No Documents, No Benefits: How India’s Invisible Workforce Is Left To Fend For Itself

New Delhi: Almost half of India’s regular-wage workers would not have hit rock-bottom amid the COVID-19 lockdown if security nets were in place, data show. Lack of documentation and registration kept many workers from accessing government relief and allowed employers to evade their obligations towards their workers during the COVID-19 lockdown, which left millions of workers without jobs and stranded away from their homes

Complicated self-registration processes and several incentives for employers to under-report their workers’ numbers are two primary reasons why a vast majority of workers lack proper documentation. Going forward, the informal nature of jobs must change to formal if workers are to be protected from economic shocks, say labour rights activists and experts.

“Although the enforcement of labour laws even for documented workers has been weak, a significant reason why worker rights are often violated is a heavily undocumented workforce,” said Aaditeshwar Seth, co-founder of Gram Vaani, a Delhi-based social enterprise, whose Mobile Vaani platform conducted a survey among 1,040 workers from April 14 till June 1. Some 81% of the respondents worked in the unorganised sector across four states. As many as 62% reported that they were not registered under any social-security scheme, and 20% had no knowledge of any such scheme. 

Nearly half the regular-wage workers in India, 49.6%, had no social security net, and 71% had no written job contract in 2017-18, according to the most-recent Periodic Labour Force Survey (PLFS). When the COVID-19 crisis hit, workers across the country lost their jobs, but the worst hit were informal workers--who comprise up to 92% of India’s workforce--who received little support from their employers and many of whom did not receive any cash transfers from the government either, the survey found. 

Due to non-registration under any social-security scheme, and the consequent lack of DBT (Direct Benefit Transfer) linkages to their bank accounts, 65% workers did not receive any promised cash transfers from the government. Cash transfers could have brought much-needed respite because 85% of the respondents said they did not have any income at all during the lockdown, and consequently, 32% had to borrow money and 15% had to sell their assets to get cash, the survey found.

Why are workers not registered?

One of the major reasons that deter many workers from getting registered is the complex self-registration process, which includes elaborate documentation, filling of detailed forms, and proof of employment which many workers do not have, Seth explained. Workers must register with the state worker welfare board, which is a challenge for migrant workers from other states, in addition to the basic lack of awareness regarding the need for registration and the procedures involved. 

Employers, on the other hand, find several incentives to under-report the number of workers they employ, experts say. 

To protect workers, the government offers several social-security nets such as the PF (provident fund) and ESI (employees’ state insurance) schemes for organised-sector workers, and welfare schemes for Building and Other Construction Workers (BOCW). The employers or contractors are required to declare the number of workers they employ to register under these schemes. 

By under-reporting their worker numbers, employers save on compliance costs for social-security payments per employee, costs for employee benefits (such as transportation and living expenses) under the Inter-State Migrant Workmen Act, while themselves availing of the benefits due to units employing fewer workers than the thresholds set under various laws pertaining to factories, industry, unionisation and so on, said Seth of Gram Vaani.

“This means that they [workers] are invisible--the government does not know who they are and they are unable to claim any insurance benefits, maternity benefits, housing, and other provisions allowed under such schemes. Employers have a clear incentive to under-report their workers,” Seth said. Employee-count thresholds imposed in the industrial sector have different degrees of compliances and costs, and a variety of practices have emerged among employers to stay under this threshold, often by employing undocumented workers, he said.

This, along with complex self-registration processes for workers, has led to reduced worker registrations. Only 18.8% of 3,196 construction workers surveyed in April by Jan Sahas, a development organisation based in Madhya Pradesh, had a BOCW registration card.

“The result of this invisibility is not restricted to just cash transfers. It also makes it easier for employers to forego their obligations,” said Rajiv Khandelwal, executive director, Aajeevika Bureau, an initiative which provides services to migrant workers. Hundreds of workers made calls to a labour helpline operated by Aajeevika Bureau, reporting how their employers had abandoned them in cities and absconded. Around 62% reported not having received any support from their employers, and had pending wages, according to the Mobile Vaani survey.

Weak enforcement of labour laws, coupled with worker invisibility, have made it easy even for employers in the organised sector to fall back on their commitments, found a March 2019 study by Gram Vaani. Across factory units of different sizes, many workers have no proof of employment--ID card, payslip, offer letter--20% workers in large units and nearly 50% workers in small units had no such proof, keeping them from claiming their rights and absolving employers of their obligations, the study found.

Possible solutions

“Resumption of work is not going to be straightforward. MSMEs [micro, small and medium enterprises] are suggesting a four-month timeline to get back on track. Reports from factories in the cities are not deeply reassuring either, where only 35% workers can be in a factory at one time,” said Seth.

The migrant workers, many of whom have now returned to their villages, are keen to find employment but 90% said that they would prefer staying back in their villages, the Mobile Vaani survey found. The rural economy, however, may not have enough employment avenues and they will be forced to return to the cities, IndiaSpend reported in May.

Post COVID-19, India needs to start moving towards formalising its economy, which will improve the quality of jobs and life for millions of its workers. The migrant workers’ plight has its roots in the informal nature of their jobs, which leaves them devoid of legal and social security; nearly 92% of the 61 million jobs created over two decades post-liberalisation, have been informal. This must change if India wants to protect its workers against COVID-19-like economic shocks, Errol D’Souza, professor of economics and director of Indian Institute of Management (IIM), Ahmedabad told IndiaSpend in an interview published in May.

Gram Vaani suggested creation of simpler systems that enable workers to initiate self-registration under employment-based social-security schemes--get an ID in the process, and use the same ID to claim welfare benefits such as ration in the destination state. The new system can be based on worker databases--ad-hoc databases collected by the government containing information about the identity of the workers (Aadhaar, voter-ID), location of workplace, native place, bank accounts, sector of work, etc.--that have emerged during the crisis to identify workers for cash transfers and to facilitate the travel of migrant workers, according to Gram Vaani.

Considering verbal confirmations from employers--similar to kachcha receipts of work issued by contractors--as proof of employment, along with shifting the burden of proof for disputing employment claims on to the employer, can ensure that many more workers are brought under the fold of social-security schemes, said Seth. “It will put more power in the hands of the workers, who will then be able to call for grievance redressal in case of inaction by the employers as well,” he said.

(Tiwari is a principal correspondent with IndiaSpend.)

We welcome feedback. Please write to respond@indiaspend.org. We reserve the right to edit responses for language and grammar.

New Delhi: Almost half of India’s regular-wage workers would not have hit rock-bottom amid the COVID-19 lockdown if security nets were in place, data show. Lack of documentation and registration kept many workers from accessing government relief and allowed employers to evade their obligations towards their workers during the COVID-19 lockdown, which left millions of workers without jobs and stranded away from their homes

Complicated self-registration processes and several incentives for employers to under-report their workers’ numbers are two primary reasons why a vast majority of workers lack proper documentation. Going forward, the informal nature of jobs must change to formal if workers are to be protected from economic shocks, say labour rights activists and experts.

“Although the enforcement of labour laws even for documented workers has been weak, a significant reason why worker rights are often violated is a heavily undocumented workforce,” said Aaditeshwar Seth, co-founder of Gram Vaani, a Delhi-based social enterprise, whose Mobile Vaani platform conducted a survey among 1,040 workers from April 14 till June 1. Some 81% of the respondents worked in the unorganised sector across four states. As many as 62% reported that they were not registered under any social-security scheme, and 20% had no knowledge of any such scheme. 

Nearly half the regular-wage workers in India, 49.6%, had no social security net, and 71% had no written job contract in 2017-18, according to the most-recent Periodic Labour Force Survey (PLFS). When the COVID-19 crisis hit, workers across the country lost their jobs, but the worst hit were informal workers--who comprise up to 92% of India’s workforce--who received little support from their employers and many of whom did not receive any cash transfers from the government either, the survey found. 

Due to non-registration under any social-security scheme, and the consequent lack of DBT (Direct Benefit Transfer) linkages to their bank accounts, 65% workers did not receive any promised cash transfers from the government. Cash transfers could have brought much-needed respite because 85% of the respondents said they did not have any income at all during the lockdown, and consequently, 32% had to borrow money and 15% had to sell their assets to get cash, the survey found.

Why are workers not registered?

One of the major reasons that deter many workers from getting registered is the complex self-registration process, which includes elaborate documentation, filling of detailed forms, and proof of employment which many workers do not have, Seth explained. Workers must register with the state worker welfare board, which is a challenge for migrant workers from other states, in addition to the basic lack of awareness regarding the need for registration and the procedures involved. 

Employers, on the other hand, find several incentives to under-report the number of workers they employ, experts say. 

To protect workers, the government offers several social-security nets such as the PF (provident fund) and ESI (employees’ state insurance) schemes for organised-sector workers, and welfare schemes for Building and Other Construction Workers (BOCW). The employers or contractors are required to declare the number of workers they employ to register under these schemes. 

By under-reporting their worker numbers, employers save on compliance costs for social-security payments per employee, costs for employee benefits (such as transportation and living expenses) under the Inter-State Migrant Workmen Act, while themselves availing of the benefits due to units employing fewer workers than the thresholds set under various laws pertaining to factories, industry, unionisation and so on, said Seth of Gram Vaani.

“This means that they [workers] are invisible--the government does not know who they are and they are unable to claim any insurance benefits, maternity benefits, housing, and other provisions allowed under such schemes. Employers have a clear incentive to under-report their workers,” Seth said. Employee-count thresholds imposed in the industrial sector have different degrees of compliances and costs, and a variety of practices have emerged among employers to stay under this threshold, often by employing undocumented workers, he said.

This, along with complex self-registration processes for workers, has led to reduced worker registrations. Only 18.8% of 3,196 construction workers surveyed in April by Jan Sahas, a development organisation based in Madhya Pradesh, had a BOCW registration card.

“The result of this invisibility is not restricted to just cash transfers. It also makes it easier for employers to forego their obligations,” said Rajiv Khandelwal, executive director, Aajeevika Bureau, an initiative which provides services to migrant workers. Hundreds of workers made calls to a labour helpline operated by Aajeevika Bureau, reporting how their employers had abandoned them in cities and absconded. Around 62% reported not having received any support from their employers, and had pending wages, according to the Mobile Vaani survey.

Weak enforcement of labour laws, coupled with worker invisibility, have made it easy even for employers in the organised sector to fall back on their commitments, found a March 2019 study by Gram Vaani. Across factory units of different sizes, many workers have no proof of employment--ID card, payslip, offer letter--20% workers in large units and nearly 50% workers in small units had no such proof, keeping them from claiming their rights and absolving employers of their obligations, the study found.

Possible solutions

“Resumption of work is not going to be straightforward. MSMEs [micro, small and medium enterprises] are suggesting a four-month timeline to get back on track. Reports from factories in the cities are not deeply reassuring either, where only 35% workers can be in a factory at one time,” said Seth.

The migrant workers, many of whom have now returned to their villages, are keen to find employment but 90% said that they would prefer staying back in their villages, the Mobile Vaani survey found. The rural economy, however, may not have enough employment avenues and they will be forced to return to the cities, IndiaSpend reported in May.

Post COVID-19, India needs to start moving towards formalising its economy, which will improve the quality of jobs and life for millions of its workers. The migrant workers’ plight has its roots in the informal nature of their jobs, which leaves them devoid of legal and social security; nearly 92% of the 61 million jobs created over two decades post-liberalisation, have been informal. This must change if India wants to protect its workers against COVID-19-like economic shocks, Errol D’Souza, professor of economics and director of Indian Institute of Management (IIM), Ahmedabad told IndiaSpend in an interview published in May.

Gram Vaani suggested creation of simpler systems that enable workers to initiate self-registration under employment-based social-security schemes--get an ID in the process, and use the same ID to claim welfare benefits such as ration in the destination state. The new system can be based on worker databases--ad-hoc databases collected by the government containing information about the identity of the workers (Aadhaar, voter-ID), location of workplace, native place, bank accounts, sector of work, etc.--that have emerged during the crisis to identify workers for cash transfers and to facilitate the travel of migrant workers, according to Gram Vaani.

Considering verbal confirmations from employers--similar to kachcha receipts of work issued by contractors--as proof of employment, along with shifting the burden of proof for disputing employment claims on to the employer, can ensure that many more workers are brought under the fold of social-security schemes, said Seth. “It will put more power in the hands of the workers, who will then be able to call for grievance redressal in case of inaction by the employers as well,” he said.

(Tiwari is a principal correspondent with IndiaSpend.)

We welcome feedback. Please write to respond@indiaspend.org. We reserve the right to edit responses for language and grammar.


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