Labour Reforms in Years 2019 & 2020
Context:
The Economic Survey 2020-21 states that the years 2019 and 2020 are landmark years in the history of labour reforms, when the country saw the nearly 29 Central Labour laws being amalgamated, rationalized and simplified into four labour codes viz.:
- The Code on Wages, 2019,
- The Industrial Relations Code, 2020,
- The Occupational Safety, Health and Working Conditions Code, 2020 and
- The Code on Social Security, 2020.
The Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman presented the Economic Survey 2020-21 in Parliament today. This has brought these laws in tune with the changing labour market trends and at the same time accommodated the minimum wage requirement and welfare needs of the unorganized sector workers, including the self-employed and migrant workers, within the framework of legislation.
Findings
Impact of COVID-19 on the Labour Market
COVID-19 has exposed the vulnerability of urban casual workers, who account for 11.2 per cent of urban workforce (All-India) as per Periodic Labour Force Survey (PLFS), January-March, 2020. A significant proportion of them are supposed to be migrants who were impacted by the lockdown. About 63.19 lakh migrant workers travelled through Shramik Special trains from May-August 2020. With limited data available on inter-state migration and employment in informal sectors, it is difficult to figure the numbers of migrants who lost jobs and accommodation during the pandemic and returned home. Government of India has taken several initiatives for the welfare of workers during the pre-lockdown and lockdown period to mitigate the crisis
Status of employment
The Survey observed that the size of labour force in 2018-19 was estimated at about 51.8 crore persons: about 48.8 crore employed and 3.0 crore unemployed. The size of the labour force increased by about 0.85 crore between 2017-18 and 2018-19. Out of these, 0.46 crore were from urban sector and 0.39 crore were from rural sector. The gender composition of the increase in the labour force comprised about 0.64 crore males and about 0.21 crore females. The size of the workforce increased by about 1.64 crore, of which 1.22 crore were in rural sector and 0.42 crore in urban sector. The gender composition was 0.92 crore females and 0.72 crore males.
Number of unemployed persons declined by about 0.79 crore between 2017-18 and 2018-19, largely in the category of females, and in rural sector. The females labour force participation rate increased from 17.5 per cent in 2017-18 to 18.6 per cent in 2018-19. These facts reveal that 2018-19 was a good year for employment generation, says the Survey.
Industry-wise estimates on workforce shows that the largest, about 21.5 crore persons are employed in ‘Agriculture’, which is still the largest employer with 42.5 per cent of workforce. Next important industry is ‘other services’ where about 6.4 crore persons (13.8 per cent) were engaged. ‘Manufacturing’ and ‘Trade, hotel & restaurants’ each employed about 5.9 crore persons with the share of nearly 12.1 per cent and 12.6 per cent respectively, while ‘Construction’ sector employed about 5.7 crore persons in 2018-19 with share of 12.1 per cent.Employed persons have significantly increased in Agriculture, Manufacturing and Transport storage & communication in 2018-19 from 2017-18.
Among the total employed, about 25 crore are self-employed, 12.2 crore regular wage/salaried employees and 11.5 crore casual workers (Table 8). Self-employment is still the major source of employment with close to 52 per cent of the workforce was self-employed. The proportion of regular wage/salaried employees saw an increase in both rural & urban areas and for both males & females. This increase was more among urban females which increased from52.1 per cent in 2017-18 to 54.7 per cent in 2018-19. This also indicates the improvement in quality of employment. At the same time, the proportion of casual labour showed a decline,
The Survey notes that the quarterly PLFS covers only the urban areas and it may be seen that the proportion of male engaged as regular wage/salaried employees has increased during the period January-March, 2020 from the January-March, 2019, while decline was noticed for both male and female in the category of causal labours during the same period.
Formal Employment
The Survey observes that the net payroll data of Employees’ Provident Fund Organisation (EPFO) as on 20th December, 2020 shows a net increase of new subscribers in EPFO of 78.58 lakhs in 2019-20 as compared to 61.1 lakhs in 2018-19. These estimates are net of the members newly enrolled, exited and re-joined during the year as per records of the EPFO. During FY 2020-21, the net new EPF subscribers shows an increase across all age groups and had peaked in September, 2020 to 14.2 lakh subscribers.
Unemployment
The Economic Survey observes that Unemployment rates at all India level, for all ages, as per usual status, declined marginally to 5.8 per cent in 2018-19 from 6.1 per cent in 2017-18.
The decline in unemployment rate is widespread across all the categories. The highest decline in unemployment rates is seen among those who have received formal vocational/technical training.
The youth unemployment rates varies widely across States in India. The States like Arunachal Pradesh, Kerala, Manipur, and Bihar are on the high extreme while the States such as Gujarat, Karnataka, West Bengal and Sikkim are on the lower extreme. zIn States/UTs such as Bihar, Himachal Pradesh and Maharashtra, the youth unemployment rate in urban areas is almost equal to the unemployment rate in rural areas. Unemployment rates in urban are much higher than the rural sector in most of the States/UTs.
Changing Nature of Work: Gig and Platform Workers
The Survey says that the nature of work has been changing with the change in technology, evolution of new economic activities, innovation in organization structures and evolving business models. Digital platforms have emerged as enablers for employment creation with the power to easily discover job seekers and job providers in the absence of middlemen. Apart from traditional forces, these new forces have created massive opportunities for the consumer and service provider to interact through innovative ways. Digital technology enables two-sided markets which saw the emergence of e-commerce and online retailing platforms such as Amazon, Flipkart, Ola, Uber, Urban Clap, Zomato, Swiggy etc. India has emerged as one of the largest country for flexistaffing in the world.
During the period of COVID-19 induced lockdown, the increasing role of the gig economy was evident with significant growth of online retail business. The lockdown period also saw employers preferring ‘Work from home’ of their employees, cutting down on staff strength and engaging freelancers or outsourcing tasks to reduce overhead costs as well as to hire skilled services. Drivers engaged in platforms like Uber/Ola, Swiggy, Big Basket, Pizza Hut etc, are now showing potential as well. As a result, the gig economy have been popular amongst the workers in India. The benefit of the gig economy is that it allows flexibility in employer-employee relationship to both service seeker and service provider.
Aatmanirbhar Bharat Rojgar Yojana (ABRY)
The Economic Survey says that ABRY, a component of Aatmanirbhar Bharat package announced in November, 2020 has total estimated outlay of Rs 22,810 crore for the scheme period i.e., up to wage month 31st May, 2023. The scheme proposes to pay: (i) Entire employees’ and employers’ contribution (12 per cent of employees’ EPF and 12 per cent of employers’ EPF contribution or statutory rate applicable to establishment) i.e. 24 per cent of wages towards EPF in respect of new employees in establishments employing up to 1000 employees (contributing EPF members with UAN) during the period from October, 2020 to June, 2021 and also to re-employ who lost their jobs due to COVID-19. (ii) Only employees’ share of EPF contribution (i.e. 12 per cent) of wages in respect of new employees in establishments employing more than 1000 employee during the period from October 2020 to June 2021, and also to re-employee who lost their jobs due to COVID-19.
Other measures
The Survey says that in order to provide relief to the organized sector employees, a notification issued on 28th March, 2020 by the Government provisioning non-refundable advance of 75 per cent of outstanding balance or 3 months’ wages whichever is lower, allowed to the members of EPFO. As on 9th December, 2020, 53.62 lakh members of EPFO have availed facility of online withdrawal amounting to Rs. 13,587.53 crore.
Reduction in statutory rate of contribution from 12 per cent to 10 per cent for wage months May, June and July, 2020 for all class of establishments covered under the EPF & MP Act, 1952 was announced as part of Atmanirbhar Bharat package. Reduction in rate of EPF contributions is intended to benefit 4.3 crore employees and employers of 6.5 lakh establishments to tide over the immediate liquidity crisis to some extent.
Under Prime Minister’s Garib Kalyan Package (PMGKP) financial assistance was given to building & other construction workers (BOCW) which largely included migrant workers from the funds collected under BOCW’s cess. 31 State/UT Governments have announced cash benefits, ranging from Rs. 1000 to Rs. 6000 per month to around 2.0 crore workers and total amount of Rs. 4973.65 crore was disbursed.
