[Coronavirus Lockdown] Garib Kalyan Yojana and the Toiling Poor

[Coronavirus Lockdown] Garib Kalyan Yojana and the Toiling Poor
Migrant labour moving from Bangalore towards Tamil Nadu

The nation has perhaps gotten used to the nail-biting suspense associated with the current Premier’s 8 PM addresses. Perhaps not. The latest nocturnal engagement with the nation heralded a 21-day complete country-wide lockdown with a 4 hour lead time.

Migrant labour moving from Bangalore towards Tamil Nadu
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Inexplicably, the half-hour address did not have a word on the fate of unorganised sector workers plus informal workers in the organized sector, who form about 92% of India’s workforce, totalling about 120 million.

An estimated 8 percent of the labour force in India falls in the formal or organized sector, which is protected by comprehensive labour laws covering industrial disputes, unfair dismissal, trade union rights, wage and working conditions, health, insurance, security schemes etc.

The humanitarian tragedy that the lockdown has brought for the migrant and mostly unorganised labour is something that is heart-wrenching.

It is unimaginable that the government should have been innocent of the foresight on how such a sudden lockdown, involving closing of establishments, restriction of movement and blockade of inter-state borders, would impact a workforce exceeding 93% of the entire work force of the country.

The media for the last few days has carried tales of migrant workers - sick, elderly and infirm included - walking for kilometres to return to the sanctuary of their homes states. These poorest of the poor have also had to literally battle for even food to eat, which government run shelters and good Samaritans have made available to them.

Even if they manage to get back to their homes, without hardly any assistance from the State, economic survival in the coming months would prove to be as challenging as the pandemic itself.

In terms of the Economic Survey of India, pertaining to the year 2001 to 2011, it was stated that annually, inter-state labour mobility averaged 5-6 million people between 2001 and 2011, yielding an inter-state migrant population of about 60 million and an inter-district migration as high as 80 million. It was therefore, reasonable to assume and expect that any policy, more so the drastic national lockdown, would adequately address the plight of these migrant workers.

After 36 hours of the lockdown, the Finance Minister, announced the Pradhan Mantri Garib Kalyan Yojana (Yojana), the much awaited relief package. Why the government, having been forewarned as early as in January, 2020 itself, could not ensure an orderly return of the migrant labour and have a rescue package in place before announcing its draconic, and perhaps unavoidable, lockdown, are questions for a future day and time.

For now, what is proposed to be examined is the Yojana’s efficacy, and that too, in respect of three of the target populations (a) organized sectors workers; (b) construction workers and (c) unorganised sector workers.

Anatomy of the Yojana

(i) The Yojana proposes helping low-wage earners in the organised sector by way of paying 24% of the monthly wages of such persons, into their Provident Fund (PF) accounts, for the next 3 months, to prevent disruption in their employment. For this purpose, wage earners earning below Rs. 15,000/- have been classified as low-wage earners.

(ii) It further states that the Employees’ Provident Fund Regulations will be amended to include ‘Pandemic’ as the reason to allow non-refundable advance of 75% of the amount or three months of the wages, whichever is lower, from their accounts. The scheme also stands notified as on March 27, 2020, by the Ministry of Labour and Employment, Government of India.

(iii) As regards the Building and Other Construction Workers Welfare Fund created under The Building and Other Construction Workers’ (Regulation of Employment And Conditions of Service) Act, 1996 [BOCW Act], the Yojana states that there are around 3.5 crore registered workers in the Fund, and that state governments will be given directions to utilise this fund to provide assistance and support to these workers to protect them against economic disruptions.

The Build up

On March 20, the Union Ministry of Labour and Employment issued an advisory in respect of employment in private/public enterprises, advising all such employers to not terminate their respective employees. The said advisory, applicable even to casual/contractual workers, also stated that:

  • if any worker takes leave, he/she should be deemed to be on duty, without any consequential deduction in wages for this period;

  • if the place of employment is to made non-operational on account of COVID-19, the employees of all such units will be "deemed" to be "on duty";

While the object behind such an advisory was salutary, absence of legal sanction rendered it toothless and many workers in establishments across the country have been ruthlessly laid off since the Coronavirus outbreak.

As on March 27, the Union Home Ministry issued a generic national advisory, urging all States/Union Territories to prevent mass exodus of migrant agricultural labourers, industrial workers and unorganised sector workers, so as to prevent the spread of COVID19. However, the same lacked any specific measures or steps to be undertaken by such states, for achieving this objective, thereby rendering it entirely ineffective and nugatory.

Migrants and Students walking during Corona Lockdown
Migrants and Students walking during Corona Lockdown
Migrant labour moving from Bangalore towards Tamil Nadu
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Unorganised Workers’ Social Security Act, 2008

The Yojana has no provision whatsoever for the unorganised sector. Therefore, in compensation, let us address this the first.

The organized labour sector in India, as on date, only forms about 3% of the total labour sector, while unorganized labour sector alone forms about 97%. Yet, for decades, the legal system has laid out the red carpet and obsessively fussed over only this segment, conferring benefits such as minimum wages, provident fund, gratuity and employees state insurance.

In 2008, with intense formal pressure from the informal section, Parliament enacted the Unorganised Workers’ Social Security Act, 2008 with the stated object “to provide for the social security and welfare of the Unorganised Workers and all matters that liked and connected with it”. The 2008 Act applies nationwide and covers all unorganised workers/labour.

The law also separately defines and addresses the “home-based worker”, “self-employed worker” and “wage worker”.

In terms of Section 3, the Central government has been given the power to formulate schemes which covers: (a) provident fund; (b) employment injury benefit; (c) housing; (d) educational schemes for children; (e) skill up gradation of workers; (f) funeral assistance; and (g) old age homes.

Section 4 states that all such schemes are to be funded by the Centre, either wholly or partly, along with the respective state government. Section 7 sets out the funding of certain schemes by state governments.

Section 10 sets out the eligibility criteria for registration of every unorganised worker as: (a) having completed the age of 4 years; and (b) self-declaration affirming that he/she is an unorganised worker. Section 10(3) further states that every such registered unorganised worker shall be given a smart card, carrying a unique identification number.

Till date, few states have formulated the rules and schemes as mandated by this law.

Sadly, this law also has some gaping holes. It fails to define the concept of “social security”. The definition of “unorganised worker” as set out in Section 2 (m), appears to have excluded a vast range, number and categories of unorganised labour.

Beyond making provisions for framing welfare schemes etc, the 2008 Act does not contemplate or lay down any other method by way of which social security of unorganised sector can be ensured. Unlike the organised sector, the 2008 Act does not empower labour from the unorganised sector, to form trade unions etc. that would otherwise give them a power of collective bargaining.

Unlike the BOCW Act, the 2008 Act does not contemplate setting up a sectoral welfare fund, not that it has been a smashing success. The law also does not provide any mechanism or forum to resolve disputes that arise between such unorganised labour and their employers etc.

Yojana - hit or miss?

In this backdrop, lets zoom in on the Yojana. Do bear in mind that as stated, that the organized sector is only about 3% percent of the entire labour force in India. Also, the registered construction workers are about 3.7% of the estimated number of construction workers in Delhi alone. This must be the pattern in other states as well.

What was needed was an immediate handout to the workers who would find it difficult to secure their earned wages and get their wages for the lay-off period. With the anticipated disruption of tsunamic proportions, there is no guarantee if the establishments where these workers were employed would even survive, and if they do, whether the workers would be on the good side of the inevitable massive job cuts.

As on date, there are about 4.5 crore registered members under the Employees' Provident Fund Organisation (EPFO)

In terms of the current EPF scheme, the employees' contribution of 12% is entirely credited in the EPF account, while out of 12% of the employer's contribution, 3.67% is credited in the EPF account and the rest 8.33% is credited in the employee pension scheme.

The benefit of bearing the EPF contribution for 3 months per worker in establishments where 90% of the workmen earn less than Rs. 15,000 would mean approximately Rs. 1,800/- per employee per month, each as the employee’s contribution and the employer’s contribution. This is on the assumption that 12% is the rate of both the employer’s and the employee’s EPF contribution, on the maximum wage ceiling of Rs. 15,000/.

The money would be in the form of reimbursements, indicating that the employers will have to continue to provide wages to its employees for the next three months for which the government will foot the PF bill. There is no clarity on whether and how the government may recover these amounts from the employers, in the coming months.

However, this is hardly the emergent cash-in-hand assistance that could make a life and death difference for the displaced, out of work migrant worker. Besides, several news reports suggest that it will cover only about 16% of EPF subscribers and 1.6% of the total workforce of 471 million in India.

The Finance Minister was fair to admit that the next relief measure, i.e. allowing the employee to a non- refundable advance of 75 percent of the amount or three months of the wages, whichever is lower, from their accounts, was not even coming out of the government’s kitty. It was just a waiver of a cap.

Any person with even a little idea of such matters would know that the employee looks at the EPF accumulation as the retirement relief to be touched or loan taken against only in the rarest of contingencies such as a grave illness or a family marriage.

In these circumstances, to simply loosen the reins on the workers on monies is hardly any generosity on the part of the government. Also the practical difficulties involved in completing the formalities involved in getting such loans cleared are Himalayan. With the nation in shutdown, and only essential government offices open, even such relief is chimeric.

Now a few words on the part of the “Yojana” that requests states to loosen the purse strings under the BOCW Act. That the number of registered construction workers in Delhi alone, as on date, is only 37,127 as opposed to the composite figure of about 10 lakh construction workers. In fact, the number of such registered “construction and other workers” under the BOCW Act, has come down from 2,86,449 in the year 2015, 3,64,974 in the year 2017, to merely 37,127 in 2019-2020 (as on date).

Section 11 of the BOCW Act makes it mandatory for a “construction and other worker” to register themselves as a beneficiary, in order to be able to avail of the benefits. In light of the fact that merely about 37,000 workers are registered in Delhi as against the number of about 37 lakhs of such workers who work in Delhi alone, it is appalling how the Yojana has failed to even take note of the plight of such a vast number of persons, who are already at an inherently disadvantageous socio-economic position.

When all the Yojana was investing in was in a “request” to the states, one wonders why it did not go whole hog and also ask the states not to limit the benefit to only registered workers! It is understandable that directing/requesting the state governments to extend these benefits to unregistered workers would be a logistical nightmare but that cannot be the reason/ground for the State instrumentalities to limit their obligations only towards a miniscule number of these workers, while leaving the majority out in the cold.

Even in the organised sector, under-reporting of covered employees is also common. Also, many organised sector establishments have increasingly hived off substantial parts of their business to contractors who supply contract labour. The Yojana does not reach out to them either. Mass scale job-loss and layoffs of contract labour has already begun.

Thus, sadly this “Yojana” is a cruel joke on the “garib” migrant labourer, the construction worker, and the overall informal sector.

The Way Forward

The pressing need of the hour is to seriously examine enactment of emergency legislation to compel the employers to directly pay the layoff wages to the government authority during the pandemic period and for the State instrumentalities to directly transfer this amount to every employee through the mechanics of the Jan Dhan Scheme.

This obligation on the State should, in fact, be independent of the actual deposit by the employer. At least some (bare) minimum amount must reach the hands of every displaced worker and must reach now!

Also, it is time to move beyond platitudes and exercises in catchy abbreviations. The best way to let the citizens know that the PM cares, is to immediately direct the operationalization of the funds contemplated by the Disaster Management Laws and use the tools available under law, including breathing life into the 2008 law, and effecting statutory amendments, should the need arise, to ensure that money directly reaches the hands of these hapless, yet healthy, victims of this global health pandemic.

The authors are Advocates based in Delhi.

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