More regular-income labour denied social security before Covid-19 hit India

Though more firms were switching to formal sector and paying workers regular wages, that didn't necessarily mean they were passing on social security benefits to them

The labour market became more vulnerable a year before the coronavirus pandemic hit India as the share of unorganised sector workers rose, official data released on Thursday showed.

While the share of workers earning regular salary went up in 2018-19 compared to 2017-18, the proportion of such hands without any social security benefits also increased pointing towards continued trend of informalisation, experts pointed out.

More than half the workers in India (51.9 per cent), who were earning regular income, had no social security net in 2018-19. The share of such workers went up from 49.6 per cent in the previous year, the National Statistical Office’s periodic labour force survey, conducted between July 2018 and June 2019, released on Thursday showed.

This is despite the fact that the share of regular-pay workers inched up from 22.8 per cent in 2017-18 to 23.8 per cent in 2018-19, even as the proportion of casual workers declined from 24.9 per cent to 24.1 per cent. The share of self-employed in the workforce remained flat at 52.1 per cent.

Radhicka Kapoor, senior fellow at Indian Council for Research on International Economic Relations (ICRIER) explained that even though there were more firms switching to the formal sector and giving regular wages to workers, that didn’t necessarily mean they were passing on social security benefits to them.

“There might be more enterprises which are coming into the formal sector, for instance, by being registered under the Goods and Services Tax regime but with a supply disruption and lack of demand in the economy, they may be option for flexible working arrangements,” Kapoor added.

The share of regular wage employees who had a written contract increased from 28.9 per cent in 2017-18 to 30.5 per cent in 2018-19 (though it remained at abysmally low levels).

It is worth noting that regular wage employees were those who had received wages not on daily basis or periodic renewal of work contract and included both full-time and part-time workers and paid apprentices.

The latest data released by the NSO is contrary to the government’s own claims. The government has often cited the payroll data released by the Employees’ Provident Fund Organisation (EPFO) to claim that the share of formal jobs has increased in India. The NSO survey asked households in India whether they received provident fund, pension, gratuity, healthcare and maternity benefits during last one year.

“This is an alarming trend and means that the informalisation of the labour market is here to stay and will only increase from here in the post-Covid-19 world,” Radhicka Kapoor, senior fellow at Indian Council for Research on International Economic Relations (ICRIER) said.

When the government announced a national lockdown in March-end, millions of migrant workers left cities to go back to their villages, often covering large distances on foot. One of the main reasons for the exodus of workers from cities was the fact that most of them were a part of the unorganised sector with no safety net, making them more vulnerable during the pandemic.

“Our own survey of workers in Delhi showed that a lot of workers who were receiving social security benefits from employers were mainly on paper. They had no idea about whether they were registered for Employees’ Provident Fund scheme or if it was portable while switching jobs. In fact, after the pandemic, we have seen that there is no social security net in our workforce at all,” Jayati Ghosh, professor of economics at the Jawaharlal Nehru University said.

The increase in share of workers in the unorganised sector was greater for females than males in 2018-19, the data showed. While 54.4 per cent regular income female workers had no access to social security in 2018-19, compared to 51.8 per cent in the previous year, for males, it increased from 49 per cent to 51.2 per cent.