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Informal sector workers not registered, officials flag problems in paying wages

Some state government officials The Indian Express spoke to said they were grappling with two issues: many unorganised sector workers are not registered with the state government, and most states did not have significant corpus of funds to meet such contingencies.

Written by Aanchal Magazine | New Delhi |
Updated: March 30, 2020 8:13:01 am
india lockdown, migrant labour movement, migrant labour crisis, unorganised sector, registered unorganised workers, coronavirus, indian express Workers at Greater Noida, Saturday. (Photo: Gajendra Yadav)

The Centre and several states have asked shops and establishments, and other commercial units, to pay wages to their workers during lockdown, but the informal nature of these entities, and non-registration of many unorganised workers with states, would restrict the states’ ability and administrative control to enforce such orders, said government officials, who did not wish to be named.

Some state government officials The Indian Express spoke to said besides the state’s capacity to ensure its orders were met, they were grappling with two other issues: many unorganised sector workers are not registered with the state government, and most states did not have significant corpus of funds to meet such contingencies.

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“Most establishments in India are informal sector establishments, most are not registered. Some may be registered under the Shop and Establishments Act, but a lot of them are not. So, the problem of locating them, how many were employed there and then making the money available to them.

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Issuing orders without the administrative capacity to carry it out is a little worrying. In this sort of situation, you can do this with organised sector entities, but for an unorganised and informal sector establishment, it is not feasible,” former Chief Statistician of India Pronab Sen said.

Most of the small-scale shops and establishments have a minimum buffer which is used by them to manage purchases, making it tough to pay during a 21-day shutdown, industry sources said.

“Most small businesses run with a monetary buffer of 3-7 days, with which they manage the working capital requirement, including purchase of inputs and provisions for worker salaries. An extended shutdown that stretches beyond a few days impedes this cycle and makes it difficult to provision for payments, including salaries. There is no way that a majority of small and even medium-sized businesses can make salary payouts when the factory or unit has downed its shutters,” a senior executive with a Mumbai-based diversified business house, which counts several SMEs as part of its supplier base, said.

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Experts said that even in the construction sector, which employs the largest share of migrant workers, the workers would not be tied to one contractor, making it difficult to enforce such orders.

Sen suggested that the government authorities should instead set up registration centres for migrant and casual workers immediately in towns and cities to help them. “Out-migration should have been stopped much earlier. The more sensible thing to do now is to tell people who are working in such establishments to get themselves registered with some government authority and say that the government would on registration give them ‘x’ amount of money on a daily or weekly basis, depending on how they want to do it… something like the ration system,” he said.

As per the last available Sixth Economic Census, conducted during January 2013-April 2014, out of total 5.85 crore establishments with 13.13 crore workers in operation, 77.6 per cent (4.53 crore) were engaged in non-agricultural activities (excluding public administration, defence, and compulsory social security activities) while 22.4 per cent establishments (1.31 crore) were engaged in agricultural activities (excluding crop production and plantation).

No recent official data estimate the country’s unorganised workers. According to the last NSSO Employment and Unemployment Survey, 2011-12, unorganised sector workers were estimated to be 82.7 per cent or 39.14 crore of the total 47.41 crore estimated employed persons. The contribution of the unorganised or informal sector to the economy, according to a National Statistical Commission report of 2012, varies between 48 per cent and 56.4 per cent. While the Labour Ministry does not keep data on migrant workers, the Economic Survey in the past had assumed it at 20 per cent of the total workforce.

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