Informal Sector: Its Woes and e-Shram

Relevance: GS-2: Issues relating to Poverty and Hunger/ GS-3: Inclusive Growth and issues arising from it.

Key Phrases: e-shram portal, Informal sector

Why in news?

A time-bound inclusive and universal registration system for informal workers and circular migrants. Aim: To register 38 crore unorganised workers such as construction labourers, migrant workforce, street vendors, and domestic workers, among others.
Registration had been recommended by the National Commission for Enterprises in the Unorganised Sector (NCEUS), and was already mandated by the Unorganised Workers’ Social Security Act
Portal has by now registered more than 120 million workers, 61 per cent from just four states -Uttar Pradesh, West Bengal, Bihar and Odisha

Integrating Welfare Schemes: The portal seeks to integrate all the social welfare schemes available for the benefit of unorganised workers.
If a worker is registered on the eSHRAM portal and meets with an accident, he will be eligible for Rs 2.0 Lakh on death or permanent disability and Rs 1.0 lakh on partial disability.
Beneficial for Inter-State Migrants: The portal helps the inter-state migrant workers avail the benefit of the welfare schemes regardless of their location.
• Social Security Benefits: The unorganised workers will be able to receive social security benefits such as insurance coverage, maternity benefits, pensions, educational benefits, provident fund benefits, housing schemes etc.

Informal economy represents enterprises that are not registered, where employers do not provide social security to employees.
According to the Periodic Labour Force Survey, over 90 per cent of workers in India are informal workers. Out of these, those engaged in rural areas workers are significantly more than urban areas workers.
Produces about 50 per cent of GDP.

Work hazards: Most industries, especially mining, have inadequate safety and health standards. Environmental hazards are evident in the case of the informal sector.
Irregularities in Wages: The daily wages are below the minimum rate of wages for informal workers.
Long Hours of work: Long hours of work in the unorganised sector beyond the labour and regulatory norms are common in India.
Poverty and Indebtedness: Workers in the unorganised sector had a much higher incidence of poverty than their counterparts in the organised sector.
No Social Security Net: There are no social security measures to provide risks coverage and ensure maintenance of basic living standards at times of crises such as unemployment or health issues.
Productivity: The informal sector basically comprises MSMEs and household businesses which are not as big as firms like Reliance. They are unable to take advantage of economies of scale.

No expansion of social security/protection presently appears to be on the cards
A patchwork of existing schemes towards creating specific statutory entitlements for social security as envisaged in the Code for Social Security
The e-Shram portal merely lists 13 existing social security and social protection schemes and six other employment generation schemes for which sections of workers could be eligible
Government has excluded workers covered by EPF (Employees Provident Fund) and ESI (Employees’ State Insurance). This would mean that lakhs of contract and fixed-term contract workers will be excluded from the ambit of Unorganised Workers
Aadhar Criteria: Aadhaar-seeding is a controversial issue. Many workers will not have an Aadhaar-seeded mobile or even a smartphone.
Dependency: The central government will have to depend on the state governments for this project to be successful. Given political issues between different parties ruling states, this can be challenging.
No benefits for the aged: The NDUW excludes millions of workers aged over 59 from its ambit, which constitutes age discrimination.
Ever-changing identities: Unorganised may have complex and ever-changing identities where they move between formal and informal sectors.

Government must publish statistics at the national and regional levels of the registrations to assess the registration system’s efficiency.
Triple linkage of One-Nation-One-Ration Card, E-Shram Card (especially bank account seeded) and the Election Commission Card can be done, for efficient and leakage-less delivery
Decentralised registration process with participation of municipalities, panchayats and civil society groups.
Allowing Multiple Mediums for Identification: The mandatory usage of Aadhaar for registration is unconstitutional and exclusionary. Other government provided ID cards should be allowed for authenticating a worker’s identity
Offline Registrations: Arrangements for offline registration are needed, given that all workers will not be able to access the online portal. To this extent, Common Service Centres can be leveraged to hold ‘registration camps
Overhauling labour laws: Labour, as well as tax policies, are key to improving the business environment. Labour regulations have to allow for more flexible work arrangements. Moreover, the right to associate freely should be vigorously protected