More regular income earners had no safety net before Covid-19 hit

The share of unorganised sector workers in the workforce rose in 2018-19, making the labour market more vulnerable a year before the Covid-19 pandemic hit India, official data showed. While the share of workers earning a regular salary went up in 2018-19 compared to 2017-18, the proportion of such workforce without any social security benefits also increased, pointing towards a continued trend of informalisation of labour, experts pointed out.

More than half the workers in India (51.9 per cent) earning a 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, showed the National Statistical Office’s periodic labour force survey, conducted between July 2018 and June 2019, released on Thursday. This is despite the fact that the share of regular salaried workers inched up from 22.8 per cent in 2017-18 to 23.8 per cent in 2018-19, as the proportion of casual workers declined from 24.9 per cent to 24.1 per cent. The share of selfemployed in the workforce remained flat at 52.1 per cent.

Radhicka Kapoor, senior fellow at Indian Council for Research on International Economic Relations, said even though more firms switched to the formal sector and gave regular wages, this doesn’t necessarily mean they were passing on social security benefits.

“There might be more enterprises that are coming into the formal sector, for instance, by being registered under the GST regime, but with a supply disruption and lack of demand in the economy, there may be an 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 — a figure that is still low.

The survey considered regular wage employees as those who had received income not on the basis of daily or periodic renewal of work contract, and included both full-time and part-time workers and paid apprentices.

The data contradicts the claims of the government, which has often cited the payroll data released by the Employees’ Provident Fund Organisation to say that the share of formal jobs had increased in India.

The NSO survey asked households in India whether they received provident fund, pension, gratuity, healthcare and maternity benefits during the past 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 world,” said Kapoor.

When the government announced the nationwide lockdown, millions of migrant workers left cities to go back to their villages as most of them were a part of the unorganised sector with no safety net.

Jayati Ghosh, professor of economics at the Jawaharlal Nehru University, said their survey of labour in Delhi showed that a lot of the workers receiving social security benefits remained a concept on paper.

“They had no idea about whether they were registered for the EPF scheme or if it was portable while switching jobs. After the pandemic, we have seen that there is no social security net in our workforce at all.”

The increase in the share of workers in the unorganised sector was greater for females than males in 2018-19.