Ambrosia

PROVIDING SOCIAL WELFARE TO

INFORMAL SECTOR WORKERS

Animesh Lahiri

Anurag Savarnya

Apoorv Jain

Bollam Vinay Kumar

Sumit Karnani

IIT KHARAGPUR

3%

97%

Distribution of Workforce

OrganizedWorkforce

UnorganizedWorkforce

PROBLEM STATEMENT• From the central point: Significant chunk

of the economy invisible: No tax collection No institutional support No benchmark

• From the unorganized sector: Poor living and working conditions. No social security. Inadequate employment, low

earnings, low health and educational status.

Lack of basic services such as first aid, shortage of clean drinking water and proper sanitation facilities.

Labourers in the unorganized sector are often trapped in a vicious cycle, starting work as children and continuing well into their old age.

What needs to be done:• Identifying the unorganized workforce.• Providing a safety and social security to them.• Make them a part of central economy.• Increase India’s labour productivity.• Provide schemes and programs for their benefit.

PROPOSED SOLUTIONApproach :

Conducted a survey at IIT Kharagpur for the proposed solution.

Conclusion drawn :

Even at IIT kharagpur which is considered to be the most organized institute has every 5out of 7 workers in the unorganized sector.

PARAMETERS OF SURVEY AT IIT KHARAGPUR

Variables

Category

Reasons for a particular

profession

Terms and conditions of job Wages Discrimination on basis of

gender

Domestic

Workers

Only job available near

their residence

Economic compulsion

No other skill

No defined rules

Increment in

wages/fringe

benefits only when

working for long period

Negotiable

Wages not enough to

satisfy bare minimum

needs

No discrimination

Women are more

preferred against men

for household jobs

Construction

Workers

No land

No other skills

No other options

Depend upon local

contractors for work

No regularity or security of

job

Disparity in wages and

in nature of work

Ill-treatment and

harassment at hands

of contractors

Garment Workers Low middle class who

want white collar jobs

Can work from home

No significant

information

Work based,(commission)

Negotiable /Arbitrary

No incidence reported

Petty Traders

/Vendors

Find pride in being self-

employed

Self-employed Uncertain No incidence reported

Sales Persons Economic compulsion

More dignified

Very tedious and also

involves risks of personal

assaults.

Mostly work

based,(commission)

Arbitrary and low

No incidence reported

PROPOSED MODEL FOR IIT

KHARAGPUR The unorganized workforce of IIT Kharagpur is divided into 5 Unions namely:

Union of Domestic workers

Union of Construction workers

Union of Garment workers

Union of Vendors

Union of Sales person

• The workforce will have to register to the corresponding union and a proper registration ID(each union will have a different ID) will be given to them.

• The different Unions will be responsible for deciding the work hour and availability of the workforce.

• The money collected as the pension fund in the different unions will be send to the “the Area level body” that is the IIT Kharagpur level body which will be under the Medinipur West district level body.

• The Medinipur West district body will be under Kolkata state level body which is connected to the Central level body.

Unorganized workforce

In terms of occupation

In terms of specially

distressed categories

OthersIn terms of

Service categories

In terms of Nature of

employment

Small and marginal farmers, landless agricultural labourers, share croppers, fishermen, those engaged in animal husbandry, labelling and packing, building and construction workers, leather workers, weavers, artisans, salt workers, workers in brick kilns and stone quarries, workers in saw mills, oil mills etc.

Toddy tappers, Scavengers, Carriers of head loads, Drivers of animal driven vehicles, Loaders and unloadersetc.

There exists a large section of unorganized labour force such as cobblers, Hamals, Handicraft artisans, Handloom weavers, Lady tailors, Physically handicapped self employed persons, Rickshaw pullers, Auto drivers, Sericulture workers, Carpenters, Tannery workers, Power loom workers and Urban poor etc.

Attached agricultural labourers, bonded labourers, migrant workers, contract and casual labourers.

Midwives, Domestic workers, Fishermen and women, Barbers, Vegetable and fruit vendors, News paper vendors etc.

IMPACTOF THE SOLUTION

The pension funds will lead to increase in national income.

Social security to the unorganized workforce.

Incentives like pension, exposure to the different government schemes will beprovided that will ensure the financial stability to the workforce even whenthey are not be able to work physically.

The people at the grass root level will be able to enjoy the benefits of variousgovernment schemes because of this decentralization.

Proper infrastructure like supply of electricity and water will be provided by thegovernment at their work stations.

Comprehensive social security coverage coverage entailing Life Insurance,Health Insurance and Old Age Pension for Unorganized Sector Workers.

Encouraging private sector participation in providing social security, includingold age pension

Legislation under consideration to enable private sector companies to sellinsurance and pension products in the form of deferred annuity, annuity withreturn of purchase price and the like.

METHODOLOGY USED TO COME

TO PROPOSED SOLUTION

Studied the Unorganized Sector using Data Development Analysis tocompute technical scores using Linear Programming Model.

“The technical efficiency of a firm is a comparative measure of how well itactually processes inputs to achieve its outputs, as compared to itsmaximum potential for doing so, as represented by its productionpossibility frontier” (Barros and Mascarenhas, 2005).

Data Development Analysis was done using the following parameters:

Gross Value added by Unorganized Workforce at IIT Kharagpur

Capital Generated by Unorganized Workforce at IIT Kharagpur

Labour by Unorganized Workforce at IIT Kharagpur

Factor by which the output bundle can be expanded relative to thefrontier constructed with input-output bundle of other bestperforming firm.

The detailed study and paper showinng calculations would beshown at final round of Manthan at Delhi.

CHALLENGES AND

MITIGATION FACTORS

As the population of unorganized workforce is quite huge, it becomes achallenge to apply the proposed solution.

It is observed that though the share of agriculture, forestry & logging andfishing sector is decreasing over time, still it has highest share in unorganizedsector’s NDP.

It is observed that principal agent problem exists in informal sector. To solve thisproblem and make hired labour more productive, institutional intervention isrequired in terms of the implementation of certain rules and regulationregarding the incentives of the hired labourer.

Secondly, lack of market is one of the main reasons of the informal firmsinefficiency. Market certainty will make the informal firms more efficient. Sodiversification of production (i.e., production of those commodities which havehigh demand both in national and international markets) may solve theproblem.

Thirdly, it is observed that perennial firms are less efficient than casual andseasonal firms because they are used to produce their product both in the peakand lean seasons. In the lean season, on the one hand demand for the productis very less and on the other hand inputs are relatively costly.

Appendix:

1. Informal Sector in India: Contribution, Growth and Efficiency (Indrajit Bairagya, Institute for social and economic change,Bangalore)

2. Contribution of the Unorganized sector to GDP (Report of

the Sub Committee of a NCEUS Task Force)

3. Measuring the unorganized sector in India by A. C.

Kulshreshtha