Model Answer
0 min readIntroduction
The informal labour market constitutes a significant portion of the urban Indian economy, estimated to be around 50% of the total workforce (NSSO, 2019). It encompasses unorganized, small-scale, and unregistered enterprises employing workers without the benefits of formal employment – job security, social security, and legal protection. Rapid urbanization and the demand for low-cost labour have fuelled the growth of this sector. However, this growth comes at the cost of widespread vulnerability and exploitation of workers, necessitating a comprehensive understanding of the issues and potential remedies.
Characteristics of the Urban Informal Labour Market
The urban informal labour market is characterized by:
- Small Scale of Operation: Most enterprises are micro or small, often family-owned.
- Lack of Registration: A significant portion operates outside the purview of formal registration and regulation.
- Low Capital Intensity: Reliance on manual labour and limited use of technology.
- Precarious Employment: Workers often face unstable employment, irregular wages, and lack of job security.
- Dominance of Self-Employment: A large proportion of informal workers are self-employed, often as street vendors, rickshaw pullers, or domestic workers.
Key Issues Facing Informal Labour
Vulnerability and Lack of Social Security
Informal workers are highly vulnerable to economic shocks, health crises, and natural disasters. They lack access to social security benefits like health insurance, pension, and unemployment allowances. The Employees' State Insurance (ESI) Act, 1948 and the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, largely exclude informal workers.
Exploitation and Poor Working Conditions
Informal workers often face exploitative working conditions, including long working hours, low wages, and unsafe environments. They are often denied basic labour rights, such as minimum wage and protection against discrimination. Child labour remains a persistent problem in certain sectors.
Limited Access to Credit and Finance
Informal workers often struggle to access formal credit and financial services, forcing them to rely on informal moneylenders who charge exorbitant interest rates. This perpetuates a cycle of debt and poverty.
Lack of Skill Development and Training
Limited access to skill development and training opportunities hinders the ability of informal workers to improve their productivity and earning potential. The Pradhan Mantri Kaushal Vikas Yojana (PMKVY) aims to address this, but its reach within the informal sector remains limited.
Challenges in Enforcement of Labour Laws
Enforcement of labour laws in the informal sector is weak due to limited resources, lack of awareness among workers, and the difficulty of monitoring and regulating a large and dispersed sector. The Labour Codes, 2020 aim to simplify and consolidate labour laws, but their effectiveness in the informal sector remains to be seen.
Policy Interventions and Challenges
Several policies have been implemented to address the issues facing informal labour:
- National Social Assistance Programme (NSAP): Provides financial assistance to vulnerable groups, including elderly, widows, and persons with disabilities.
- Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA): While primarily rural, it provides a safety net for some migrant workers returning to their villages.
- Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act, 2014: Aims to protect the rights of street vendors and regulate street vending activities.
- e-Shram Portal (2021): A national database of unorganized workers to facilitate access to social security schemes.
However, challenges remain in effectively implementing these policies, including:
- Coverage Gaps: Many informal workers remain outside the reach of social security schemes.
- Implementation Challenges: Weak enforcement and bureaucratic hurdles hinder effective implementation.
- Lack of Awareness: Many workers are unaware of their rights and available benefits.
Conclusion
The urban informal labour market is a complex and multifaceted issue requiring a holistic and multi-pronged approach. Strengthening social security nets, improving working conditions, promoting skill development, and ensuring effective enforcement of labour laws are crucial steps. The e-Shram portal represents a positive step towards data collection and targeted interventions. However, sustained political will, increased investment, and greater collaboration between government, employers, and workers are essential to ensure a just and equitable future for the millions of informal workers who contribute significantly to the Indian economy.
Answer Length
This is a comprehensive model answer for learning purposes and may exceed the word limit. In the exam, always adhere to the prescribed word count.