Class 24 Unemployment and Labour Reforms 15

UNEMPLOYMENT
CONTENT
UNEMPLOYMENT
1. UNEMPLOYMENT ...................................................................................................................................... 3
2. Concept of Unemployment ............................................................................................................................ 3
Sources of data on unemployment ................................................................................................................ 3
(1) Reports of Census of India................................................................................................................ 3
(2) National Statistical Office’s Reports of Employment and Unemployment Situation, Annual
Reports of Periodic Labour Force Survey .......................................................................................................... 3
Measurement of Unemployment in India by NSO:..................................................................................... 4
(1) Daily Status Approach: ..................................................................................................................... 4
(2) Weekly Status Approach: ................................................................................................................. 5
(3) Usual Status Approach: .................................................................................................................... 5
NSO and CSO: ........................................................................................................................................ 5
(3)DIRECTORATE GENERAL OF EMPLOYMENT AND TRAINING DATA OF
REGISTRATION WITH EMPLOYMENT EXCHANGES ............................................................................ 5
3. Latest trends in Employment ........................................................................................................................ 6
Types of Unemployment in India ................................................................................................................. 6
Disguised Unemployment ....................................................................................................................... 7
Structural Unemployment ...................................................................................................................... 7
Seasonal Unemployment ......................................................................................................................... 7
Technological Unemployment ................................................................................................................ 7
Cyclical Unemployment .......................................................................................................................... 7
Frictional Unemployment ....................................................................................................................... 7
Voluntary Unemployment ...................................................................................................................... 7
Involuntary unemployment .................................................................................................................... 7
Sectoral Distribution of Employment in Indian Economy ........................................................................ 8
● In the course of the economic development of a country, labour flows from agriculture and
other related activities to industry and services. ................................................................................................ 8
Causes of Unemployment .............................................................................................................................. 9
Formal and Informal Sector ......................................................................................................................... 9
Formal/Organised Sector ....................................................................................................................... 9
Informal/Unorganised Sector ................................................................................................................. 9
Difference between Formal and Informal Sector ...................................................................................... 10
Gig workers ........................................................................................................................................... 11
4. Informalisation of Indian workforce .......................................................................................................... 11
Scenario of Informal Workers According to E-Shram Portal .......................................................... 12
Challenges Related to Informal Sector in India ................................................................................. 12
Government initiatives for the Informal/Unorganised Sector .......................................................... 13
Impact of Unemployment ............................................................................................................................ 13
Government Initiative to Control Unemployment .................................................................................... 14
1. MGNREGA ....................................................................................................................................... 14
2.PMKVY – Pradhan Mantri Kaushal Vikas Yojana ....................................................................... 15
Other Major Initiatives......................................................................................................................... 15
Way Forward ............................................................................................................................................... 18
Labour reforms in India.............................................................................................................................. 18
Introduction ........................................................................................................................................... 18
Constitutional Provisions related to Labour Welfare in India.......................................................... 18
Background ........................................................................................................................................... 19
Need for reform and codification of India's Labour Laws ................................................................ 19
Labour codes introduced by the Government .................................................................................... 20
Code on Wages, 2019 ............................................................................................................................ 21
Code on Social Security, 2020 .............................................................................................................. 22
Code on Occupational Safety, Health and Working Conditions, 2020 ............................................. 23
Code on Industrial Relations, 2020 ...................................................................................................... 25
Comparison between fixed term employment, permanent employment and contract labour ....... 26
5. Impacts of Labor codes ............................................................................................................................... 27
Definition Of Worker Under Labor Codes ................................................................................................ 27
Definition Of ‘Wages’ Under Labour Codes ............................................................................................. 27
Gratuity And Leave Encashment ............................................................................................................... 27
For More Study Material, Visit: studyiq.com Page no.

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Provident Fund ............................................................................................................................................ 28

Enabling Employment Opportunities For Women Employees ............................................................... 28
Much Wider Coverage ................................................................................................................................ 28
Faster F&F Settlements ............................................................................................................................... 28
Issues And Concerns Against The New Consolidated Codes ................................................................... 29
Jurisdiction Of Central Government ......................................................................................................... 29
Power To The Exempt Establishment ........................................................................................................ 29
Other Concerns ............................................................................................................................................ 30
6. Other steps taken for welfare of workers .................................................................................................. 30
7. PYQs (UPSC) ............................................................................................................................................... 30
PRELIMS ..................................................................................................................................................... 30
MAINS .......................................................................................................................................................... 31

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UNEMPLOYMENT
UNEMPLOYMENT
CONCEPT OF UNEMPLOYMENT
● There are a variety of ways by which an unemployed person is identified.
o Economists define an unemployed person as one who is not able to get employment for
even one hour in half a day.
● The National Statistical Office (Previously it was known as National Sample Survey Organisation)
defines unemployment as :
o “ A situation in which all those who, owing to lack of work, are not working but either seek
work through employment exchanges, intermediaries, friends or relatives or by making
applications to prospective employers or express their willingness or availability for work
under the prevailing condition of work and remunerations”.
● The unemployment rate is the most frequent measure of unemployment.
o The unemployment rate is the number of people unemployed divided by the working
population or people working in the labour force.
Unemployment rate = (Unemployed Workers / Total labour force) ×
100
SOURCES OF DATA ON UNEMPLOYMENT

● There are three sources of data on unemployment :
(1) Reports of Census of India;
(2) National Statistical Office’s Reports of Employment and Unemployment Situation, Annual
Reports of Periodic Labour Force Survey, and
(3) Directorate General of Employment and Training data of Registration with Employment
Exchanges.
(1) REPORTS OF CENSUS OF INDIA

● A census is a procedure of systematically acquiring, recording, and calculating information about
the members of a given population.
○ While it has been undertaken every 10 years, beginning in 1872 under British Viceroy Lord
Mayo, the first complete census was taken in 1881.
○ The decennial(10-yearly) Census of India has been conducted 15 times, as of 2011.
● Post-1949, the census has been conducted by the Registrar General and Census Commissioner of
India under the Ministry of Home Affairs, Government of India.
● All the censuses since 1951 were conducted under the 1948 Census of India Act.
● The last census was held in 2011, whilst the next was to be held in 2021. But it has been
postponed due to the COVID-19 pandemic.
● Note: Though the data provided by the census is comprehensive, there is a huge delay due to
the 10-year gap between the consecutive censuses.
(2) NATIONAL STATISTICAL OFFICE’S REPORTS OF EMPLOYMENT AND UNEMPLOYMENT

SITUATION, ANNUAL REPORTS OF PERIODIC LABOUR FORCE SURVEY
● Reliable estimates of employment and unemployment are obtained through labor force surveys
conducted by the National Statistical Office (NSO) under the Ministry of Statistics, and
Programme Implementation(MoSPI).

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UNEMPLOYMENT
● Considering the importance of the availability of labor force data at more frequent time
intervals, the NSO launched the Periodic Labour Force Survey (PLFS) in April 2017.
○ Earlier the source of the data was nationwide quinquennial (5-yearly) surveys on
employment and unemployment by the National Sample Survey Office (NSSO).
○ The quinquennial surveys of NSSO provide data for upto 2011-12 only. Hence, it was
replaced by the Periodic Labour Force Survey (PLFS), started in 2017-18 on an annual basis.
Periodic Labour Force Survey (PLFS):

● The objective of PLFS is primarily two fold-
(1) First, to estimate the key employment and unemployment indicators (viz. Worker
Population Ratio, Labour Force Participation Rate, Unemployment Rate) in the short
time interval of three months for the urban areas only in the 'Current Weekly Status'
(CWS).
(2) Second one was, for both rural and urban areas, to measure the labor force estimates on
key parameters in both usual status (ps+ss) and Current Weekly Status.
● The Periodic Labour Force Survey (PLFS) gives estimates of Key employment and
unemployment Indicators:
○ Labour Force Participation Rate (LFPR): LFPR is defined as the percentage of persons in
labour force (i.e. working or seeking or available for work) in the population.
○ Worker Population Ratio (WPR): WPR is defined as the percentage of employed persons in
the population.
○ Unemployment Rate (UR): UR is defined as the percentage of persons unemployed among
the persons in the labour force.
○ Current Weekly Status (CWS): The activity status determined on the basis of a reference
period of last 7 days preceding the date of survey is known as the current weekly status
(CWS) of the person.
MEASUREMENT OF UNEMPLOYMENT IN INDIA BY NSO:

(1) DAILY STATUS APPROACH:
● In a daily status approach, the present activity status of the person with respect to whether a
person is employed or unemployed or outside the labor force is recorded for each day in the
reference week.
○ The measure adopts half day as a unit of measurement for estimating employment or
unemployment.
● It is the most inclusive of all approaches used as it captures the days of unemployment of those
who are recorded as employed on the weekly status approach.
○ An individual working for 4 hours or more but up to 8 hours on a day is recorded as
employed for the full day.
○ An individual working for 1 hour or more but less than 4 hours is recorded as employed for
the half day.
○ Accordingly, a person having no gainful work even for 1 hour a day is described as
unemployed for a full day.
● It is beneficial in sectors like farming and non-farming households where employment often
fluctuates over a small period within a week.

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○ Hence the need for the use of a daily status approach to measuring the magnitude of
unemployment and underemployment in India is better.
● Labour Bureau of India has stopped computing data related to UR, LFPR and WPR based on the
CWS and CDS approaches since 2013-14.
(2) WEEKLY STATUS APPROACH:

● Weekly Activity Status, as the name suggests, relates to the activity status of a person in the
week preceding the date of the survey.
● A person who has engaged in any economic activity for at least one hour and for at least one day
in the last seven days preceding the date of the survey is regarded as employed.
● This same criterion is also considered to determine if a person has made efforts to find
employment or not and is marked ‘seeking/available for work or ‘not available for work’
accordingly
(3) USUAL STATUS APPROACH:

● The Usual Status Approach captures long-term unemployment prevalent in the economy.
● Usual Principal Activity status (UPS), or Usual Status (PS), is determined using the majority time
criterion and refers to the activity status on which he/she spent a longer part of the year.
● The principal usual activity status is further used to classify him/her in/out of the labor force.
● This approach measures the number of persons who remained unemployed for a major part of
the year and gives the lowest estimates of unemployment.
● It enables one to determine the usual activity status of a person as being employed or
unemployed or outside the labor force.
● The persons covered may be grouped into those working or available for work in their principal
activity sector and subsidiary sector.
● It records only those persons as being unemployed who had no gainful work for a major time
during the 365 days preceding the date of the survey and are actively seeking work.
NSO AND CSO:

● The Ministry of Statistics and Programme Implementation has two wings, one relating to
Statistics and the other- Programme Implementation. The Statistics Wing called the National
Statistical Office (NSO) consists of the Central Statistical Office (CSO), the Computer Center and
the National Sample Survey Office (NSSO).
○ CSO coordinates the statistical activities in the country and also evolves statistical
standards.
○ NSSO is responsible for conducting large scale sample surveys in diverse fields on an all
India basis.
(3)DIRECTORATE GENERAL OF EMPLOYMENT AND TRAINING DATA OF REGISTRATION WITH

EMPLOYMENT EXCHANGES
● The Directorate General of Employment (DGE) in the Ministry of Labour is the apex organization
for development and coordination at the National level for the programmes relating to National
Employment Services.
○ Employment service is operated through a countrywide network of Employment Exchanges.

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Note: Though the above discussed three sources provide different estimates of unemployment,
they do provide us with the attributes of the unemployed and the variety of unemployment
prevailing in our country.
Latest trends in Employment

● The estimates of Worker Population Ratio (WPR) for persons aged 15 years and above defined
as the number of employed persons to total population on usual status basis during the years
2017-18 to 2019-20 has shown an increasing trend, while the estimated Unemployment Rate
on usual basis for 15 years and above is showing a decreasing trend.
● The estimates of Labour Force Participation Rate (LFPR) for male and female persons for aged
15 years and above on usual status basis during 2019-20 is 76.8 per cent and 30.0 per cent
respectively.
● According to Economic Survey 2022-23, Labour markets have recovered beyond pre-Covid
levels, in both urban and rural areas, with unemployment rates falling from 5.8 per cent in 2018-
19 to 4.2 per cent in 2020-21.
○ A noticeable rise was observed in rural female LFPR from 19.7 per cent in 2018-19 to 27.7
per cent in 2020-21.
○ The steady increase in employment levels can be attributed to multiple measures taken to
cushion the impact of Covid-19 on MSMEs, street vendors, and manufacturing units and
provide job opportunities through various targeted schemes and measures.
○
TYPES OF UNEMPLOYMENT IN INDIA

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DISGUISED ● Under this type of unemployment, more people are employed than
UNEMPLOYMENT actually needed. Marginal productivity of labour is zero in this type of
unemployment and is mostly found in the agriculture sector.
● It exists when part of the labor force is either left without work or is
working in a redundant manner such that worker productivity is
essentially zero.
● Example: In rural cities, where agriculture is the real source of earning.
Such kind of underemployment can often be seen in such lands that
require only three or four people to work on such land. Moreover, there
are only two additional persons required for any sudden or disguised
situation.
STRUCTURAL ● Under this type of unemployment, there is a mismatch between the

UNEMPLOYMENT worker’s skills and the availability of jobs in the market. Many people
in India do not get jobs matching their skills.
● For example: a person with a master of business administration (MBA)
accepting a full-time cashier position due to the inability to find work in
their field m
SEASONAL ● Under this type of unemployment, people do not have work during
UNEMPLOYMENT certain seasons of the year. For example – Construction Workers.
TECHNOLOGICAL Under this type of unemployment people lose their jobs due to
UNEMPLOYMENT advancements in technologies. For example, Automation is leading to a
decrease in jobs in the IT sector.
CYCLICAL Under this type of unemployment, people lose jobs during the recession
UNEMPLOYMENT (down phase in a business cycle) and get jobs during the boom ( growth
phase in a business cycle).
FRICTIONAL ● Under this type of unemployment, people are unemployed for a short
UNEMPLOYMENT span of time while searching for a new job or switching between jobs.
It is actually the time lag between the jobs.
● Frictional unemployment is considered voluntary unemployment
because the reason for unemployment is not a shortage of jobs, but in
fact, the workers themselves quit their jobs in search of better
opportunities.
VOLUNTARY A person is out of a job on his own choice. Either he wants higher wages or
UNEMPLOYMENT doesn’t want to work at all.
INVOLUNTARY It is a situation where a person is willing to work at the prevailing wage
UNEMPLOYMENT rates, but unable to find work due to factors beyond his control.
Casual worker
● Workers are classified under three categories of occupational status: self-employed, working
as casual labour, and working on a regular wage/salary.
● A casual worker is a worker on a temporary employment contract with generally limited
entitlements to benefits and little or no security of employment. The main attribute is the
absence of a continuing relationship of any stability with an employer, which could lead to

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their not being considered 'employees' at all.

● Using 2020 population figures (which generate an estimate of 473 million workers), around
118 million workers in India are casually employed, representing around 25 per cent of the
total Indian workforce, while slightly more than half or 246 million are self-employed.
SECTORAL DISTRIBUTION OF EMPLOYMENT IN INDIAN ECONOMY

● In the course of the economic development of a country, labour flows from agriculture and
other related activities to industry and services.
● Agriculture: PLFS data also shows a decline in the absolute number and share of workers
employed in agriculture between 2018–19 and 2017–18
● Industries and Services: The total number of jobs created in industry and services continued to
show an increase, even during 2019–20.
○ The PLFS estimates indicate that industry added 4.8 million new jobs during 2018–19 and
3.4 million during 2019–20.
○ The services sector provided additional employment to 10.1 million persons during 2018–
19 and 6 million during 2019–20.
○ Quarterly Employment Survey (QES) covers establishments with ten or more workers in
nine major sectors viz. manufacturing, construction, trade, transport, education, health,
accommodation & restaurants, IT/BPOs, and financial services.
■ According to QES, nine sectors accounted for around 83 per cent of the total
employment in establishments (Eco Survey 2022-23)
■ The estimated total employment in the nine selected sectors according to the fourth
round of QES (January to March 2022) stood at 3.2 crore.
○ As per the latest Annual Survey of Industries (ASI) FY20, employment in the organized
manufacturing sector has maintained a steady upward trend over time, with the
employment per factory increasing gradually.
■ In terms of share of employment (total persons engaged)30, the food products industry
(11.1 per cent) remained the largest employer, followed by wearing apparel (7.6 per
cent), basic metals (7.3 per cent), and motor vehicles, trailers, and semi-trailers (6.5 per
cent).
Per cent distribution of workers over sectors and gender and industry type, 2017–18 to
2019–20.

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CAUSES OF UNEMPLOYMENT
● Large population – Constant increase in population is a big concern in India.
● Social Factors – The prevalent caste system in India prevents some people from particular castes
from taking up specific occupations.
● Stagnant Agriculture Sector - The low productivity in the agriculture sector plus the lack of
alternative opportunities for agricultural workers makes the unemployment situation even
worse.
● Loss of small-scale/Cottage Industries – Destruction of small-scale industries that are labour
intensive also aggravates the problem of unemployment.
● Low investments in the manufacturing sector - Inadequate growth of infrastructure and low
investments in the manufacturing sector restrict the employment potential of the secondary
sector.
● Lack of proper Education and Skills - The huge workforce of the country is associated with the
informal sector because of a lack of required education or skills. People do not have the required
specialization that is required for jobs in the present times.
FORMAL AND INFORMAL SECTOR

FORMAL/ORGANISED SECTOR
● The formal sector has a formal contract between employer and employee and a pre-defined
work conditions
● This sector consist of organized group of people working in the same environment and is legally
and socially aware their rights.
● The formal or organised sector consists of all the companies or enterprises where the employees
have regular and guaranteed work and wages.
● The formal sector of the economy is recognized and regulated by the government.
● It includes all the businesses, organizations, and individuals who operate within the framework
of the law, and who pay taxes and follow government regulations.
● Status: According to Labour Ministry, India’s formal sector employment moved up marginally by
0.4 million in the January-March quarter of 2022 with the total number of workers employed
across nine sectors at 31.8 million compared to 31.4 million in the third quarter of 2021-22.
INFORMAL/UNORGANISED SECTOR
● The informal sector of the economy refers to economic activities that are not regulated or
protected by the government.
● It is often characterized by small-scale enterprises, self-employment, and other forms of
economic activity that operate outside of formal channels.
● Examples of informal sector activities include street vendors, home-based businesses, and
unregistered small businesses. These businesses typically operate without formal contracts,
licenses, or permits, and may not pay taxes or follow government regulations.
● In other words, Informal sector consists of all unincorporated private enterprises owned by
individuals or households engaged in the sale and production of goods and services operated on
a proprietary or partnership basis.
● Thus, the informal sector includes millions of farmers, agricultural laborers, owners of small
enterprises, and people working in those enterprises as also the self-employed who do not have
any hired workers.

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UNEMPLOYMENT
● It also includes all nonfarm casual wage laborers who work for more than one employer such as
construction workers and headload workers.
● Status: 27.69 crore informal sector workers are registered on the e-shram portal (2022 data).
Formal-Informal Employment (ps+ss) across Organized and Unorganized Sector (in Crores)
DIFFERENCE BETWEEN FORMAL AND INFORMAL SECTOR

There is a huge difference between the workforces of the formal and informal sectors. Some of
these are:
Basis Formal Sector Informal Sector
Meaning Comprises businesses and economic Consists of workers and
activities that are under the supervision of enterprises that do not come
the government. under the regulation of the
government.
Social The employees of this sector are entitled The employees in this sector are
Security to Social Security Benefits. not entitled to Social Security
Benefits Benefits.
Salary/Wage The pay scale is high Comparatively low pay scale
Job Security Job security and fixed working hours. No such job security or fixed hours
Tax Benefits The enterprises in this sector are licensed The enterprises in this sector are
and are liable to pay taxes to the not liable to pay taxes to the
government. government.
Employees All public and private sector enterprises All the enterprises that employ less
that employ more than 10 people are than 10 people are considered to
considered to fall under the formal sector. fall under the informal sector.

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UNEMPLOYMENT
Trade The workers in the formal sector have a Workers in this sector have no
Unions right to form Trade Unions to protect their such right of forming a Trade
interests. Union.
Gig workers
● The term "gig" is a slang word for a job that
lasts a specified period of time.
● Gig workers are independent contractors,
online platform workers, contract firm
workers, on-call workers, and temporary
workers.
● Gig workers enter into formal agreements
with on-demand companies to provide
services to the company's clients.
● Examples of Gig Workers include-Cab
drivers in Ola and Uba, Delivery boys in
Swiggy and Zomato etc.
● Gig workers can be broadly classified into
platform and non platform-based workers.
o Platform workers are those whose work
is based on online software apps or
digital platforms.
o Non-platform gig workers are generally casual wage workers and own-account workers in
the conventional sectors, working part-time or full time. D
● The Economic Survey 2020-21 has noted that India has already emerged as one of the world’s
largest countries for flexi-staffing (i.e., gig and platform work), and that this form of work will
likely continue to grow with the increase in e-commerce platforms. The gig economy engages
millions of gig workers.
o It is estimated that there were 68 lakh (6.8 million) gig workers in 2019-20, using both
principal and subsidiary status, forming 2.4% of the non-farm workforce or 1.3% of the total
workers in India.
o It is estimated that in 2020-21, 77 lakh (7.7 million) workers were engaged in the gig
economy. They constituted 2.6% of the nonagricultural workforce or 1.5% of the total
workforce in India.
o The gig workforce is expected to expand to 2.35 crore (23.5 million) workers by 2029-30.
The gig workers are expected to form 6.7% of the non-agricultural workforce or 4.1% of the
total livelihood in India by 2029-30.
Informalisation of Indian workforce

● The informalization of the Indian economy refers to the trend of a growing number of workers
and economic activities operating outside the formal sector and without legal protection.
● Predominance of Informal Sector has become one of the central features of the labor market
scenario in India. While the informal sector contributes around half of the GDP of the country,
its dominance in the employment front is such that more than 90% of the total workforce has
been engaged in the informal economy.

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UNEMPLOYMENT
● Indian Government has made several efforts to formalize the economy. Introduction of the
Goods and Services Tax (GST), Digital Payment Systems and enrollment of informal sector
workers on numerous government portals like e-Shram are all meant to encourage the
formalization of the economy.
SCENARIO OF INFORMAL WORKERS ACCORDING TO E-SHRAM PORTAL

● E-Shram Portal was launched on August 26, 2021. It aims to register unorganized workers such
as construction laborers, migrant workforce, street vendors, and domestic workers, among
others
○ The workers are issued an e-Shram card containing a 12-digit unique number.
○ If a worker is registered on the eSHRAM portal and meets with an accident, he will be
eligible for Rs 2.0 Lakh on death or permanent disability and Rs 1.0 lakh on partial disability.
○ The aim of the portal is to boost the last-mile delivery of the welfare schemes for over
unorganized workers in the country.
● Analysis from E-Shram Portal
○ Occupation : Agriculture is at the top with 52.11% of enrolments done by those related to
the farm sector followed by domestic and household workers at 9.93% and construction
workers at 9.13%.
○ Social Category: Over 74% of the enrolled workforce belongs to Scheduled Castes (SC),
Scheduled Tribes (ST) and Other Backward Classes (OBC).
■ The proportion of the General Category workers is 25.56%.
■ The data showed that 94.11% of the registered informal workers have a monthly
income of Rs 10,000 or below, while 4.36% have a monthly income between Rs 10,001
and Rs 15,000.
○ Age: The proportion of the registered workers aged above 50 years is 13.23% while 2.93%
of workers are aged between 16 and 18 years.
■ 61.72% of the registered workers on the portal are of the age from 18 years to 40 years,
while 22.12% are of the age from 40 years to 50 years.
○ Gender : 52.81% of registered workers are female and 47.19 % are male.
○ Top-5 States: Top-5 states in terms of registrations are Uttar Pradesh, Bihar, West Bengal,
Madhya Pradesh and Odisha.
CHALLENGES RELATED TO INFORMAL SECTOR IN INDIA

● Economic Exploitation: The informal employment by definition has no written contract, paid
leave and hence pay no minimum wages, nor pay attention to conditions of work.
○ The Code on Wages 2019 is still limited in scope and efficacy for the informal sector. Casual
workers are typically the least covered because:
■ If a state government refuses to include a specific job within a particular sector, it is not
covered under the minimum wages criteria.
● Absence of Taxation: As the informal economy's enterprises aren't subject to direct regulation,
they frequently evade one or more taxes by concealing their earnings and outlays from the
regulatory framework.
● No Fixed Hours: There are no set working hours, and in India's unorganised sector, long working
hours are common. In the agriculture sector, in particular, there is no set working hour because
there are no rules that can serve as a standard for the working conditions of farm workers.

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UNEMPLOYMENT
● No Separate Statistics: There are no official statistics available representing the true state of the
economy, which makes it difficult for the government to make policies regarding the informal
sector in particular and the whole economy in general.
● Worst Hit at the Time of Disaster: Many natural disasters such as floods, drought, famine,
earthquakes and so on have devastating effects on the informal sectors. This problem is
exacerbated by the lack of social security.
GOVERNMENT INITIATIVES FOR THE INFORMAL/UNORGANISED SECTOR

● National Pension Scheme for Traders and Self-employed Persons- This scheme was made under
Unorganized Workers Social Security Act, 2008 section 3(1) for Vyapari’s to protect them in their
old age. This scheme’s objective is to provide social security and old age protection to the
shopkeepers/ traders/ self-employed people called the vyapari’s between the ages of 18-40
years who are not engaged in EPFO/ESIC/PM-SYM.
● Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)- It is a one-year life insurance scheme
renewable from year to year offering coverage for death due to any reason.
● Pradhan Mantri Shram Yogi Maan-dhan Yojana- The scheme PM-SYM was made to protect
unorganized workers who perform work like street vendors, agriculture-related work,
construction site workers, workers in industries of leather, handloom, mid-day meal, rikshaw or
auto wheelers, rag picking, carpenters, Hamals, fisherman’s etc.
● Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY)- It is the world’s largest
health insurance/ assurance scheme fully financed by the government.
● Atal Pension Yojana- The scheme was launched in May, 2015, with the objective of creating a
universal social security system for all Indians, especially the poor, the underprivileged, and the
workers in the unorganized sector.
● Garib Kalyan Rozgar Yojana- The scheme was bought by the government of India to promote
employment opportunities for migrant workers, in June 2020 with a budget of 50,000 crore
rupees.
○ This scheme was bought because of COVID-19 during which many workers were shifted from
one place to another having huge losses in their livelihood because of loss of employment
during the lockdown period.
IMPACT OF UNEMPLOYMENT
● Poverty-The problem of unemployment gives rise to the problem of poverty.
● Extra Burden on the Government – The government has to spend more money on running
welfare schemes for the people. This might also increase the fiscal deficit.
● Increase in Anti-social Elements - Unemployed persons can easily be enticed by antisocial
elements. This makes them lose faith in the democratic values of the country and they might
engage in terrorist activities or illegal activities.
● Hampers Growth of the country - Unemployment affects the growth of the economy as the
workforce that could have been gainfully employed to generate resources actually gets
dependent on the remaining working population.
● Loss of Human Resources - It is often seen that unemployed people end up getting addicted to
drugs and alcohol or attempts suicide, leading to losses to the human resources of the country.

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UNEMPLOYMENT
GOVERNMENT INITIATIVE TO CONTROL UNEMPLOYMENT

● Several policies have been initiated by the government to reduce the unemployment problem in
the country. Few policies to reduce unemployment are mentioned below:
1. MGNREGA
● Mahatma Gandhi National Rural Employment Guarantee Act(MGNREGA), launched in 2005,
provides the right to work to people.
● It provides social security by guaranteeing a minimum of 100 days of paid work per year to all
the families whose adult members opt for unskilled labour-intensive work.
Economy Survey 2021-2022
Allocation to MGNREGS in FY 2021-22 increased to ` 73,000 crores, from ` 61,500 crores in FY
2020-21. In FY 2021-22 over 8.70 crore individuals and 6.10 crore households were provided
work so far.
Salient features of MGNREGA:

● It provides a legal guarantee for 100 days of employment in every financial year to adult
members of any rural household willing to do public work-related unskilled manual work at the
statutory minimum wage.
● It is a demand-driven programme where the provision of work is triggered by the demand for
work by wage-seekers.
● It requires that priority be given to women in such a way that at least one-third of the
beneficiaries be women.
● Households willing to do unskilled manual work will have to apply for registration to the local
Gram Panchayat (GP), in writing or orally. The Gram Panchayat, after due verification will issue a
Job Card to the household as a whole.
● A Job Card holding household may submit a written application for employment to the GP,
stating the time and duration for which work is sought. The minimum days of employment have
to be 15 days. Receipt of wages should be within fifteen days of work done.
● The GP will issue a dated receipt of the written application for employment, against which the
guarantee of providing employment within 15 days operates. If employment is not provided
within 15 days, daily unemployment allowance in cash has to be paid. The Liability of payment
of unemployment allowance rests on the States.
● Contractors and use of labour displacing machinery are prohibited.
● Social Audit of MGNREGA works is mandatory, which lends to accountability and transparency.
● The Gram Sabha is the principal forum for wage seekers to raise their voices and make
demands. It is the Gram Sabha and the Gram Panchayat which approves the shelf of works
under MGNREGA and fix their priority.
● The choice of works suggested in the Act address causes of chronic poverty like drought,
deforestation, soil erosion, so that the process of employment generation is on a sustainable
basis.
Employment and MGNREGA:

● According to data from the GoI, MGNREGS has generated 3089.49 crore (308.949 million)
person days as of August 2020, and created over 3.6 crore (36 million) geo-tagged assets as of
2019.

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o Thus, it has proved to be an important

programme of the Government of India in
addressing the issues of the workers of rural
India.
● The participation of women so far is more than
50%, far ahead of the minimum percentage of 33%
as mandated by the Act.
o The States not known for women’s
participation in workforce are reporting a high
number of women joining the programme. For
example: Kerala, where women accounted for about 15 per cent of the workforce.
o Under the Act they took up 79 per cent of the employment created.
2.PMKVY – PRADHAN MANTRI KAUSHAL VIKAS YOJANA

● PMKVY was launched in 2015.
● The objective of PMKVY was to enable the youth of the country to take up industry-relevant skill
training in order to acquire a secured better livelihood. Between 2016-17 and 2021-22 (as of 15
January 2022 ), under PMKVY 2.0 about 1.10 crore persons were trained.
OTHER MAJOR INITIATIVES

● The government launched the Start-Up India Scheme in 2016. The aim of Startup India
programmes was to develop an ecosystem that nurtures and promotes entrepreneurship across
the nation.
● Stand up India Scheme also launched in 2016 aimed to facilitate bank loans to women and
SC/ST borrowers between Rs 10 lakh and Rs. 1 crore for setting up a Greenfield enterprise.
● National Skill Development Mission was set up in November 2014 to drive the ‘Skill India’
agenda in a ‘Mission Mode’ in order to converge the existing skill training initiatives and
combine scale and quality of skilling efforts, with speed.
● Pradhan Mantri Mudra Yojana (PMMY) is being implemented by the Government for facilitating
self-employment. Under PMMY, collateral-free loans upto Rs. 10 lakh, are extended to
micro/small business enterprises and to individuals to enable them to set up or expand their
business activities.
● The government launched the Garib Kalyan Rojgar Abhiyaan (GKRA) of 125 days on 20th June
2020 to boost employment and livelihood opportunities for returnee migrant workers and
similarly affected persons including youth in rural areas, in 116 selected districts across 6 States
of Bihar, Jharkhand, Madhya Pradesh, Odisha, Rajasthan, and Uttar Pradesh.
● PM GatiShakti is a transformative approach for economic growth and sustainable development.
The approach is driven by seven engines, namely, Roads, Railways, Airports, Ports, Mass
Transport, Waterways, and Logistics Infrastructure. This approach is powered by Clean Energy
and Sabka Prayas leading to huge job and entrepreneurial opportunities for all.
● The Government of India is encouraging various projects involving substantial investment and
public expenditure on schemes like the Prime Minister’s Employment Generation Programme
(PMEGP) of the Ministry of Micro, Small & Medium Enterprises, Mahatma Gandhi National Rural
Employment Guarantee Scheme (MGNREGS) & Pt. Deen Dayal Upadhyaya Grameen Kaushalya
Yojana (DDU-GKY) of the Ministry of Rural Development, Deen Dayal Antodaya Yojana-National

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Urban Livelihoods Mission (DAY-NULM) of the Ministry of Housing & Urban Affairs etc. for
employment generation.
○ Besides these initiatives, various flagship programs of the Government such as Make in
India, Start-up India, Digital India, Smart City Mission, Atal Mission for Rejuvenation and
Urban Transformation, Housing for All, Infrastructure Development, and Industrial Corridors
are also oriented towards generating employment opportunities.
● Production-Linked Incentive (PLI) Scheme- Recently, Finance Minister has announced an outlay
of INR 1.97 Lakh Crores for the Production Linked Incentive (PLI) Schemes across 13 key sectors,
to create national manufacturing champions and generate employment opportunities for the
country’s youth.
● Aajeevika - National Rural Livelihoods Mission (NRLM)- It was launched by the Ministry of Rural
Development (MoRD), Government of India in June 2011. Aided in part through investment
support by the World Bank, the Mission aims at creating efficient and effective institutional
platforms for the rural poor, enabling them to increase household income through sustainable
livelihood enhancements and improved access to financial services.
● National Career Service (NCS) Project- Project for the transformation of the National
Employment Service to provide a variety of career-related services like job matching, career
counseling, vocational guidance, information on skill development courses, apprenticeships,
internships, etc.
Skill Development
● Skill India Mission: It was launched in 2015, Skill India Mission focuses on re-skilling and up-
skilling in prominent trades. Under the Mission, the government implements Pradhan Mantri
Kaushal Vikas Yojana (PMKVY), Jan Shikshan Sansthan (JSS) Scheme and National
Apprenticeship Promotion Scheme (NAPS), for providing short-term Skill Development
training and Craftsman Training Scheme (CTS), for long term training, to the youth.
o PMKVY – Pradhan Mantri Kaushal Vikas Yojana: PMKVY has two training components,
viz., Short Term Training (STT) and Recognition of Prior Learning (RPL). Several micro-
programmes under PMKVY have also been formulated for targeting artisans’ clusters in
partnership with private sector, also to ensure employment for all artisans. A special
project has been launched to revive the traditional Namda craft of Jammu & Kashmir and
upskilling Weavers & Artisans of traditional crafts of Nagaland and Jammu and Kashmir.
o Recognition of Prior Learning (RPL): RPL’s objectives are (i) to align the competencies of
the unorganized workforce of the country with the standardized National Skill
Qualification Framework; (ii) to enhance the opportunities for employment and provide
alternative means for higher education; (iii) to provide opportunities for reducing
inequalities.
o Jan Shikshan Sansthan (JSS) Scheme: It provides vocational skills to non-literate, neo-
literates, persons with a rudimentary level of education up to 8th and school dropouts up
to 12th standard in the age group of 15-45 years. The priority groups are women, SC, ST,
minorities, divyangjan and other backward sections of the society.
o National Apprenticeship Promotion Scheme (NAPS): It promotes apprenticeship training
and the engagement of apprentices by providing financial support to industrial
establishments undertaking apprenticeship programs.
o Craftsmen Training Scheme (CTS): CTS is for providing long-term training in 137 trades

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through 14,604 Industrial Training Institutes (ITIs) across the country. For session 2020,
13.36 lakh trainees were enrolled.
● Aatmanirbhar Skilled Employees Employer Mapping (ASEEM) portal: It is a digital platform,
created to match the supply of skilled workforce with the market demand, and acts as a
directory of skilled workforce.
● India International Skill Centre (IISC) Network: IISC Network is catering to the needs of foreign
countries where Indian manpower is in demand. The IISC Network is a fee-based market-
driven model; based on global workforce supply and demand dynamics. It provides
incremental skill training on international standards and assessment of skills for overseas
employment.
Pradhan Mantri Dakshta Aur Kushalta Sampann Hitgrahi Yojana (PM-DAKSH): It is a national
action plan for skilling marginalized persons including scheduled castes, backward classes and safai
karamcharis.
Policy responses to boost rural livelihood
1.Incentives for job creation: Aatmanirbhar Bharat Rojgar Yojana (ABRY):
● It was announced as a part of the Aatmanirbhar Bharat 3.0 package to boost the economy,
increase the employment generation in the post-Covid recovery phase and to incentivize the
creation of new employment along with social security benefits and restoration of loss of
employment during COVID-19 pandemic.
● This scheme is implemented through the Employees’ Provident Fund Organization (EPFO). The
Government of India is bearing both the employees’ share (12% of wages) and employers’
share (12% of wages) of contribution payable or only the employees’ share, depending on the
employment strength of the EPFO registered establishments.
● Under the scheme:
○ An employee drawing a monthly wage of less than Rs. 15000/- who was not working in any
establishment registered with the Employees’ Provident Fund Organization (EPFO) before
1st October 2020 and did not have a Universal Account Number or EPF Member account, is
eligible for the benefit.
○ Any EPF member possessing a Universal Account Number (UAN) drawing a monthly wage
of less than Rs. 15000/- who made exit from employment during the Covid pandemic are
eligible for the benefit.
Garib Kalyan Rojgar Abhiyaan:

● To boost employment and livelihood opportunities for returnee migrant workers, Garib Kalyan
Rojgar Abhiyaan was launched in June 2020.
● It focused on 25 target-driven works to provide employment and create infrastructure in the
rural areas of 116 districts of 6 States with a resource envelope of Rs 50,000 crore.
3.Boosting Self-employment:
● The Deendayal Antyodaya Yojana – National Rural Livelihoods Mission (DAY-NRLM),
launched in 2011, is another intervention that seeks to alleviate rural poverty through building
a sustainable community. Institutions for the poor.
● The programme targets to mobilize about 9-10 crore households into Self Help Groups (SHGs).
● It is to link them to sustainable livelihood opportunities by building their skills and enabling

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them to access formal sources of finance, entitlements and services from both public and
private sectors. Till December, 2021, 8.07 crore households are mobilized into SHGs
4.e-SHRAM Portal: e-SHRAM portal has been launched to create a National Database of
Unorganized Workers (UWs).
● One of the main objectives of this portal is to facilitate the delivery of Social Security Schemes
to the workers.
The database includes construction workers, migrant workers, gig workers, platform workers,
agricultural workers, MGNREGA workers, fishermen, milkmen, ASHA workers, Anganwadi workers,
street vendors, domestic workers, rickshaws pullers and other workers engaged in similar other
occupations in the unorganized sector. As of 18 January 2022, over 22.85 crore workers have been
registered on the e-SHRAM portal.
WAY FORWARD
● Many manufacturers in India have labor-intensive work like food processing, hardware, apparel,
and more. They can create special package jobs for individuals.
● There should be increase in government jobs in fields like health, police, education, and more.
● There should be decentralized industrial activities for equal employment opportunities in
regions.
● Rural area development will control migration and reduce urban job pressure too.
● The youth should remain the center of focus for entrepreneurship projects.
● Women should receive more liberation in workplaces.
● The education system should focus on skill development more.
● A more effective scheme must be launched like Skill India, Startup, and Stand-Up India.
● The enhancement of human capital will help.
● There should be reation of decent quality of jobs in formal and informal sectors.
● There should be equity in the capital and labor market.
● Self-employed must get support as well as private sectors.
LABOUR REFORMS IN INDIA

INTRODUCTION
● Labour laws are a group of laws, rules and regulations that deal with the legal rights and duties
of working people and their organizations.
a. It helps in the distribution of powers between employers and employees.
b. Also, it facilitates individual and collective employment relationships.
CONSTITUTIONAL PROVISIONS RELATED TO LABOUR WELFARE IN INDIA

Concurrent List of ● “Labour” comes under the concurrent list.
seventh schedule ● Both the Central and State Governments are competent to enact
legislation subject to certain matters being reserved for the
centre..

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Fundamental Rights ● Article 16 provides for equality of matters in public employment.

● Article 19(1)(c) gives everyone a specific right "to form associations
or unions".
● Article 23 prohibits trafficking in human beings and forced labour.
● Article 24 prohibits child labour.
Directive Principles of ● Article 41: Right to work, and to public assistance in cases of
State Policy unemployment.
● Article 42: Provision for just and humane conditions of work and
maternity relief.
● Article 43: Secure work, a living wage, conditions of work ensuring
a decent standard of life and full enjoyment of leisure and social
and cultural opportunities.
● Article 43A: secure the participation of workers in the
management of industries.
BACKGROUND
● The empowerment of workers is necessary for an empowered, prosperous, and Aatmanirbhar
India.
● Even after 73 years of Independence, approximately 90% of workers work in the unorganized
sectors that do not have access to all the social securities.
○ The total number of workers, comprising organized and unorganized sectors, is more than 50
crores.
● The Second National Commission of Labour had submitted its report in 2002 which said that
there was the multiplicity of Labour Laws in India and therefore, recommended that at the
Central level multiple Labour Laws should be codified in 4 or 5 Labour Codes.
● The Second National Commission on Labour (2002) recommended that the central labour laws
should be integrated into groups like:
○ Industrial relations;
○ Wages;
○ Social security;
○ Safety; and
○ Welfare and working conditions.
● This was recommended by the Commission because the existing labour laws were archaic,
complex and had inconsistent definitions.
● The Commission suggested simplification of the labour codes for the sake of transparency and
uniformity.
NEED FOR REFORM AND CODIFICATION OF INDIA'S LABOUR LAWS

● Complex and Overlapping Laws:
○ As Labour falls under concurrent list, There are over 100 state and 40 central laws regulating
various aspects of labour.
○ The Second National Commission on Labour (NCL) (2002) found existing legislation to be
complex, with archaic provisions and inconsistent definitions.
● To strike a firm balance between rights of the workers and interests of the employers:

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○ To provide sufficient rights to workers while creating an enabling environment that can
facilitate firm output and growth, leading to job creation.
○ Employers believe that labour laws in India are excessively pro-worker in the organised
sector.
● Impacts ease of doing business:
○ There is too much inspection, and industries are looked upon with suspicion when it comes
to enforcing labour laws.
○ Multiplicity of labour laws puts high administrative burden as it has resulted in multiple
inspections, returns and registers.
● Promote Capital Intensive Industries:
○ Complex labour laws indirectly promote capital-intensive industries because industries don't
want to increase their burden by managing so many employees.
● Simplification and updation:
○ With the passage of time, labour laws need an overhaul to ensure simplification and
updation, along with provisions which can capture the needs of emerging forms of labour
(e.g., gig work).
● Poor Labour enforcement:
○ The labour enforcement machinery has been ineffective because of poor enforcement,
inadequate penalties and rent-seeking behaviour of inspectors. The Codes address some of
these aspects.
● Global Competitiveness:
○ The Restrictive labour regulations prevent firms from making the required adjustments to
their inputs in response to shocks to demand and technology. It makes it difficult to compete
with firms in countries where labour market rigidity is not a problem.
● Contract Labour:
○ Labour compliances and economic considerations have resulted in increased use of contract
labour. However, contract labour have been denied basic protections such as assured wages
○ Industries play a crucial role in skill development. However, these laws discourage firms from
employing a large number of permanent workers and steer them towards employing more
casual or contract workers. In such temporary workers, firms show no inclination to invest in
skill development and training.
● Trade Unions
● There are several registered trade unions but no criteria to ‘recognise’ unions which can
formally negotiate with employers. The Industrial Relations Code creates provisions for
recognition of unions.
LABOUR CODES INTRODUCED BY THE GOVERNMENT

● The central government proposed to replace 29 existing labor laws with four Codes. The
objective is to simplify and modernize labor regulation.
● In 2019 and 2020, 29 central labor laws were amalgamated, rationalized and simplified into four
labor codes, viz, the Code on Wages, 2019; the Industrial Relations Code, 2020; the Code on
Social Security, 2020; and the Occupational Safety, Health & Working Conditions Code, 2020.
● The government intends to implement all four labour codes by the Centre and states in one go
for a seamless transit to the new legal framework in the country.

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● The central government has already pre-published the draft rules for all four codes. Now, states
are required to frame regulations on their part as labour is a concurrent subject.
Labour Acts being subsumed

Codes
Code on ● Payment of Wages Act, 1936;
Wages, ● Minimum Wages Act, 1948;
2019 ● Payment of Bonus Act, 1965; and
● ·Equal Remuneration Act, 1976
Occupation ● Factories Act, 1948;
al Safety, ● Mines Act, 1952;
Health and ● Dock Workers (Safety, Health and Welfare) Act, 1986;
Working ● Building and Other Construction Workers (Regulation of Employment and
Conditions Conditions of Service) Act, 1996;
Code, 2019 ● Plantations Labour Act, 1951;
● Contract Labour (Regulation and Abolition) Act, 1970;
● ·Inter-State Migrant Workmen (Regulation of Employment and Conditions of
Service) Act, 1979;
● Working Journalist and other Newspaper Employees (Conditions of Service and
Miscellaneous Provision) Act, 1955;
● Working Journalist (Fixation of Rates of Wages) Act, 1958;
● Motor Transport Workers Act, 1961;
● Sales Promotion Employees (Condition of Service) Act, 1976;
● Beedi and Cigar Workers (Conditions of Employment) Act, 1966; and
● Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act,
1981
Industrial ● Trade Unions Act, 1926;
Relations ● Industrial Employment (Standing Orders) Act, 1946, and
Code, 2019 ● Industrial Disputes Act, 1947
Code on ● Employees’ Provident Funds and Miscellaneous Provisions Act, 1952;
Social ● Employees’ State Insurance Act, 1948;
Security, ● Employees’ Compensation Act, 1923;
2019 ● Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959;
● Maternity Benefit Act, 1961;
● Payment of Gratuity Act, 1972;
● Cine-workers Welfare Fund Act, 1981;
● Building and Other Construction Workers’ Welfare Cess Act, 1996; and
● Unorganised Workers Social Security Act, 2008
CODE ON WAGES, 2019

Objective Seeks to regulate wage and bonus payments in all employments where any
industry, business, trade or manufacture is carried out.
Wage Include Include salary, allowance, or any other component expressed in monetary
terms. This does not include bonus payable to employees or any travelling
allowance, among others.

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Features of the Code on Wages

Coverage ● The Code will apply to all employees.
● The central government will make wage-related decisions for
employment such as railways, mines, and oil fields, among others.
● State governments will make decisions for all other employment.
Floor wage To remove regional disparity in minimum wages the provision of floor wage
has been introduced.
● The central government will fix a floor wage. It may set different floor
wages for different geographical areas.
● The central government may take advice of the Central Advisory Board
and may consult with state government before fixing Floor wage.
● The minimum wages decided by the central or state governments must
be higher than the floor wage.
Fixing the ● Minimum wages will be notified by the central or state governments.
minimum wage ● While fixing minimum wages, the central or state governments may take
into account factors such as skill of workers, and difficulty of work
Minimum wages will be revised by the central or state government every
5 years.
● The Code prohibits employers from paying wages less than the minimum
wages
Advisory Boards ● The central and state governments will constitute advisory boards.
● The Boards will advise the respective governments on various issues
including fixation of minimum wages, and increasing employment
opportunities for women
Payment of ● Wages can be paid in coins, currency notes, by cheques, by directly
wages crediting into the bank account or through electronic mode.
Gender sensitive ● The Code prohibits gender discrimination in matters related to wages
and recruitment of employees for the same work or work of similar
nature.
Overtime ● The central or state government may fix the number of hours that
constitute a normal working day. In case employees work in excess of a
normal working day, they will be entitled to overtime wage, which must
be at least twice the normal rate of wages.
Offences ● The Code specifies penalties for offences committed by an employer.
● Penalties vary depending on the nature of offence, with the maximum
penalty being imprisonment for three months along with a fine of up to
one lakh rupees
CODE ON SOCIAL SECURITY, 2020

Objective To ensure security for all workers, the Central Government has
amalgamated 9 Labour Laws into the Social Security Code in order to
secure the right of workers for insurance, pension, gratuity, maternity

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benefit etc.
Major Features
Applicability The central government may, by notification, apply the Code to any
establishment (subject to size-threshold as may be notified).
Social Security Fund ● The central government will set up a fund for unorganised workers, gig
workers and platform workers.
● Further, state governments will also set up and administer separate
social security funds for unorganised workers.
● It also makes provisions for the registration of all three categories of
workers - unorganised workers, gig workers and platform workers.
National Social The Board will be created for the purposes of the welfare of the workers
Security Board (unorganised, gig and platform) and recommend and monitor schemes for
them
Role of aggregators ● Schemes for gig workers and platform workers may be funded through
a combination of contributions from the central government, state
governments, and aggregators.
o Code specifies 9 categories of aggregators including ride sharing
services, food and grocery delivery services, content and media
services, and e-marketplaces
Changes in ● Expands the definition of ‘employees’ to include contract workers.
definitions ● Expands the definition of ‘inter-state migrants’ to include self-
employed workers from another state.
● Expands the definition of “platform worker” to additional categories of
services or activities as may be notified by the government.
● Expands the definition of audio-visual productions to include films,
web-based serials, talk shows, reality shows and sports shows.
Additional powers ● The code adds new clauses which may become applicable in the cases
during an epidemic of an epidemic.
● For example, the central government may defer or reduce the
employer’s or employee’s contributions (under PF and ESI) for a period
of up to three months in the case of a pandemic, endemic, or national
disaster.
Term of eligibility ● Gratuity is payable on the termination of employment, if the employee
for gratuity has been in the organisation for at least five years.
● The code reduces the gratuity period from five years to three years for
working journalists.
● Requirement of minimum service has been removed for payment of
gratuity in case of fixed term employees.
CODE ON OCCUPATIONAL SAFETY, HEALTH AND WORKING CONDITIONS, 2020

Objective To provide a better and safe environment along with occupational health
and safety to workers at the workplace, 13 existing Labour Laws have been
subsumed in the Occupational, Safety, Health and Working Conditions Code,

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2020.
Major Features
Definition of ● Any premises which employs over 20 workers where manufacturing
Factory process is carried out using power.
● Any premises which employs over 40 workers where manufacturing
process is carried out using without power
Establishments ● It includes all establishments where any hazardous activity is carried out
engaged in regardless of the number of workers.
hazardous activity ● Emergency standards may be set
Duties of ● General Duty
Employers o Duties include providing a safe workplace, issuing appointment
letters, and complying with the provisions of the Code
● Specific Provision
o Factories, mines, docks, plantation and construction: Employer
must provide a risk-free workplace and instruct employees on safety
protocol.
o Inter-state migrant workers: Employers/contractors have to: (i)
notify specified authority of both states in case of fatal accidents and
serious bodily harm, (ii) ensure suitable work conditions, and (iii)
extend medical check-up and other benefits like provident fund and
ESI entitlements which other workers in the establishment may be
entitled to.
o Mines: The owner and agent of the mine will be jointly responsible
for providing a safe work environment.
Contract Workers ● The Code will apply to establishments or contractors employing 50 or
more workers (on any day in the last one year).
● The code also prohibits contract labour in core activities (to be
determined by the appropriate government).
Daily Work hour ● The code limits the maximum daily work hours limit for workers at 8
limit hours
Age ● No person below the age of 14 may be allowed to work.
● Mines: No worker below the age of 18 or apprentice/trainee below the
age of 16, may work in a mine.
Disability Construction work: No employer can hire workers with defective vision,
deafness, or a tendency for giddiness, if there is a risk of accident.
Employment of ● Women will be entitled to be employed in all establishments for all types
Women of work and at night (between 7 PM and 6 AM) subject to their consent
and safety.
National ● The Code provides for the constitution of a National Occupational Safety
Occupational and Health Advisory Board (National Advisory Board) by the Central
Safety and Health Government, which shall be empowered to advise the Central
Advisory Board Government
Exemption ● The code empowers the state government to exempt any new factory
from the provisions of the Code in order to create more economic

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activity and employment

Inter-state ● Any person who moves on his own to another state and obtains
Migrant workers employment there and is earning a maximum of Rs 18,000 per month, or
such higher amount which the central government may notify.
Benefits for Inter- ● Option to avail the benefits of the public distribution system either in the
state Migrant native state or the state of employment.
workers ● Availability of benefits available under the building and other
construction cess fund in the state of employment.
● Insurance and provident fund benefits available to other workers in the
same establishment.
● It requires the central and state governments to maintain or record the
details of inter-state migrant workers in a portal and the migrant
worker can register himself on the portal on the basis of self-declaration
and Aadhaar.
Displacement ● No displacement allowance to the Inter-state migrant workers
allowance
Social Security ● The amount collected from certain penalties will be credited to the Fund.
Fund for The government may prescribe other sources as well for transferring
Unorganised money to the Fund.
workers
Health, Safety ● The Central Government has listed down a few key measures and steps
and Working which must be taken into consideration regarding the health and safety
Conditions of of the employee like:
Employees ● Separate washing facility for male and female employees.
● Males, Females and Transgenders must be allocated separate bathing
places and locker rooms.
● Sitting arrangement for employees working in a standing position.
● Proper first aid facilities.
● Cleanliness and hygiene must be maintained at the workplace.
● Portable drinking water must be made available.
● Adequate lighting.
● Adequate measures to avoid overcrowding.
Code on Industrial Relations, 2020

Objective In this Code, all possible steps have been taken for industrial units and
workers so that disputes can be prevented in future.
Major Features
Definition of ● It defines a ‘worker’ as any person who works for hire or reward. It
worker excludes persons employed in a managerial or administrative capacity
or in a supervisory capacity with wages exceeding Rs 18,000.
o The definition is broadened to include journalists
Prior permission ● An establishment having at least 300 workers is required to seek prior
of the permission of the government before closure, lay-off, or retrenchment.

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government for ● Only central government is allowed to increase the threshold through
closure, lay-off notification.
and retrenchment
Disputes relating ● The code classifies any dispute in relation to discharge, dismissal,
to termination of retrenchment, or otherwise termination of the services of an individual
individual worker worker to be an industrial dispute.
● The worker may apply to the Industrial Tribunal 45 days after the
application for the conciliation of the dispute was made.
Strikes and ● The code requires all persons to give prior notice of 14 days before a
lockouts strike or lock-out.
● It also prohibits strikes and lock-outs:
● during and up to seven days after a conciliation proceeding, and
● During and up to sixty days after proceedings before a tribunal.
Negotiating Trade ● The trade union having more than 51% of the workers as members
Union and Council would be recognised as the sole negotiating union. If there is no
negotiating trade union, a negotiating council will be formed.
Tribunals for ● For the settlement of industrial disputes, each Industrial Tribunal will
settlement of consist of a judicial member and an Administrative member.
disputes ● The Code provides for the constitution of Industrial Tribunals and a
National Industrial Tribunal to decide industrial disputes.
Fixed-term ● Fixed-term employment refers to workers employed for a fixed duration
employment based on a contract signed between the worker and the employer. The
code has introduced provisions on fixed-term employment.
Comparison between fixed term employment, permanent employment and contract labour
Feature Fixed Term Employee Permanent Employee Contract Labour
Type of ● Employment under ● Employment directly ● Engaged in an
employment written contract. No under a written establishment
contractor or agency is contract. through a
involved. ● On the payroll of the contractor or
● On the payroll of the establishment. agency.
establishment. ● Not on the payroll
of the
establishment
Term ● Stipulated fixed term. ● Employed on a ● Based on terms
● Employment lapses on permanent basis negotiated with
completion of term, ● Notice has to be the contractor.
unless renewed. No given for termination
notice is required to be of employment.
given for retrenchment
Nature of ● Not specified. ● Hired for routine ● Employment may
work work. be prohibited in

26
UNEMPLOYMENT
certain cases, e.g.,

if similar work is
carried out by
regular workmen.
Impacts of Labor codes

DEFINITION OF WORKER UNDER LABOR CODES
● The labor codes provide for a separate definition of “employee” and a “worker”. While all
individuals employed in an organization will be employees, individuals who do not have
managerial or supervisory roles may potentially be workers.
● Thus, organisations will have to identify categories of employees that may qualify as workers
and evaluate the financial and other implications under the labour codes.
● It may be quite challenging to identify workers given that the definition lacks clarity and has
been a matter of extensive litigation in the past.
DEFINITION OF ‘WAGES’ UNDER LABOUR CODES

● One of the key impact areas under the labour codes is the introduction of a uniform
definition of ‘wages’ across all the labour codes.
○ Currently, there is a difference in the reference ‘wage’ used for the calculation of employee
benefits under various laws (such as Gratuity, Provident Fund, Employees’ State Insurance,
Statutory Bonus, etc.).
● Under the labour codes, all the benefits will be calculated basis the new definition of wages.
While this definitely brings uniformity and simplicity from an administrative perspective, it may
also mean additional cost implications for organisations.
● The definition of ‘wages’ covers all components of salary except a specific list of exclusions.
○ Also, there is a 50% ceiling on such exclusions, meaning at least 50% of gross remuneration
will be covered under wages.
○ This will mean a higher quantum of benefits for employees/workers considering many of
these benefits are currently calculated only on basic salary
GRATUITY AND LEAVE ENCASHMENT

● Gratuity under the labour codes is payable on the termination of employment as 15 days’
‘wages’ for each completed year of service.
○ Currently, this is paid as 15 days’ ‘basic salary’ for each completed year of service in most
organisations.
○ Thus, if an employee who has worked in the company for 10 years resigns after the labour
codes are implemented, he/she will be entitled to a gratuity equivalent to 15 days’ ‘wages’
for each of the past 10 years.
● For most companies, ‘wages’ will be much broader than the basic salary and this is likely to result
in a retrospective cost impact which companies may not have accounted for.
● Leave encashment is payable to ‘workers’ for un-availed annual leave under the labour codes.
○ The same is also required to be calculated basis the new definition of ‘wages’. Many
organisations currently do not have a leave encashment policy or pay leave encashment only
on termination of employees on the basis of basic salary.

27
UNEMPLOYMENT
PROVIDENT FUND
● As per the provisions of the labour codes, the employer and employees are required to make
contributions towards the provident fund on ‘wages’.
● It seems to indicate that there could be an increase in the PF contributions which could result in
a reduction in employees’ net take home.
● However, there is a specific provision in the Code on Social Security, 2020 which states that the
existing EPF scheme (under the current law) shall remain in force for a period of 1 year from the
commencement of the code.
● Under the existing EPF Scheme, there is a statutory wage ceiling prescribed of INR 15,000 per
month, such that employers and employees cannot be compelled to make contributions on
wages in excess of such ceiling.
ENABLING EMPLOYMENT OPPORTUNITIES FOR WOMEN EMPLOYEES

● The labour codes have specific provisions concerning the employment of women which is likely
to provide impetus to the employment of women while also ensuring their safety at the
workplace.
● Some of the key changes introduced by the labour codes which are likely to encourage
employment opportunities for women include the introduction of flexible work arrangements,
subject to state rules.
● Also, women are now permitted to be employed in night shifts (i.e., before 6 AM and beyond 7
PM), subject to satisfaction of certain conditions subject to state rules.
MUCH WIDER COVERAGE

● Unlike the current labour laws, where coverage is different for each of the laws depending on
the type of work done by the employee or coverage is restricted to workers or employees
drawing certain remuneration, the 4 labour codes seem to apply to all employees and certainly
have much wider coverage than each of the current laws looked at individually.
● The new labour codes also look at new-age working models and seem to give protection and
legal remedies to 21st-century workers as well.
● The labour codes cover contract labour, fixed-term employment, gig workers, platform workers,
and many more concepts.
● Thus, the laws appear to be forward-looking and are more inclusive.
FASTER F&F SETTLEMENTS

● The Code on Wages requires wages payable to an employee to be paid within two days of
removal, dismissal, resignation, or retrenchment.
● This will require exit formalities and HR processes to be completed expeditiously and for dues to
be settled within the prescribed period.
● Companies must take note of this and make the necessary changes to their internal processes.

28
UNEMPLOYMENT
Impacts of labour codes in brief:

● The codes will lead to consolidation and simplification of labour laws.
● The new codes have extended the coverage to more categories of workers and
establishments.
● The codes guarantee timely minimum pay to all with provisions like National Minimum
Wages.
● The codes facilitate the growth of firms along with job creation by increasing the permission
threshold before closure or retrenchment to 300 workers.
● They improve labour administration through web-based surprise inspections and
compounding of offences in certain cases.
● The codes increase the protection of contract labourers rights by increasing the
responsibilities of the contractor.
● The codes provide recognition to negotiating unions with 51% membership.
● The codes promote use of technology- Electronic registration and licensing.
● Codes lead to reduction in compliance costs and disputes.
● Universalisation of social security:
o Schemes of Employees Provident Fund Organisation (EPFO) have been extended to all
industries and self employed workers and any other class of workers including
unorganised workers.
o Employees State Insurance (ESI) scheme is extended to unorganised workers, gig workers
etc.
ISSUES AND CONCERNS AGAINST THE NEW CONSOLIDATED CODES

JURISDICTION OF CENTRAL GOVERNMENT
● The three Labour codes (Code on Industrial Relations 2020, Code on Occupational Safety, Health
and Working Conditions, 2020 and Code on Social Security 2020) specify that the central
government will act as the appropriate government for any central public sector undertaking
(PSUs).
● The central government will continue to be the appropriate government for a central PSU even if
the holding of the central government in that PSU becomes less than 50%.
● It is unclear as to why the central government should continue to exercise jurisdiction over an
establishment in which it does not own controlling stake.
POWER TO THE EXEMPT ESTABLISHMENT

● The 2020 code on Industrial Relations provides the government with the power to exempt any
new industrial establishment or class of establishment from any or all of its provisions if it is in
the public interest.
● The 2020 code on Occupational Safety also gives the appropriate government the power to
exempt any establishment for a period to be specified in the notification.
● Further, it enables the state government to exempt any new factory from its provision in the
interest of creating more economic activity and employment.
● Public interest could be interpreted broadly giving wide discretion to central and state
governments.

29
UNEMPLOYMENT
OTHER CONCERNS
● Strikes and lock-outs may become difficult for all establishments: Industrial Relations Code,
2020 prohibits strikes and lock-outs during and up to seven days after a conciliation proceeding.
○ It may impact the ability of workers to strike and employers to lock out workers.
● Mandatory linking with Aadhaar may violate Supreme Court judgment: This provision is
mentioned in the Code on Social Security 2020.
○ It may violate the Supreme Court’s Puttaswamy-II judgment, which provides that Aadhaar
number may only be made mandatory for expenditure on a subsidy, benefit, or service
incurred from the Consolidated Fund of India.
● Against the Interests of Employees- The codes provide the liberty to industrial establishments to
hire and fire their employees at will. This move might enable companies to introduce arbitrary
service conditions for workers.
● Free Hand to States -The central government has also attracted criticism that states have been
given a free hand to exempt laws in violation of labour rights.
○ However, the Union Labour Minister has said the labour issue is in the Concurrent list of the
Constitution and therefore, states have been given the flexibility to make changes as they
wish.
● Lack of flexibility in work hours -The work hours provisions for regular workers do not provide
flexibility to fix work hours beyond eight hours a day.
● Lack of clarity - Overlap and lack of clarity in definitions of gig workers, platform workers and
unorganized workers.
Other steps taken for welfare of workers

● Workers are given portability through Universal Account Number (UAN) so as to enable them
to withdraw their provident fund securely from anywhere.
● Development of Unified Shram Suvidha portal- It facilitates reporting of inspections and
submissions of returns for transparency and accountability.
○ It is envisaged as a single point of contact between employer, employee and enforcement
agencies bringing in transparency in their day-to-day interactions.
● e-Shram portal is a national Database of Unorganized Workers (NDUW), which will be seeded
with Aadhaar to extend the benefits of the social security schemes to them.
● PM Shram Yogi Maan Dhan Yojana has been started to provide old age security in the form of
guaranteed pension of Rs 3000 after attaining the age of 60 to the contributory unorganised
sector workers
● Maternity Benefit Amendment Act, 2017 increased paid maternity leave from 12 weeks to 26
weeks.
PYQs (UPSC)
PRELIMS
Q. With reference to the casual workers employed in India, consider the following statements:
(2021)
1. All casual workers are entitled to employees Provident Fund Coverage
2. All casual workers are entitled to regular working hours and overtime payment

30
UNEMPLOYMENT
3. The government can by notification specify that an establishment or industry shall pay wages only
through its bank account.
Which of the above statements are correct?
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
Answer- C
Q.Disguised unemployment generally means (2013)

(a) Large number of people remain unemployed
(b) Alternative employment is not available
(c) Marginal productivity of labour is zero
(d) Productivity of workers is low
Answer- C
MAINS
1. How globalization has led to the reduction of employment in the formal sector of the Indian
economy? Is increased Informalisation detrimental to the development of the country? (2016)
2. “Success of ‘Make in India’ programme depends on the success of ‘Skill India’ programme and
radical labour reforms.” Discuss with logical arguments. (2015)
3. While we found India’s demographic dividend, we ignore the dropping rates of employability.
What are we missing while doing so? Where will the jobs that India desperately needs come
from? Explain. (2014)

31

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UNEMPLOYMENT

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Provident Fund ............................................................................................................................................ 28

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SOURCES OF DATA ON UNEMPLOYMENT

(1) REPORTS OF CENSUS OF INDIA

(2) NATIONAL STATISTICAL OFFICE’S REPORTS OF EMPLOYMENT AND UNEMPLOYMENT

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Periodic Labour Force Survey (PLFS):

MEASUREMENT OF UNEMPLOYMENT IN INDIA BY NSO:

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(2) WEEKLY STATUS APPROACH:

(3) USUAL STATUS APPROACH:

NSO AND CSO:

(3)DIRECTORATE GENERAL OF EMPLOYMENT AND TRAINING DATA OF REGISTRATION WITH

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Latest trends in Employment

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STRUCTURAL ● Under this type of unemployment, there is a mismatch between the

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their not being considered 'employees' at all.

SECTORAL DISTRIBUTION OF EMPLOYMENT IN INDIAN ECONOMY

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FORMAL AND INFORMAL SECTOR

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DIFFERENCE BETWEEN FORMAL AND INFORMAL SECTOR

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Informalisation of Indian workforce

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SCENARIO OF INFORMAL WORKERS ACCORDING TO E-SHRAM PORTAL

CHALLENGES RELATED TO INFORMAL SECTOR IN INDIA

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GOVERNMENT INITIATIVES FOR THE INFORMAL/UNORGANISED SECTOR

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GOVERNMENT INITIATIVE TO CONTROL UNEMPLOYMENT

Salient features of MGNREGA:

Employment and MGNREGA:

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o Thus, it has proved to be an important

2.PMKVY – PRADHAN MANTRI KAUSHAL VIKAS YOJANA

OTHER MAJOR INITIATIVES

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Garib Kalyan Rojgar Abhiyaan:

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LABOUR REFORMS IN INDIA

CONSTITUTIONAL PROVISIONS RELATED TO LABOUR WELFARE IN INDIA

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Fundamental Rights ● Article 16 provides for equality of matters in public employment.

NEED FOR REFORM AND CODIFICATION OF INDIA'S LABOUR LAWS

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LABOUR CODES INTRODUCED BY THE GOVERNMENT

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Labour Acts being subsumed

CODE ON WAGES, 2019

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Features of the Code on Wages

CODE ON SOCIAL SECURITY, 2020