Government’s Own 'GIG Workers'
ContextAs outsourcing/contractual has become the dominant mode of working in the government, from highly specialized tasks to the most routine ones.
Background
- The government has been worried about unequal remuneration and treatment of contract workers, but it continues to hire them in bigger numbers.
- As many as 3 million people working in the government sector — or 43% of the total government workforce — are engaged in temporary jobs, according to a study by the Indian Staffing Federation (ISF), an apex body of staffing companies in the country.
- At least 9 million of these people are engaged in key flagship government programs and are deprived of minimum wages with limited to nil social security cover.
Nature of Jobs in the Government Sector
They may be classified into three categories;
- Permanent;
- Contractual and
- Daily wagers
Analysis
Who are Gig Workers of the Government?
- The term "gig" is a slang word for a job that lasts a specified period of time. Traditionally, the term was used by musicians to define a performance engagement.
- Examples of gig workers include freelancers, independent contractors, project-based workers, and temporary or part-time hires.
Question for Economic Development: August 2022 Current Affairs
Try yourself:
Who are gig workers in the government sector?Explanation
- Gig workers in the government sector refer to freelancers, independent contractors, project-based workers, and temporary or part-time hires.
- These individuals are hired for a specified period of time and are not considered permanent employees of the government.
- Unlike permanent employees, gig workers do not have long-term job security and often have limited social security coverage.
- The government relies on gig workers for various tasks, ranging from highly specialized to routine jobs.
- The hiring of gig workers has raised concerns about unequal remuneration and treatment compared to permanent employees.
Report a problem
How they are supporting the economy?
- The gig economy is based on flexible, temporary, or freelance jobs, often involving connecting with clients or customers through an online platform.
- The gig economy can benefit workers, businesses, and consumers by making work more adaptable to the needs of the moment and the demand for flexible lifestyles.
- At the same time, the gig economy can have downsides due to the erosion of traditional economic relationships between workers, businesses, and clients.
- The gig economy has many benefits for both the employee and employer. An employer has access to a wide range of talent that they can hire. If the talent proves to be less than acceptable, there is no contract to keep the employee on or issues of letting them go.
Why it is not recommended to employee contractual employees?
Despite it is not recommended to employ more gig workers, the government is expanding its scope. So, what are the reasons behind it?
- Lack of job security, irregular wages, and uncertain employment status
- Rising stress due to uncertainty associated with regularity in available work and income
- Limited access to the internet and digital technology
- The contractual relationship between the platform owner and gig worker denies the latter access to many workplace entitlements.
- Stress is due to pressure from algorithmic management practices and performance evaluation based on ratings.
Constitutional Provisions
What can be done to safeguard their interest?
- Increase access to institutional credit for platform workers and those interested in setting up their own platforms.
- Unsecured loans extended to first-time borrowers in the platform economy may be classified as Priority Sector Lending.
- Skill development of youth and workforce to make them employable.
- Government can ensure universal coverage of platform workers through the Code on Social Security.
- Paid Sick Leave, Health Access, and Insurance for gig workers.
- Occupational Disease and Work Accident Insurance to all delivery and driver partners.
- Retirement/Pension Plans and Other Contingency Benefits.
Conclusion
Fixed-term contractual stints with the government with safeguards against sheer exploitation can be a major source of employment. However, such modes of recruitment will have to assimilate the principles of affirmative action, in line with the vision of social justice enshrined in our Constitution.
Regional Rural Banks
Why in News?Recently, a meeting was held between the finance minister and the heads of banks to discuss various reforms in Regional Rural Banks (RRBs).
What are RRBs?
- About:
- The Regional Rural Banks (RRBs) were established in 1975 under the provisions of the Ordinance promulgated on 26th September 1975 and Regional Rural Banks Act, 1976.
- RRBs are financial institutions which ensure adequate credit for agriculture and other rural sectors.
- The RRBs combine the characteristics of a cooperative in terms of the familiarity of the rural problems and a commercial bank in terms of its professionalism and ability to mobilise financial resources.
- After the reforms in the 1990s, the government in 2005-06 initiated a consolidation program that resulted in the number of RRBs declining from 196 in 2005 to 43 in FY21, and 30 of the 43 RRBs reported net profits.
- Functions:
- The basic functions of a bank can be summarized as follows:
- To provide safety to the savings of customers
- To create credit and increase the supply of money
- To encourage public confidence in the financial system
- To mobilize the savings of public
- To increase its network so as to reach every segment of the society
- To provide financial services to all customers irrespective of their level of income
- To bring in social equity by providing financial services to every stratum of society.
Question for Economic Development: August 2022 Current Affairs
Try yourself:
What are the basic functions of a bank?Explanation
- Banks provide safety to the savings of customers by ensuring the security of their deposits.
- Banks create credit and increase the supply of money by lending money to individuals and businesses.
- Banks encourage public confidence in the financial system by maintaining a stable and reliable banking system.
- Banks mobilize the savings of the public by accepting deposits and making them available for productive purposes such as loans and investments.
Report a problem
What are the Issues Related to RRBs?
- Rising Cost: The rising cost of operations of Regional Rural Banks (RRBs) as compared to scheduled commercial banks.
- The government wants them to work towards increasing their earnings.
- Limited Activities: Due to the fact that many of these branches don't have enough business, they are incurring losses.
- In rural areas, they mainly offer government schemes like Direct Benefit ransfer.
- Low Internet Banking: At present only 19 RRBs have internet banking facilities and 37 have mobile banking licenses.
- Existing regulations allow only those RRBs to offer internet banking which maintains minimum statutory capital to risk-weighted assets ratio (CRAR) of more than 10%.
What are the Suggestions by the Government?
- It has asked RRBs to move towards digitization, including offering internet banking services to its customers and expanding their credit base further through increased lending to the Micro, Small, and Medium Enterprises (MSME) sector.
- So that they become financially sustainable
- It urged the sponsor banks to formulate a clear roadmap in a time-bound manner to further strengthen the RRBs and support the post-pandemic economic recovery and
- Also, suggested conducting a workshop on RRBs and sharing the best practices with each other.
How are RRBs being Reformed by the Government?
- Over the years, various steps have been taken by the government to increase the contribution of people to the financial system of India.
- In 1969, a major renovation in the banking sector took place with the Nationalization of all the Banks existing in India. In the year 1981, the National Bank for Agriculture and Rural Development (NABARD) was established.
(i) The main aim of establishing NABARD was to promote sustainable and impartial agriculture and enhance rural prosperity through effective credit support, related services, institution development, and other innovative initiatives.
- Hence, the National Bank for Agriculture and Rural Development (Nabard) will spearhead the initiative to revive the RRBs.
- Further, the development bank is already working on a roadmap for 22 RRBs which is expected to be implemented by the end of this year.
(i) The plan also included merging branches of these RRBs with sponsor banks once these branches reach a certain level of business. - Last year, the government set up a panel with members drawn from Nabard and the RBI to give recommendations for strengthening the regional lenders.
(i) The government has contributed RS 4,084 crores towards RRB recapitalization in 2021-22, of which Rs. 3,197 crores has been released to 21 lenders. focus on financial inclusion by leveraging technology
Way Forward
- There is a need to have a common framework for RRBs, along the lines of core banking solution (CBS), so that all of them can provide online banking services to their customers and further, enhance their outreach and profitability.
- There should be more like internet banking etc.
- Further, they need to increase their efficiency and touch various other dimensions of banking, like providing loans to merchants, MSME’s that could increase their profitability.
To read more information on this topic:
Youth Employment Deteriorated In India: ILO Report
Why in News?Recently, the International Labour Organisation (ILO) has released a report titled “Global Employment Trends for Youth 2022: Investing in transforming futures for young people”.
What is the International Labour Organization?
- About:
- It is the only tripartite United Nation (UN) agency. It brings together governments, employers and workers of 187 member States (India is a member), to set labour standards, develop policies and devise programmes promoting decent work for all women and men.
- Received the Nobel Peace Prize in 1969.
- Establishment:
- Established in 1919 by the Treaty of Versailles as an affiliated agency of the League of Nations.
- Became the first affiliated specialized agency of the UN in 1946.
- Headquarters: Geneva, Switzerland
- Reports:
- World of Work Report
- World Employment and Social Outlook Trends 2022
- World Social Protection Report
- Social Dialogue Report
- Global Wage Report
What are the Findings Globally?
- Gender Disparity in EPR:
- Young women exhibited a much lower Employment-to-Population ratio (EPR), showing that young men are almost 1.5 times more likely than young women to be employed.
- In 2022, 27.4 % of young women globally are projected to be in employment, compared to 40.3 % of young men.
- Pandemic Impacted Youth Employment:
- Covid-19 Pandemic has worsened the numerous labour market challenges facing those aged between 15 and 24 years, who have experienced a much higher percentage loss in employment than adults since early 2020.
- The total global number of unemployed youths is estimated to reach 73 million in 2022, a slight improvement from 2021 but still six million above the pre-pandemic level of 2019.
- Regional Differences:
- The recovery in youth unemployment is projected to diverge between low- and middle-income countries on the one hand and high-income countries on the other.
- High income countries are the only ones expected to achieve youth unemployment rates close to those of 2019 by the end of 2022.
- Meanwhile, in the other country income groups, the rates are projected to remain more than 1% above their pre-crisis values.
- Benefits of Green and Blue Economies:
- Young people were well-placed to benefit from the expansion of the so-called green and blue economies, centred around the environment and sustainable ocean resources respectively.
- An additional 8.4 million jobs may be created for young people by 2030 through green and blue investments, notably in clean and renewable energies, sustainable agriculture, recycling and waste management.
- Broadband Coverage and Employment:
- Achieving universal broadband coverage by 2030 may lead to a net increase in employment of 24 million new jobs worldwide, of which 6.4 million would be taken by young people.
- Investments in care sectors would create 17.9 million more jobs for young people by 2030.
What are the Findings Related to India?
- Decline in Youth Employment:
- The youth employment participation rate declined by 0.9 % over the first nine months of 2021 relative to its value in 2020, while it increased by 2 % for adults over the same time period.
- The situation is particularly severe for very young people aged 15-20 years.
- Low Young Female Employment:
- Indian young women experienced larger relative employment losses than young men in 2021 and 2022.
- In general, the high youth employment losses in India drive up the global average employment losses.
- Young Indian men account for 16% of young men in the global labour market, while the corresponding share for young Indian women is just 5%.
- Gap in Online Education:
- School closures lasted 18 months and among the 24-crore school-going children, only 8% of such children in rural areas and 23% in urban areas had adequate access to online education.
- Given the deeply unequal access to online resources in developing countries, children from socio-economically disadvantaged families, which are the large majority, had almost no access to education.
- Learning Regression:
- School closures not only prevented new learning, but also led to the phenomenon of “learning regression”, that is, children forgetting what they had learned earlier.
- In India, 92% of children on average lost at least one foundational ability in language and 82% lost at least one foundational ability in mathematics.
- Teachers are Paid Less:
- The study found out that teachers in non-state schools are often paid significantly less than those in state schools.
- Teachers in low-fee private schools in India, Kenya, Nigeria and Pakistan are paid between one eighth and one half of what their counterparts in the state sector receive.
- Domestic work is Highly Informal:
- Domestic work is a highly informal sector in India, and wages are extremely low and young women and girls are vulnerable to abuse.b
- Reports of abuse suffered by young domestic workers are common, including verbal and physical abuse, and sexual exploitation.
Question for Economic Development: August 2022 Current Affairs
Try yourself:
What is one of the main issues faced by Regional Rural Banks (RRBs) according to the passage?Explanation
- According to the passage, one of the main issues faced by RRBs is the rising cost of operations compared to scheduled commercial banks.
- The government wants RRBs to work towards increasing their earnings to become financially sustainable.
- This indicates that the high cost of operations is a significant concern for RRBs.
Report a problem
What are the Recommendations?
- Investment in various sectors must be accompanied by the promotion of decent working conditions for all young workers.
- Young workers should be ensured that they enjoy fundamental rights and protections including freedom of association, the right to collective bargaining, equal pay for work of equal value, and freedom from violence and harassment at work.
- Young people should be provided with well‐functioning labour markets with decent job opportunities for those already participating in the labour market, along with quality education and training opportunities for those yet to enter it.
Udyam Portal
Why in News?Around one crore Micro, Small and Medium Enterprises (MSMEs) have registered on the Udyam portal within a span of 25 months, according to the Union Minister of Micro, Small, and Medium Enterprises.
What is the Udyam portal??
- It was introduced on July 1st, 2020.
- The Union MSME ministry introduced an online mechanism for registering MSMEs.
- Additionally, it is connected to the databases of the Goods and Services Tax Network and the Central Board of Direct Taxes (CBDT).
- A channel of communication and engagement between taxpayers, the federal government, several state governments, and other stakeholders is established via the complex and one-of-a-kind IT enterprise known as GSTN.
- It is entirely online, doesn't call for any paperwork, and helps MSMEs operate more easily.
Feature
- The MSME registration process is entirely electronic, paperless, and self-declaratory. No documentation or paperwork must be uploaded in order to register an MSME.
- After registration, a Registration number will be provided.
- An Udyam Registration Certificate will be issued once the registration process is complete. This certificate will feature a dynamic QR Code that may be used to visit the web page on our portal and information about the company.
- PAN & GST connected information on an enterprise's investment and revenue will be automatically retrieved from the relevant government data repositories
Significance
- This procedure will be incredibly easy and seamless for business owners.
- It will serve as a model for ease of doing business both domestically and abroad.
- Transaction costs and time will be cut. Entrepreneurs and businesses can concentrate on doing their actual jobs while being globally competitive.
- Additionally, MSMEs support the nation's exports, GDP, and job creation.
New initiative
- For the sharing of Udyam data, the MSME ministry inked MoUs with the Tourism Ministry and the National Small Industries Corporation.
- Additionally, the Udyam registration Digi locker facility would be linked.
About MSME
- The Micro Small and Medium Enterprises (MSMEs) industry make a significant contribution to the nation's socioeconomic growth.
- Due to the sector's exports and contribution to India's Gross Domestic Product (GDP), the industry has grown significantly in prominence.
- Additionally, the sector has made significant contributions to the growth of entrepreneurship, particularly in India's semi-urban and rural regions.
- The Micro, Small & Medium Enterprises Development (MSMED) Act of 2006 specifies two categories into which Micro, Small & Medium Enterprises (MSME) are divided: Manufacturing Enterprises and Service Enterprises.
Making out a case for the other UBI in India
ContextAs per the Author, there are good reasons why Universal Basic Insurance is a better proposition than Universal Basic Income Social security systems are like a safety net. It saves a household from falling into a poverty trap. Social security mainly encompasses food security (NFSA), health security (Ayushman Bharat Scheme) and income security.
Types of security nets
- Passive safety net: E.g., Rising economy, creating more jobs
- Active safety net (it works like a trampoline so that those who fall on it are able to bounce back) e.g., National Food Security Act, MGNREGA, Ayushman Bharat Scheme
- Proactive safety net which acts like a launchpad out of poverty e.g., Universal Basic Income
Income security is the trickiest part to tackle in the social security basket. Various government schemes for Income security are:
- General Provident Fund (GPF)- for Central and State government employees
- Employees’ Provident Fund (EPF)- for workers in the other organised sector.
- Public Provident Fund (PPF) that can be availed by any Indian citizen
- Pradhan Mantri Kisan Maan-Dhan Yojana (PM-KMY)
- PM-KISAN scheme (for farmers)
- Atal Pension Yojana (APY)
What is Universal Basic Income?
UBI is a model for providing all citizens of a country with a guaranteed minimum sum of money, regardless of their income, resources or employment status.
- This provides a “safety net preventing any citizen” from sinking below a basic minimum standard of living
- Economic Survey 2016-17 has recommended UBI as an alternative to the various subsidy
Issues with UBI:
- Lack of political will
- Huge fiscal pressure
- Free cash to people may increase the inflation rate
- Difficulty in reducing subsidies on exiting schemes
- No guarantee that cash will be spent on productive assets.
Why Universal Basic Insurance?
- Low insurance penetration: The insurance penetration (premium as a percentage of GDP) in India has been hovering around 4% for many years compared to 17%, 9% and 6% in Taiwan, Japan and China, respectively.
- Thus insurance can become a need-based safety net for the poor.
- Availability of Data: The economy largely remains informal, data of that informal sector are now available both for businesses (through GSTIN, or Goods and Services Tax Identification Number) and for unorganised workers (through e-Shram, which is the centralised database of all unorganised workers).
- The social registry portal, ‘Kutumba’, developed by Karnataka is a good example of social security data.
Conclusion
Till the Indian economy grows to have adequate voluntary insurance, social security can be boosted through the scheme of universal basic insurance.
‘One Nation One Fertiliser’
ContextThe Ministry of Chemicals and Fertilisers announced it has been decided to implement One Nation One Fertiliser by introducing a “Single Brand for Fertilisers and Logo” under the fertiliser subsidy scheme named “Pradhanmantri Bhartiya Janurvarak Pariyojna” (PMBJP).
- The memorandum stated the single brand name for UREA, DAP, MOP and NPK etc. would be BHARAT UREA, BHARAT DAP, BHARAT MOP and BHARAT NPK respectively for all Fertiliser Companies, State Trading Entities (STEs) and Fertiliser Marketing Entities (FMEs).
- Under the new “One Nation One Fertiliser” scheme, companies are allowed to display their name, brand, logo and other relevant product information only on one-third space of their bags.
- On the remaining two-thirds space, the “Bharat” brand and Pradhanmantri Bharatiya Jan Urvarak Pariyojana logo will have to be shown.
Government’s argument for introducing this scheme
The government’s logic for introducing a single ‘Bharat’ brand for all subsidised fertilisers being marketed by companies is as follows:
- There are some 26 fertilisers (inclusive of urea), on which government bears subsidy and also effectively decides the MRPs.
- The government is spending vast sums of money on fertiliser subsidy (the bill is likely to cross Rs 200,000 crore in 2022-23)
- The government also decides where fertilizer has to be sold.
- This is done through the Fertiliser (Movement) Control Order, 1973.
- Under this, the department of fertilisers draws an agreed monthly supply plan on all subsidised fertilisers in consultation with manufacturers and importers.
Question for Economic Development: August 2022 Current Affairs
Try yourself:
What is the purpose of the Udyam portal?Explanation
- The Udyam portal was introduced to register Micro, Small, and Medium Enterprises (MSMEs).
- It is an online mechanism that allows MSMEs to register without any paperwork.
- The portal is connected to the databases of the Goods and Services Tax Network and the Central Board of Direct Taxes.
- It helps MSMEs operate more easily and cuts transaction costs and time.
- The registration process is entirely electronic, paperless, and self-declaratory.
- After registration, an Udyam Registration Certificate is issued with a dynamic QR Code for accessing information about the company.
Report a problem
Drawbacks of the scheme
A couple of issues are immediately apparent:
- It will disincentivise fertiliser companies from undertaking marketing and brand promotion activities.
- Companies will be reduced to contract manufacturers and importers for the government.
- In case of any bag or batch of fertilisers not meeting the required standards, the blame will be fully on the government.