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Understanding the unorganised sector

By Kiran Moghe

Almost 400 million people - more than 85% of the working population in India - work in the unorganised sector. Of these, at least 120 million are women. The recent Arjun Sengupta Committee report is a stark reminder of the huge size and poor conditions in this sector. A subsequent draft Bill to provide security to workers, which bypasses regulatory measures and budgetary provisions, has generated intense debate

The UPA government recently finalised the draft of a Bill purporting to provide social security to workers in the unorganised sector. The draft is likely to be tabled in the monsoon session of Parliament and it is bound to become a source of intense debate between unions representing the interests of workers in the unorganised sector and the central government. It would be useful to examine the issues and concerns of workers from the unorganised sector in India , and also evaluate whether the draft Bill is able to address some of these concerns.

The term 'unorganised' is often used in the Indian context to refer to the vast numbers of women and men engaged in different forms of employment. These forms include home-based work (for example: rolling papads and beedis), self-employment (for example: selling vegetables), employment in household enterprises, small units, on land as agricultural workers, labour on construction sites, domestic work, and a myriad other forms of casual or temporary employment.

Workers engaged in the unorganised sector do not have the benefit of several laws such as the Minimum Wages Act or the Factories Act. They are also not covered by statutory welfare measures such as maternity benefits, provident fund, gratuity, etc, all of which were put in place after intense struggles by the Indian working class in the pre- as well as post-Independence period.

The term 'unorganised' is often used interchangeably with the term 'informal', or employment in the informal sector. Strictly speaking, 'informal' is used to denote those forms of enterprise that are not governed by any legal framework (for example, registration under Company Laws). Although it is quite logical that an 'informal' enterprise will employ 'informal'/'unorganised' labour, it must be remembered that 'formal' enterprises also have 'unorganised' employees, and, in fact, there is an increasing tendency to informalise employment relationships in the formal sector.

The use of contract workers to run canteens or do housekeeping and gardening, employing teachers on a clock-hour basis, and 'outsourcing' jobs such as data entry are some examples that may unravel the complex nature of employment in the unorganised/informal sector in the country. What is important is this: whether in terms of the legal status of the enterprise or the employment relations, workers in this sector are the most disadvantaged section of workers in India.

Two National Labour Commissions, along with several other international and national commissions, committees and conferences in the last 50 years have documented the socio-economic conditions of workers in the unorganised sector in India . The latest is the National Commission for Enterprises in the Unorganised Sector (NCEUS), also known as the Arjun Sengupta Committee, which submitted its report to the Government of India in 2006.

The Committee's report estimated that there are over 340 million (approximately 34 to 37 crore) workers in the unorganised sector in India , and that they contribute around 60% to the national economic output of the country. Around 28 crore work in the rural sector, of which an estimated 22 crore are in the agricultural sector. Around 6 crore are in urban areas. Women make up 11-12 crore, of which around 8 crore are engaged in agriculture.

In terms of overall employment, the Committee's report estimates that over 92% of the country's working population is engaged in the unorganised sector, and that the majority of women workers also work in this sector. Yet, in spite of their vast numbers, and their substantial contribution to the national economy, they are amongst the poorest sections of our population. It is therefore imperative that urgent steps are taken to improve their condition -- this is the Constitutional obligation of those who govern the country.

By and large, there are three types of issues of unorganised sector workers that need to be addressed. One is the regulation of their working conditions, the second is provisioning for conditions in which they are unable to continue to work, such as old age and disability, and the third is measures to help them overcome situations of insecurity, such as major illnesses and the liability of losing employment or being laid off at the will of the employer, for which they have no legal remedy.

Unorganised sector work is characterised by low wages that are often insufficient to meet minimum living standards including nutrition, long working hours, hazardous working conditions, lack of basic services such as first aid, drinking water and sanitation at the worksite, etc. Even a cursory glance will identify several such occupations, including agricultural labour, construction workers on building sites, brick-kiln workers, workers in various service industries ranging from transport and courier services to the hospitality industry.

A large 'invisible' section of workers are employed in what is called 'home-based work' where, typically, workers use their own premises to do piece-rated work. This not only includes traditional crafts, handloom weaving, beedi rolling, but also more modern industry such as electronics. A survey done by AIDWA (All-India Democratic Women's Association), as far back as 1989, in Pune city identified over 150 occupations where women did home-based work that ranged from making flower garlands, folding paper for the book printing industry, supplying chappatis to caterers, making agarbattis , weaving plastic seats for office chairs, de-seeding tamarind, and packing sweets.

Both formal and informal surveys reveal that on an average, unorganised sector workers do not earn more than Rs 30-50 per day. Some may appear to earn more but the work is often seasonal and the total earnings amount to roughly the same. In order to earn more, workers work longer and harder. This is particularly the case for self-employed persons such as vendors, ragpickers, and petty traders, who make their services available from the early hours of the morning to late at night, in all types of inhospitable working conditions.

Parents often take the help of children to supplement their own earnings, and this is a major reason for the widespread prevalence of child labour in the unorganised sector. Women are given low and unequal wages. Sexual harassment is common but unarticulated due to fear of loss of employment. There is no question of paid leave and maternity benefits. The use of cheap labour in the unorganised sector is the major source of profit for employers and contractors who exploit the workers' lack of collective bargaining power and state regulation.

Living in abject poverty, most workers in the unorganised sector barely manage a subsistence existence. There is no question of saving, particularly for times when they are unable to work. Hazardous work conditions often cause accidents, loss of limbs, etc. Such disability is disastrous because there are no other sources of income for these households. More importantly, there is no provision of old age security such as a pension. When AIDWA decided to organise domestic workers into a union in Pune city, the overwhelming response of women to the demand for pensions revealed the huge insecurity they faced.

The lack of savings and support systems also mean that there is no fall-back in other emergencies, especially major illnesses or the death of an earning member in the family. The rising costs of private healthcare and the systematic dismantling of the public health system in these times of liberalisation are a major reason for the huge indebtedness of households in the unorganised sector. There is a pressing need to provide insurance, especially health insurance cover to the workers.

The assurance of the UPA in its Common Minimum Programme announced in May 2004, that it would ensure "comprehensive protective legislation" for agricultural workers and workers in the unorganised sector, raised hopes within this section and the unions that have worked hard in the last few years to organise them. There have been several drafts of the proposed legislation, including one formulated by the Arjun Sengupta Committee. They propose the setting up of tripartite boards with representation of workers, employers and the government that will register the workers, regulate their working conditions and implement social security welfare schemes. Several campaigns, nationally and locally, and struggles launched by the workers themselves have attempted to ensure that the legislation is implemented.

The recent draft approved by the Cabinet therefore comes as a shock to all those looking forward to the passage of the Bill. For one, it lumps together the agricultural sector and the rest of the unorganised sector, when the CMP itself makes a commitment for separate laws. Most importantly, it makes absolutely no mention of the regulation of service conditions, which is the most crucial aspect of the legislation. On welfare aspects, it contains only pious declarations with no specific schemes. It introduces the concept of a Worker Facilitation Centre to be run by "NGOs", thereby negating the important role played by trade unions in articulating and taking up the demands of this poorest section of workers. Worse, it makes absolutely no mention of the government's budgetary commitment to the process of providing social security. The draft therefore reveals the huge gap between the political rhetoric of the ruling sections in this country and their actual intentions.

However, this is not the first time the government has made a mockery of its own assurances. The first draft of the National Rural Employment Guarantee Act was similarly flawed, but sustained efforts by various organisations have ultimately resulted in a piece of legislation that has the potential to bring about social and economic change in rural India. There is no doubt that the vast unorganised working sections in the country will launch yet another sustained struggle to ensure that their fundamental Constitutional rights are legally actualised.

(Kiran Moghe is President of the Pune Zilla Gharkamgar Sanghatana and Maharashtra President of AIDWA (All-India Democratic Women's Association))

InfoChange News & Features, September 2007