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Report to 2Nd REPORT OF THE STUDY GROUP (II) ON Umbrella Legislation for Workers in the Unorganised Sector Submitted to THE CHAIRMAN National Commission on Labour, 2000 Ministry of Labour Government of India October 2001 2 Contents Chapter 1: Who are the Unorganised Workers?.......................................................................... 6 Chapter II: Existing legislation and the unorganised sector ....................................................... 32 Chapter III: History of recommendations for legislation ........................................................... 42 Chapter IV: Justification for legislation .................................................................................. 51 Chapter V: Perspective and Rationale for Umbrella Legislation for Workers in the Unorganised Sectors.................................................................................................................................. 56 Chapter VI: Sustenance of natural, open and common property resources.................................. 61 Chapter VII: Minimum Wages/Earnings .................................................................................. 64 Chapter VIII: Core Labour Rights ........................................................................................... 81 Chapter IX: Social Security - Survey...................................................................................... 88 Chapter X: Review of the Existing Models of Welfare Funds and Boards .................................. 96 Chapter XI: Social security for unorganised sector workers .....................................................113 Chapter XII: Classification of Occupations .............................................................................117 Chapter XIII: Unorganised Sector Workers’ Board ................................................................125 Chapter XIV: Summary.........................................................................................................137 3 Preface The National Commission on Labour, 2000 constituted the Study Group (II) on Umbrella Legislation for workers in the Unorganised Sector, with the following members: Swami Agnivesh, Smt. Aruna Roy, Shri Baba Adhav, Shri O.P.Aghi, Shri Avdhash Kaushal, Smt. Nalini Nayak and Shri A. Kanaga Sabapathy, with the undersigned as the Chairman. Each member of the Group is eminent in her / his line of activity or discipline. In the first meeting of the Study Group, it decided to associate the Centre for Education and Communication (CEC), New Delhi, an organization specialized on Labour issues, as its consultant, to prepare a draft on the basis of issues formulated and views expressed by the members, backing them up with relevant information and data. The group met six times, between 09 November 2000 and 14 October 2001. Members formulated the basic issues, expressed their views on them and then requested the CEC to prepare the draft filling in with the relevant background material and data. In each meeting the basic draft was revised. The report adopted by the Study Group in its meeting dated 28 August 2001 is thus a collaborative product of the contribution by the members and data and references brought in by the CEC on the advice of the Group. The members of the Secretariat of the Commission helped the Group immensely by providing inputs on the legislation and outcome of various consultations held by the Commission in different parts of the country. The report adopted by the Study Group is in two parts. Part I is a discussion on the framework of a possible ‘Umbrella Legislation for workers in the Unorganised Sector’. It is divided into 15 chapters and discusses following topics: Who are the unorganised sector workers? (Chapter I); Existing legislation and the unorganised sector (Chapter II); History of recommendations for legislation (Chapter III); Justification for legislation (Chapter IV); Perspective and rationale for umbrella legislation (Chapter V); Sustenance of natural, open and common property resources (Chapter VI); Minimum wages/earnings (Chapter VII); Core Labour Rights (Chapter VIII), Social Security (Chapter IX); Review of the existing models of welfare funds and boards (Chapter X); Social security Suggestions (Chapter XI); Classification of occupations (Chapter XII); Unorganised Sector Workers Board (Chapter XIII); Summary (Chapter IV); Bibliography (Chapter XV) and Annexures (Chapter XVI). In Part II, the Study Group has attempted an indicative Bill, ‘Protection of Rights of Workers in the Unorganised Sector Bill, 2001’ incorporating the key elements from Part 4 I. The Bill has the following components in respective Chapters: Chapter I Preliminary; Chapter II Rights of workers; Chapter III Constitution of the Unorganised Sector workers’ Board; Chapter IV Functions of the Boards; Chapter V Relationships among Union board, State Boards, Subsidiary Boards, district boards and worker facilitation centres; Chapter VI Relationship with the existing welfare fund boards; Chapter VII Registration of Workers; Chapter VIII Funds; Chapter IX Wage and price fixation; Chapter X Special committees; Chapter XI Record Maintenance, Inspection and Penalties; Chapter XII Enforcement; Chapter XIII Dispute Settlement; Chapter XIV Miscellaneous and Chapter XV Schedules. The group places on record its high appreciation of the work done by Shri T. C. Girotra, Dr. Rashmi Aga rwal and Dr. R.S. Tiwari of the Commission. It also acknowledges gratefully help and co-operation it received from the supporting staff of the Commission. The group would like to thank Shri J John, Executive Director and his fellow researchers of the CEC for helping it to prepare a fairly exhaustive report and an indicative outline of the proposed Bill on the Protection of Rights of Workers in the Unorganized Sector. Finally, the group records its gratitude to the Chairman of the Commission and his fellow members for encouragement and guidance that it received from them. New Delhi D Bandyopadhyay 14 October 2001 Chairman, Study Group II 5 Chapter 1: Who are the Unorganised Workers? 1. Unorganised sector is too vast to remain within the confines of a conceptual definition. Hence, descriptive means are used to explain the unorganised sector, besides going into the existing definitions. Unorganised sector is often used interchangeably as informal sector. There are authors who differentiate these sectors. 2. In this document, the term ‘unorganised’ sector is used as inclusive of informal sector. Attempt is made to discern some of the features of the unorganised sector making use of the existing literature and a sample analysis based on secondary sources, the data sheet of which is appended. 3. Some of the distinct sub-sectors of unorganised sector are reviewed in order to get a grasp of the sector. Some of occupations in the unorganised sector are listed. 4. The concept of informal/unorganised sector received great attention in the early 1970s when International Labour Organisation through its World Employment Mission Programme took up serious efforts to study the issue. In India, National Council for Applied Economic Research (NCAER) and Self-Employed Women's Association (SEWA) conducted a joint workshop on this issue in March-April 1997. Institute for Applied Manpower Research (IAMR) and Institute of Human Development (IHD) had also done a similar joint exercise in December 1997. Central Statistical Organisation has formed an Expert Group on Informal Sector (Delhi Group) to suggest definition of informal sector. In the NCAER-SEWA workshop, Gujarat Group of Experts on Estimation of Informal Sector proposed a definition for informal sector based on employment. According to the group, the informal sector includes all workers in informal enterprises, some workers in formal enterprises, self-employed workers, and those doing contract work for informal or formal sector enterprises and contractors (Kantor, 1997). NCAER-SEWA workshop has raised doubts on the enterprise-based definition of the informal sector that may leave details on contractual wage labour untouched. It said that the definition for informal sector should comprise of activities and ranks of the self-employed producing non-tradable services and items for the local markets. It further said that the National Accounting must cover the informal sector that shall include home-based workers, artisan groups and contract workers, besides the workers in unorganised sector of service, manufacture and agriculture. 5. The term ‘informal’ per se denotes the informal nature of work in the activity concerned irrespective of the actual number of workers employed and also 6 irrespective of whether it is within the purview of registration requirements. Studies done in India restrict informal sector to activities employing less than 10 persons. These tend to set an upper limit of employment of 9 persons, besides other criteria, for identifying informal sector activities. 6. In India, unorganised sector and informal sector are used interchangeably. However, the unorganised sector is used commonly in all official records and analysis. It is defined as the residue of the organised sector. The term ‘organised’ is understood to have 10 or more employees. The various methods of estimating organised sector data on labour such as used by Annual Survey of Industries (ASI), Employment Market Information (EMI) programme, decennial Population Census and quinquennial surveys of the NSSO have themselves limitations (Suryanarayanan, 1998). The problems of underestimation
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