BackOur urban poor need help in the form of an employment scheme
Framing an urban job-generation scheme would be full of challenges but the case for income support to the badly off is clear
PremiumA study by King’s College, London, and Australian National University said the covid pandemic could push global poverty to above 1 billion people once again. Much of the impact may be felt in the emerging Asian economies of India, Bangladesh and Indonesia. Covid-induced restrictions or adaptations and changes in modes of work, medical costs, and the resultant rise in unemployment, or employment at wages lower than earlier, manifest themselves as adverse shocks, which push vulnerable populations (those just above the poverty line) below the poverty line. Government initiatives have concentrated on the rural poor and micro, small and medium enterprises (MSMEs), the former easier to identify because of the socio-economic and caste census of 2011. Identifying the urban poor is a trifle more difficult, compounded by migration issues. That’s the crux of the problem, since the Pradhan Mantri Garib Kalyan Yojana (PMGKY), Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), cash transfers to pensioners, widows and the disabled, the National Food Security Act, Pradhan Mantri Awas Yojana (PMAY), or the MSME package do not differentiate between rural and urban residents. Indeed, the Pradhan Mantri Street Vendors’ Atma Nirbhar Nidhi (Svanidhi) is specifically for street vendors. The hitch has been lack of identity, which would have been less of a problem had the 1979 Inter-State Migrant Workmen Act been enforced. Had that statute been enforced, urban job markets would have also become more formalized.
Data on India’s economic contraction identifies construction, trade, hotels and other services, manufacturing and mining as the worst affected. While there are indications that the worst of the contraction is over, uncertainty over jobs and salaries is by no means over. Reliable employment data is often dated. Subject to that, less than 20% of the urban workforce works in the formal sector. This is a partially misleading statement, since though the sector may be formal, all workers in a formal sector need not have formal contracts. More than 80% of the urban workforce is thus informal. Of this, roughly half work for wages and the other half are self-employed. Anecdotes and localized small-sample surveys suggest covid and the consequent lockdown has adversely affected construction workers, domestic help, transport workers, street vendors, waste-pickers and sex workers. As the lockdown has eased, though pockets remain locked in parts of some states, indicators suggest an economic turnaround. However, a question remains. Should something be done for the urban poor who are salaried, since they have often lost their jobs or have been forced to work for wages less than half of what they used to earn earlier? The suffering of some segments is reflected in reduced discretionary expenditure. This doesn’t recover immediately, not when there is uncertainty over the future.
The idea of an urban counterpart to the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is not new. It was mooted with the caveat that such a scheme should lead to the creation of assets, physical or in the form of human capital formation. This is akin to the Keynesian cliché of digging ditches and filling them up, though Keynes never said, or wrote, anything like that. That quote is attributed to Joan Robinson, who suggested Keynes might have said something like that. Closer home, employment-generation on infrastructure projects using government expenditure isn’t a new idea either. When Awadh was struck by a severe famine in 1784, Nawab Asaf-ud-Daula came up with a plan of employment for the construction of Lucknow’s Bara Imambara. The story goes that while ordinary citizens worked all day to erect the edifice, nobles would bring it down during the night in an 18th century version of the ditch-digging proposal.
The problems in devising an urban employment scheme are obvious but not intractable.
1) There is a problem with identifying workers, even if such a scheme is demand-driven and involves self-identification. There is no ready counterpart of MGNREGA job cards.
2) If urban job cards are to be issued, who will issue them? Are urban local bodies, with their myriad governance issues, in a position to do it? And, if job cards are used, will these be for an individual or for a household?
3) If the idea is that such a scheme should be demand-driven, the wages offered and the number of days of guaranteed employment must both be below market norms.
4) As with rural India, do ready infrastructure projects exist in urban India? Would land issues get in the way? One can’t readily employ people for micro-irrigation works, canals, ponds and wells in urban areas, and there is only a limited degree of freedom with buildings, parks and roads. Also, can one factor in some form of skill upgradation, perhaps through an apprenticeship programme?
5) If there are no projects available, will there be unemployment insurance?
6) How can an urban jobs scheme be implemented through employers when the bulk of such employment is provided through contractors who are not registered? It is not just workers who remain unidentified, employers are no less so.
7) A job-stamp idea could be considered to extend employment options not just to a few government but also recognized public institutions.
Borrowing ideas from the MGNREGA scheme, some states —Kerala, Jharkhand, Himachal Pradesh, Odisha, Tamil Nadu and Telangana—have sought answers to some of these questions. Pre-covid, the Union government introduced the Pradhan Mantri Rozgaar Protsahan Yojana (PMRPY), providing partial subsidies to employers registered with India’s Employees’ Provident Fund Organisation. It is possible to extend that Yojana for some more time. The root problem is that social security is still a work-in-progress, and even more so for migrants.
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