In an attempt to bring all unorganised labour within the fold of social security protection, such as Universal Health Coverage the union government has announced that it will extend the benefit of the Employees State Insurance Act to domestic workers. Although the pilot scheme will be rolled out only in Hyderabad and Delhi, it marks an important turn in a long standing demand for extension of legal protections to unorganised labour.
The gap between formal sector workers and informal sector workers/unorganised labour is large. There are several parameters by which this gap is defined and availability of legal protections is one of them. Informal sector are either deliberately left out of legal protections or are not covered by the legislations which have been made with the formal sector in mind.
Labour legislations emerged after the industrial revolution, from the terrible working conditions generated by the need for relentless manufacturing. Most labour rights are also based on these systems of production, with collective bargaining and freedom of association being established as core labour rights rather than social protection.
Workers in informal sector are so varied in their location and conditions that it is difficult to identify standards that would be relevant to all of them. To take the example of domestic workers; these are workers who do not have a workplace that can be distinguished from a home; they don’t have fixed working hours or common work conditions. Opportunities for collective action are also remote.
Workers in informal sector pose a challenge to a labour law regime that is based on an image of a formal sector worker who works for fixed hours, in a formal place of work, along with other workers and who expects to be in employment on a regular basis. The definition of an workers in the informal sector has been understood in a wide manner to include home-based workers and self-employed workers. The inclusion of domestic workers into this definition was also strongly resisted on the ground, that it required the recognition of a home as a place of work which is unprecedented.
In including workers from the informal sector into legal protection, several strategies are being contemplated. They include extending the protection of existing legislations like the Minimum Wages Act and the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal ) Act 2013 to informal sector workers, enacting separate legislations like the Unorganised Workers Social Security Act 2008 passing sector specific legislations like the (Protection of Livelihood and Regulation of Street Vending) Act 2014.
The extension of the Employees State Insurance Act (ESI Act) falls within the first strategy. When legislations which are geared towards meeting the needs of formal sector workers are extended to informal sector workers, there are several challenges. Although the definition of a worker under the ESI Act includes contract workers who are informal workers, the other provisions of the Act are not easy to extend, such as the condition of a contribution.
The ESI Act is based on the model of a contributory health insurance scheme. It expects both the employee and the employer to contribute to a fund that is administered by the state. The state has set up hospitals, dispensaries and tied up with various hospitals where workers can avail of free medical services. In order to avail of these services, domestic workers who will now be covered under the Act and/or their employers will be expected to contribute to the ESIC Fund. As per a press statement in August 2016 by union minister for Labour, Mr. Bandaru Dattatreya employers would have to pay Rs 200 monthly towards this scheme that will enable medical facilities for domestic workers.
Domestic workers are employed on different terms, while some may satisfy the image of a typical worker who works for a fixed employer, on a regular basis and may or may not require accommodation, a majority of domestic workers work part time and for multiple employers.
Under the ESI Act the contribution of the employees is 1.75% and that of the employers is 4.75% which makes it about 5.25% of the wages. If we assume a minimum wage of 4,000 rupees that amounts to Rs 210 per month and 2520 rupees in a year. Of course in a large corporation, which is the target of the legislations like the ESI employees earning below 100 rupees a day i.e. 3000 rupees per month are exempt.
Suitable modifications will have to be made while extending benefits of the organised sector to the unorganised sector. While employers will be expected to pay the contribution of both employers and employees it is not clear how the scheme will function for part time employees. Under the ESI Act the employers contribute more and workers only need to contribute 1.75 % i.e. for a minimum wage of 4000 the workers need to pay only 70 rupees per month. That will be Rs 840 per year which they may be able to pay but the challenge is to find the other contributor.
Unless the model of contributory insurance is tweaked such that the state also contributes a portion in those cases where there are multiple employers, or there are no employers the scheme will not function for part time domestic workers who perhaps need the protection the most as well as other members of the unorganised sector. It will perpetuate the model that only those workers who satisfy the image of a regular worker are entitled to social protection.