Finding Unemployment Benefits

  • IASbaba
  • March 22, 2022
  • 0
UPSC Articles
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  • GS-2: Fundamental Rights
  • GS-2: Government policies and interventions for development in various sectors and issues arising out of their design and implementation

Finding Unemployment Benefits

Context: Even before COVID-19, the unemployment rate touched a peak in 2017-18 at 6.1%.

  • As per the Centre for Monitoring Indian Economy, the average urban unemployment rate remained higher at 9.04% in 2021 and above 7% in January-February 2022. 
  • Meanwhile, the rural unemployment rate rose to 8.35% in February 2022 after mild fluctuations around 5-7% since June 2021 (8.75%). 

Does a satisfactory system of unemployment relief exist? 

Unlike in China, the labour laws do not expressly provide for unemployment benefits. However, India does have various initiatives that provides unemployment relief

  1. Employees’ State Insurance Act (ESIA), 1948
  • Under the said act, the Rajiv Gandhi Shramik Kalyan Yojana (RGSKY) provides unemployment allowance to involuntarily unemployed insured persons who have made contributions for two years to ESI. 
  • The cash relief is at the rate of 50% of the last average daily wages for the first 12 months and 25% for the next 12 months. 
  • It covers unemployment due to retrenchment, closure or permanent invalidity. 
  • It provides medical care during unemployment tenure and vocational training. 
  1. Atal Beemit Vyakti Kalyan Yojana (ABVKY)
  • It was introduced in 2018 under which unemployed insured persons are provided allowance at the rate of 50% of the average per day earning of the claimant.
  • Allowance is provided for 90 days.
  • It was launched on pilot basis for two years but was extended during the COVID-19 period.
  1. Industrial Disputes Act (IDA), 1947
  • Industrial establishments employing 100 or more workers must pay retrenchment compensation of 15 days of average pay for the completed years of service to workers in case of they lose jobs due to closure.
  • Here, the burden of unemployment allowance is transferred to the employer. Employment-intensive industries like construction and services are excluded. 
  1. Social Security Code (SSC), 2020
  • Though SSC included unemployment protection in its definition of ‘social security’, it did not provide for a scheme for the same.
  • Government reasoned that Unemployment allowance is already provided for under the ESI Act and hence no need of separate scheme.
  • The SSC offers the vague promise of schemes to the unorganised workers.

Have the above schemes been successful?

  • ESIA, despite a more inclusive coverage of 10 or more workers than the Employees’ Provident Fund Act (20 or more workers), covers fewer workers due to its limited and slow expansion of districts in India. 
  • Under the RGSKY, 0.043% (13,341/3,09,66,930) of the employees availed of unemployment allowance during 2007-08 to 2019-20
  • Further, unemployment allowance’s share in total cash expenditure of ESIC ranged from 0.25% to 0.99%. The incredibly low off-take means that RGSKY is not successful.
  • Under ABVKY, from July 1, 2018 to March 31, 2020, 120 claims were made, which means a meagre average daily cash relief of ₹73.33. 

What alternative measures can be taken?

  • The SSC must be amended to provide for a universal unemployment allowance scheme with tripartite contributions by employers, workers and the government. 
  • An urban employment guarantee scheme should be framed to alleviate the sufferings of workers in the urban labour market. 
  • Laws and welfare schemes must offer relief to marginalised workers who are reeling under multiple blows. 

Connecting the dots:

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