often rely on their children for financial support.
Several factors contribute to the vulnerabilities of the elderly. Many elderly people, especially those from low-income backgrounds, face job and income uncertainty. While a decline in workforce participation among the elderly might suggest the possibility of early retirement, it also raises concerns about their ability to meet their financial needs in old age. Additionally, poor elderly individuals add to the economic burden on their families, exacerbating overall poverty and insecurity. The situation is further complicated by the rising costs of private healthcare and inadequate public health services, which place significant strain on families trying to care for their aging members. Overall, the data points to a need for stronger social security measures and better healthcare facilities to support the growing elderly population, particularly those who are impoverished.
Unemployment Insecurity
The challenges of unemployment and job insecurity faced by India's informal and non-organized workers. The low rates of open unemployment in India reflect the tendency of poor workers to avoid prolonged periods without work. In 1999–2000, there were 26.6 million unemployed workers in India, with a daily unemployment rate of 7.3%. However, a significant portion of the unemployed are likely to be young, educated urban individuals.
For informal and non-organized workers, the primary concern is not just unemployment but also underemployment and low-productivity jobs, which result in low wages and perpetuate extreme poverty. The National Rural Employment Guarantee Act (NREGA), recently passed in India, seeks to address employment insecurity by guaranteeing at least 100 days of work in the most impoverished areas of the country. Despite these efforts, informal workers remain vulnerable to job loss due to various factors, given the precarious nature of their employment. Therefore, unemployment benefits for these workers under specific circumstances to provide a safety net in case they lose their jobs. This highlights the need for broader social security measures to protect the livelihoods of informal and non-organized workers.
International Labour Organisation’s Measures
The International Labour Organization (ILO) has several schemes to help informal sector workers, such as Employment Creation where the ILO helps create employment through micro, small, and medium enterprise (MSME) development. This can help informal sector workers organize themselves and access skills training, finance, and business services. Social Security, where the ILO works with WIEGO to ensure that social security schemes are accessible, affordable, and in line with the priorities of informal workers. Policy Dialogue, where the ILO's Way out of Informality project facilitates policy dialogue through research and identifies best practices that can be scaled up. Formalizing Employment, where the ILO's Formalizing Employment in Domestic Work project helps bring domestic workers within labour and employment regulations. Integrated Policy Framework, were
the ILO's Informal Economy Unit promotes an integrated policy framework to help workers transition from the informal to the formal economy. Technical Support, where the ILO provides technical support to improve and expand access to health care services for informal sector workers.
Government of India’s Measures
India has a number of laws and schemes to protect the interests of informal sector workers, such as Unorganised Workers' Social Security Act, 2008, where this act requires the government to create welfare schemes for unorganized workers, including those for life and disability cover, health, maternity benefits, and old age protection.
Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM), this pension scheme provides social security and old age protection for unorganized workers. eShram, this portal was launched in August 2021 to register unorganized workers across India and build a National Database of Unorganized Workers (NDUW).
Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), this scheme provides life and disability cover. Pradhan Mantri Suraksha Bima Yojana (PMSBY), this scheme provides life and disability cover. Ayushman Bharat- Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), this scheme provides health and maternity benefits. PM SVANidhi, this micro credit scheme is for street vendors.
Karnataka Government measures
The Karnataka State Unorganised Workers Social Security Scheme provides financial assistance and social security benefits to workers in the unorganised sector, including those in agriculture, construction, and other informal sectors. The Shree Shakti Scheme focuses on the welfare of women working in the unorganised sector, offering them financial support, skill development programs, and health benefits.
The Karnataka Building and Other Construction Workers Welfare Board offers benefits to construction workers, including financial assistance for medical expenses, education, and pensions. The Karnataka State Labour Welfare Fund is used to provide various welfare benefits to workers in the unorganised sector, such as financial aid for education, medical treatment, and pensions.
Specific schemes are in place to support handloom weavers with financial assistance, health coverage, and other social security benefits. Additionally, the government has introduced various insurance and pension schemes for unorganised sector workers, offering coverage against accidents, health issues, and providing pensions for old age.
To enhance employability and income prospects, the government supports skill development and vocational training programs for workers in the unorganised sector. Health insurance schemes are also available, providing coverage for medical expenses and ensuring that unorganised sector workers have access to necessary healthcare services.
Employer’s Lacuna
The employers have limited knowledge of the Employees’ State Insurance Scheme (ESIS) and other social health protection schemes, with only 17% aware of ESIS and 10% aware of government health schemes. While medical and sickness benefits are better recognized, maternity and disability benefits are less known. Employers' reluctance to join ESIS stems from perceived ineligibility, lack of understanding, minimal interest in worker health insurance, and concerns over contribution costs and the quality of care.
Worker's Lacuna
About 72% of workers were employed in small enterprises (5-9 workers), while 22% worked in slightly larger units (10-19 workers). Only 6% worked in establishments with 20 or more workers. 96% of workers were hired directly by the owners, but only 1.1% had written contracts. 62% lacked any formal agreement, while 37% had oral agreements. Over half (54%) of workers worked more than 8 hours daily, with 20% exceeding 11 hours. Only 17% received overtime pay, and just 3% were paid fully for it. 53% received a weekly day off, but only 33% were paid for it. One-third of workers faced health risks, and 7% had experienced workplace accidents. In 54% of cases, the employer covered medical costs, while 15% of workers had to pay for treatment themselves. 33% had health protection benefits, mostly from state schemes, with 10% contributing to the scheme. Only 7.5% of female workers or spouses of male workers received maternity-related assistance.
For serious health issues, 12% of family members had been hospitalized, with childbirth being the most common reason. Private hospitals were preferred by 58%, while 42% used government hospitals. Out-of-pocket hospitalization costs were high, with 40% spending more than Rs. 15,000, and 50% having to take loans to cover these out-of-pocket expenses and 49% drawn from personal savings. Only 1.5 per cent cases had partial/ full coverage by an insurance agency. Only 21% of workers had knowledge of ESIS, with awareness higher among women. Only 1.8% of workers were engaged in ESIS-registered enterprises, though 63% expressed interest in joining. Workers felt employers should bear the responsibility for health coverage.
Trade unions played a limited role in negotiating protection and better working conditions, with only 3% of establishments reporting union activity in this regard.
This illustrates poor working conditions, limited access to contracts, insufficient health protection, and the need for better union involvement.
Findings
Lack of information, awareness, and trust among the workers on employers.
Benefits not aligned with priorities of the workers which in turn demotivate and which directly slow down the efficiency of the work.
Costs and inadequate financing arrangements which fails to establish proper mechanism to make social security policies effective.
Complex and burdensome administrative procedures of Government making it expensive for employers.
Infrequent visits to establishment and mere mechanical work of public authorities which results in derogation of effective implementation of these policies.
Lack of organization of enforcement agencies at international level for implementing the policies and measure of the ILO.
Suggestion:
The major issue with inefficient implementation of welfare policies is the lack of proper or direct visits by public officials, who often merely sign off on papers and bills submitted by employers without verifying the actual situation. To address this, public officials must frequently visit establishments to ensure that every government-provided benefit reaches the workers. At International level an enforcement mechanism has to be constituted which have to submit report on enforcement of these policies. Employers need to understand that the productivity of their products or services is directly tied to the well-being and security of their workers. A healthy and secure workforce is more productive. Workers should also be made aware of the social security benefits available to them and be encouraged to request these from their employers. If these benefits are not provided, workers should first approach the relevant government officials and, if necessary, seek legal recourse to ensure that these entitlements are made available at their workplace.
Conclusion
The unorganized sector in India, despite being a significant contributor to the economy, faces considerable challenges in accessing essential social security and health benefits. The inefficiency in implementing welfare policies, largely due to the lack of direct and regular inspections by public officials, has left many workers vulnerable to financial instability and health risks. Employers often overlook the crucial link between a healthy, secure workforce and productivity, further exacerbating the problem. Additionally, the workers' lack of awareness about their entitlements contributes to the inadequate utilization of available social security measures.
Addressing these issues requires a multifaceted approach. Public officials must ensure regular and thorough inspections of establishments to verify that government benefits reach the intended beneficiaries. Employers must recognize the value of investing in their workers' well-being, which in turn enhances productivity. It is also essential to empower workers with knowledge about their rights and the available social security benefits, encouraging them to advocate for these entitlements. Where employers fail to provide these benefits, workers should be supported in seeking redress through government channels or legal means.
Overall, to achieve equitable and sustainable development in the unorganized sector, it is imperative to enhance the effectiveness of existing welfare policies through better enforcement, increased awareness, and a commitment to the well-being of the workforce.
References
Government of India, Ministry of Labour, Annual Report, 2005-06.
Government of India, Economic Review, various issues.
Government of India (2002), National Human Development Report, Planning Commission, New Delhi
ILO (2002), Decent Work and the Informal Economy, Report VI, International Labour Conference, 90th Session, Geneva.
ILO (2001), Social Security Issues, Challenges and Prospects, International Labour Conference 89th Session Report VI, ILO, Geneva.
National Commission on Labour (NCL 2002), Report of the National Commission on Labour, Government of India, New Delhi.
Planning Commission (2005), Unorganised Sector of the Indian Economy, A note from Dr. Balachandra Mungekar, Member, Planning Commission to the Chairman, NCEUIS dated 6th Jan, 2005.
Rajasekhar, D., G.K. Karnath, S. Madheswaran and Suchitra J.Y., 2005, ‘Design and Management of social Security Benefits of Unorganised Workers in Karnataka, Institute of Social and Economic Change, Bangalore.
Unorganized Worker’s Social Security Act,2008
https://labour.gov.in/unorganized-workers
https://thewire.in/economy/indias-unorganised-sector-is-being-engulfed-further-marginalised