Urban employment guarantee Part 1: “Desperate times call for desperate measures”

In the first of a three part series, we explore the need for a work guarantee scheme to mitigate the crippling effects of the pandemic on the urban poor.

Mukesh Kumar, a 34-year-old father of three, was a peon in a school till June 2020 when he was laid off. All his efforts to find a job since have been in vain.

“There is no place I have not tried,” said Mukesh, a NOIDA resident. “I don’t have the guts to set up a cart to sell vegetables and deal with the local authorities”. Mukesh emphasises that returning to Kanpur, from where he moved to NOIDA over 15 years ago, was not an option even though he may get a few days of work and wages there under MNREGA.

Even during better times, few among the urban poor had a job like Mukesh’s that got them a monthly income. For every Mukesh, there are scores who sit at kerbs waiting for someone to hire them. Or standing behind a cart selling vegetables, fruits, bangles, and what have you, earning a precarious living while constantly under fear of being evicted.

There is widespread  awareness of the rural MNREGA scheme, but a similar scheme for urban areas is not something people like Mukesh can visualize. “Whenever we hear of schemes for the poor, it is generally for those in villages, not for people in the cities,” says Mukesh. “It is a pipe dream to even imagine an urban employment guarantee scheme”.

But some economists, and activists have been making a case for the introduction of such a scheme on humanitarian and economic grounds. Particularly since COVID-19 ran amok in the country, hugely impacting livelihoods among the urban poor.

Like Amarjeet Kaur, all-India general secretary of the All India Trade Union Congress  (AITUC). “We have been demanding such a programme for the urban poor since 2004, when MNREGA was being discussed,” says Amarjeet Kaur. “The pandemic amplified manifold the livelihood and income problems that the urban poor have always faced. Most of the urban poor are those who migrated from villages and now don’t want to go back.

“It has become a matter of survival for them. They are hungry, and would starve but for the generosity of civil groups, religious organisations and some philanthropists. The free rations announced by the government don’t reach them for want of documentation”. 

Read more: COVID-19 broke the backs of Mumbai’s informal sector workers. What does 2021 hold in store?

The AITUC has been pressing for 200 days of work under MNREGA, currently 150 days and visualises the same number of days in urban employment guarantee. “As for wages, we are pressing for the minimum wage the 7th Central Pay Commission has recommended (Rs 18,000 a month) for the government’s contractual labour,” says Amarjeet.

“Even Rs 14,000 a month will do for a start. The important thing is that the government should see the urgency and come up with a scheme and fund it. MNREGA is entirely funded by the Centre, but now they can discuss with the state governments and design a shared funding programme”. 

Urban work scheme: Hunger stalks the jobless urban poor
No income, no jobs. Police distributing food to migrant labour in Kaushambi in NCR during the first wave last year. Pic Pramod Pushkarna

You can see the MGNREGA roles picking up hugely. People want the support that MGNREGA offers, and they’re going for it. We don’t have a comparable form of urban support, and we need to think very quickly about whether we should have one“.

Former RBI governor Raghuram Rajan in a media interview

Targeting the right people and inclusion would be crucial to the implementation of any such programme, and regardless of this government’s indifference to data, the Labour Bureau figures updated and the NSSO database, could be the starting point, argues Kaur.

J Krishnamurty, a visiting professor at the New Delhi-based Institute for Human Development too argues that there is a strong case for extending the existing rural employment guarantee to urban India, “This works through self-selection and can reach groups not always reached by other welfare schemes,” Krishnamurty wrote in a paper published in September 2020.

The implementation of the scheme, Krishnamurty believes, should be done cautiously, “given how little we know about the magnitude and characteristics of migrant workers”. He suggests a pilot project in one or more selected cities, “without calling it a guarantee. Based on what we learn from this, it can then be extended to all of urban India. Components on adult education and training/retraining should be included in the project to improve skills, productivity and worker rights”.

Read more: Can an urban income guarantee scheme reduce unemployment in cities?

Another option, according to Somnath Mukherjee, an investment strategist and Managing Partner at ASK Wealth Advisors, is to have a National Urban Employment Programme, (NUEP) which would “kill several birds with one stone. For those who went back to their villages, there is the promise of reasonable income support from MNREGA wages, and other state government doles. But this could lead to demand destruction in urban economies on a massive scale on the one hand, and lack of enough labour to restart production operations”.

Citing the examples of construction, real estate, SMEs and supply chain intermediaries that have been badly hit, Mukherjee says an urban employment programme would stem the reverse migration, keep many sectors of the economy going and ensure rapid bounce back when things normalise.

“Desperate times call for extraordinary measures,” adds Mukherjee. “The multiplier impact of the NUEP, in terms of keeping leveraged business viable, and thereby preventing NPAs in the banking system, and stemming a potentially disastrous en masse reverse migration, far outstrip its misuse potential. It’s an idea whose time has come”.

But how feasible would such a programme be? Is it possible to lay out a concrete roadmap to achieve this? Are governments even interested? In Part 2 of the exploration, we shall look at that.

What the numbers say

  1. According to the Centre for Monitoring Indian Economy (CMIE), unemployment rate as on week ending May 23, 2021, was 14.73%, with over 17% unemployment in urban India, and 14% in rural areas. 
  2. CMIE puts the number of jobs in the Indian economy before Covid 19, at 403.5 million. Today, that number is 390 million. Within this, 73-74 million are salaried.
  3. That leaves almost 320 million jobs in the informal, non-salaried sectors, a sizable chunk of which would be migrant workers in urban areas, most of whom have returned to their villages.
  4. CMIE estimates that over one crore people have lost their jobs in the second wave since the beginning of the pandemic last year.
  5. Unemployment rate is expected to be at 12% at the end of May as against 8% in April.
  6. A nationwide survey of 1.75 lakh households by CMIE shows a disconcerting trend in income generation during the last one year. Only 3% said their income had increased, while 55% reported a decline in income, and 42% saying their incomes had remained the same. 
  7. Adjusting for inflation, the survey shows that 97% of households in the country saw a decline in income during the pandemic.
  8. Labour participation rate (percentage of working age population in the market) too has come down to 40 per cent from pre-pandemic levels of 42.5 per cent.

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