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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
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