Baba’s Explainer – Urban Employment Guarantee Scheme

  • IASbaba
  • September 15, 2022
  • 0
Economics, Governance
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  • GS-2: Government policies and interventions for development in various sectors
  • GS-3: Indian Economy and issues relating to planning, mobilization, of resources

Context: The Indira Gandhi Urban Employment Guarantee Scheme (UEGS) has rolled out in Rajasthan with the objective of providing economic support to the poor and needy families living in the cities through work to be provided on demand for 100 days in a year.

  • Rajasthan State government has touted it as the country’s biggest scheme to give guaranteed jobs to the people residing in cities, on the lines of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) for villagers started by the UPA government at the Centre in 2006.
Why is there a growing demand for Urban Employment Guarantee Scheme?

The demand for a job guarantee scheme in the cities is increasing because of the

  • Growing distress among the urban poor
  • Higher unemployment rates in urban areas in comparison with villages
  • Persistently high inflation affecting the people
  • Prevalence of low-wage and poor quality informal work in urban areas.
  • Moreover, as against the rural unemployment being mostly seasonal, unemployed people in the cities face problems throughout the year.
Who are eligible to get jobs in Rajasthan’s UEGS?
  • Those in the age group of 18 to 60 years residing within the limits of urban local bodies are eligible to demand and get employment in the identified segments.
  • There is no income limit, though the poor and destitute people, especially those who lost their livelihood during the pandemic, will be given preference.
  • More than 3.5 lakh people across the State have got themselves registered under the scheme so far and job cards have been issued to 2.25 lakh of them.
  • A budgetary provision of ₹800 crore has been made for the scheme in 2022-23. At least 50 persons in each ward of urban local bodies will be given employment and the work permitted under the scheme will be approved and executed through committees at the State, district and local body levels.
  • The State government will also reward the municipal bodies doing good work under the scheme.
  • The cost of material and the payment for the labour for work of general nature will be in the ratio of 25:75 and will vary for special work which needs technical expertise.
  • The State government’s Department of Local Bodies will be responsible for the scheme’s implementation.
What are the categories of tasks?

The tasks to be carried out under the scheme have been clubbed mainly under eight heads.

  • Environment protection, which will involve tree plantation at public places, maintenance of parks and watering plants on footpaths and dividers.
  • Water conservation, where the tasks may be allotted for cleanliness and improvement of ponds, lakes and stepwells, construction, repair and cleaning of rain water harvesting structures and restoration of water sources.
  • Other categories are heritage conservation, removal of encroachments and illegal boards, hoardings and banners, stopping defacement of property and service-related works.
  • As part of convergence, the people engaged under the employment guarantee scheme can be employed elsewhere in other schemes, already having a material component, which require the labour.
  • Eligible people will get work such as tree plantation, cleaning ponds, collecting garbage from door to door and segregating it and catching stray animals.
  • Apart from all these categories, the State government can add new tasks or amend the ones already included in the list.
  • A Jan Aadhar card, introduced by the State government, or its registration slip will be required for registration, which can be done at e-Mitra centres.
  • While more than 31,000 muster rolls have been issued for the work, the wages will be paid at the rate of ₹259 a day to unskilled labourers and ₹283 a day to skilled labourers.
  • The ‘mates’ or supervisors on top of the labourers will get ₹271 a day.
Benefits of the scheme
  • Livelihood rights activists feel that though the scheme would help reduce distress among the urban population, the ultimate test of its success will be to ensure that it improves the wage rate in the labour market, which was one of the major contributions of MGNREGA.
  • The kind of jobs provided under the scheme will be different than those in the rural areas and will need a more skilled workforce.
  • The scheme may turn out to be a game changer for the people who lost their jobs in the pandemic and are struggling to make ends meet amid high inflation.
Are similar schemes operative in other States?
  • The Rajasthan government has prepared the employment guarantee programme after studying similar such schemes operative in other States. Several States are looking favourably towards an urban version of MGNREGA. These schemes include the
    • Ayyankali Urban Employment Guarantee Scheme in Kerala
    • Urban Wage Employment Initiative under UNNATI in Odisha
    • Mukhya Mantri Shramik Yojana in Jharkhand
    • Mukhya Mantri Yuva Swabhiman Yojana in Madhya Pradesh.
  • The Swarna Jayanti Shahari Rozgar Yojana was launched as a Centrally-sponsored scheme in 1997 to provide gainful employment to the urban unemployed and underemployed poor by encouraging them to set up self-employment ventures and through the provision of wage employment. The scheme was replaced with the National Urban Livelihoods Mission in 2013. However, neither of the two was an employment guarantee scheme.
What is the idea of DUET (Decentralised Urban Employment and Training) Scheme proposed by welfare economist Jean Dreze?
  • There is a crisis of employment in the urban informal sector, as millions of workers have lost their job due to periodic lockdowns, and may or may not retrieve it soon.
  • Our public institutions and public spaces (schools, colleges, health centres, bus stands, jails, shelters, hostels, parks, museums, offices, etc.) have a chronic problem of poor maintenance.
  • There is growing interest in an employment guarantee act, but little experience of relief works in urban areas. Decentralised Urban Employment and Training’ (DUET) could act as a step towards urban employment guarantee.
  • The state government issues ‘job stamps’ and distributes them to approved institutions – schools, colleges, government departments, health centres, municipalities, neighbourhood associations, urban local bodies, etc
  • Each job stamp can be converted into one person-day of work within a specified period, with the approved institution arranging the work
  • Wages, paid by the government, would go directly to the workers’ accounts against job stamps certified by the employer.
  • Employees are to be selected from a pool of registered workers by the approved employer, or, by an independent ‘placement agency’ (to avoid collusion)

Role of the placement agency

  • The primary role of the placement agency is to assign registered workers to approved employers as and when required. But it could also serve other purposes, for example, certifying workers’skills, protecting workers from exploitation and arranging social benefits for them.
  • Various options could be considered for the placement agency, such as: (1) a single agency for the municipality, run by the local government; (2) a worker cooperative; (3) multiple placement agencies, run as non-profit organisations or cooperatives.


  • Some countries have employment-subsidy schemes of similar inspiration, e.g. “service voucher schemes” (SVS) in several European countries.
  • Belgium has a very popular SVS for domestic services such as cleaning and ironing. It was used by 1 out of 5 households in 2016.
  • The service vouchers are much like job stamps, except that they are used by households instead of public institutions, for the purpose of securing domestic services such as cooking and cleaning.
  • The service vouchers are not free, but they are highly subsidised, and households have an incentive to use them since that is a way of buying domestic services very cheap.
  • In the DUET scheme, the use of job stamps relies on a sense of responsibility among the heads of public institutions, not their self-interest.
How is DUET different from MGNREGA?
  • It is meant to create a lasting institution as an antidote to urban unemployment and urban decay.
  • The motivation for DUET is quite different from that for MNREGA. MNREGA offers insurance to rural workers in a slack season or in a drought year when agricultural jobs disappear. That is not the case of urban production.
  • What is the rationale/merits of DUET?
  • Job Creation: Activating a multiplicity of approved employers will help to generate a lot of employment.
  • Activating a multiplicity of potential employers: The approved employers will have a stake in ensuring that the work is productive.
  • Efficient: The scheme requires little staff of its own since existing institutions are the employers. The Scheme thus avoids the need for special staff, facilitating productive work.
  • Avoids Leakages: Workers are assured of timely payment at the minimum wage as it involves direct payment of wages using JAM trinity.
  • Towards employment guarantee: It would be relatively easy to move from DUET towards demand-driven ’employment guarantee’. That would require the municipality to act as a last-resort employer, committed to providing work to all those who are demanding work
  • Urban Infrastructure Creation: Urban areas could use some infrastructure and there is under utilised labour but there are no resources to use this labour to build the infrastructure. DUET may be one way to solve this problem.
What are the precautions that one needs to take to make DUET a success?
  • Permissible List of Works: To avoid abuse, the use of job stamps could be restricted to a list of permissible works. But the list should be fairly comprehensive, and not restricted to maintenance.
  • Avoid Displacement of Existing Jobs: The list of works should not be so broad as to displace existing jobs in public institutions.
  • Ensure Worker Safety: All DUET employment should be subject to worker safety and welfare norms specified in the scheme and existing labour laws.
  • Equity in worker registration: All urban residents above the age of 18 should be eligible to register under DUET, but special registration drives or placement agencies could be located in low-income neighbourhoods.
  • Integrate Skilling: The scheme would cover both skilled and unskilled workers. Whenever a skilled worker is employed, an assistant (unskilled) worker could be mandatorily employed as well, to impart an element of training and skill formation to the scheme.
  • Giving priority to women would have two further merits. First, it would reinforce the self-targeting feature of DUET, because women in relatively well-off households are unlikely to go (or be allowed to go) for casual labour at the minimum wage. Second, it would promote women’s general participation in the labour force.
  • Needs Independent Monitoring: An independent authority could be appointed or designated at the municipal level to monitor, inspect, audit and evaluate the works.

Main Practice Question: Why is there a growing clamour for Urban Employment Guarantee Programme? What are the challenges that governments face in implementing it?

Note: Write answers to this question in the comment section.

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