An Employment Registry For The Informal Sector – An Idea.

Article by Laalithya Konduru

There have been deep rumblings about growing unemployment in India. The Modi government in its first term came under a lot of fire for not doing enough to tackle the problem. It was also accused of withholding and fudging data on unemployment. The government in its defence rightfully said that there were no mechanisms in place to accurately measure employment data. It has used EPF data to showcase its success in generating jobs while the opposition used the NSSO reports as ammunition to claim that the unemployment rate is at its highest in 45 years. The truth seems to lie somewhere in between. Be that as it may, for a government to administer welfare schemes, being able to accurately measure data is a key requirement.

Despite the unemployment rate remaining high, as a business owner looking to employ labour, it has been my experience that finding willing workers is extremely difficult, offering double the prevailing MNREGA wage notwithstanding. Upon speaking to other business owners, I have come to the understanding that it is not my experience alone.

There is an alternative which addresses the government’s need to measure data, the need of entrepreneurs to find labour, and the need of unemployed labour to find gainful employment. It can also function as the mechanism that regularizes the unorganized sector, which in reality forms the major chunk of India’s economic pie.

The government should set up an online employment register for the informal sector – a database of all citizens who are willing to work and are unemployed. A person must choose whether they would like to register with the employment exchange or with the employment register. Citizens who become employed more gainfully may opt out of the register.

The register should be based on geographical location and should be organised state-wise, district-wise, taluk-wise, block-wise and panchayat-wise. It should contain details like name, gender, age, Aadhar number, phone number, and skills if any.

Let the government set a minimum wage, say Rs. 400 for an eight-hour shift in a place like rural Tamil Nadu. There should be no discrimination in wages between men and women as they have different skill sets which are often complimentary in nature.

The prospective employers could be agriculturists, small enterprises, shops, hotels, contractors or even individuals. They should put up a requirement request at least one day in advance, indicating the nature of work, place of work, dates and timing. It should be the responsibility of the registry to arrange and manage manpower from the pool of registered citizens. At the end of the job, both the employer and the employees can rate each other on various KPIs (Key Performance Indicators). An overall rating will be calculated based on the ratings for each KPI. This overall rating will be displayed along with the profile of the employee and employer on the registry.

At first use of the registry, an employer will be provided employees at random. For future requirements, the employers can scroll through the register and request any particular employee. Employees may refuse to work with a particular employer on future jobs once a job they are currently engaged in gets completed. In case the job is a long term undertaking of at least 6 months, the employee can give the registry 1 months’ notice to find a replacement so that the job does not suffer delays. In short, the registry shall function like Uber for jobs in the informal sector.

The employers should pay the registry in advance the labour cost as calculated by the estimated man-hours to complete the job, and the minimum wage set for that geographical location. In case of longer-term projects lasting more than 2 months, the employers should pay the registry the cost for each month upfront. The registry shall disburse the wages from the payments received after deducting 15% of wages as employee’s contribution to various contributory funds already available to the organized sector. The employer can contribute an equal amount and the concerned government departments shall administer the funds as per usual practice.

Persons with disability who are unable to work and senior citizens who would like to retire are to be registered separately. The unemployment rate at any given time must only be calculated based on the figures recorded in the employment register and the national employment exchanges – an existing database for the formal sector, which is also in need of reforms, but discussing those is beyond the scope of this topic. Persons of working age not registered in any of the 3 databases (the employment register, the employment exchange and the register for retired persons and disabled persons unable to perform any work) must be assumed to be gainfully employed. MNREGA employment must be provided only to those who are registered with the employment registry and unable to find jobs via the registry. This can help greatly downsize MNREGA spending.

The 3 databases are to be used in conjunction with each other to efficiently deliver schemes like PDS, Ayushman Bharat, National Pension Scheme, etc. PDS should be available only to those who fall below a certain cut-off annual income, the tracking of which becomes possible due to the registry. Due to the contributions of the workers and employers to the contributory funds, the government expenditure on these schemes can be reduced, making more money available for spending elsewhere. The government can also remove the burden of ESI, PF, and many more cumbersome statutory requirements on small scale employers and administer these via the registry, making it easier for small entrepreneurs to do business. This can have far reaching effects on Indian economy.

Registered workers should be encouraged to upgrade or learn new skills through the Skill India program. The period of their learning should be considered as a paid leave during which half the wages shall be paid by the government. The skilled labour should have a higher minimum wage, say Rs. 600 for an eight-hour shift.

Every registered woman must be allowed maternity leave where the government pays the half wage, but this must be available only for the first 2 pregnancies. For subsequent pregnancies, she will be entitled to leave but no wages shall be paid.

Senior citizens pension and disability pension should be raised to a more meaningful level of Rs. 6000 per month. This will be possible due to the savings made on MNREGA and other schemes. Workers who complete 20 years of service should have a minimum pension of Rs.15000 per month. It is very much possible under the present National Pension Scheme itself because of the contributions proposed. This will have a huge effect on the quality of life experienced by our elderly citizens.

By implementing an employment registry for the informal sector on these lines, not only can the government save on welfare schemes and make them more efficient, it can also track national income levels and erase the wage gap between men and women currently prevalent in the informal sector. It can also help raise standards of living and deliver meaningful poverty alleviation schemes to those who really need them, leading to an overall more prosperous India.