CRITICAL ANALYSIS OF THE UNEMPLOYMENT BENEFIT SCHEMES IN INDIA

BY ARTIKA ASHDHIR

ROLL NO: 2010GL004

TATA INSTITUTE OF SOCIAL SCIENCES

YEAR: 2010-12

SUBJECT: SOCIAL PROTECTION AND THE STATE

DR. VARSHA AYYAR

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CONTENTS«««««««««««««««««««««..PAGE NO.
ABSTRACT««««««««««««««««««««««««««««..3 ABBREVATIONS«««««««««««««««««««««««««...4 1. WHAT IS SOCIAL PROTECTION AND SOCIAL SECURITY?.............................5 2. WHY DO WE NEED SOCIAL SECURITY?.............................................................6 2.1 BACKGROUND INFORMATION ON SOCIAL SECURITY«««««««6 3. TYPES OF UNEMPLOYMENT«««««««««««««««««««««7 3.1 VOLUNTARY UNEMPLOYMENT«««««««««««««««««..7 3.2 INVOLUNTARY UNEMPLOYMENT««««««««««««««««..7 4. WORKFORCE IN INDIA«««««««««««««««««««««««.9 4.1 ORGANIZED AND ORGANIZED SECTORS«««««««««««««.10 5. PROBLEM OF UNEMPLOYMENT IN INDIA««««««««««««««...11 6. REGIONAL VARIATIONS IN UNEMPLOYMENT««««««««««««..15 7. INITIATIONS BY THE GOVERNMENT«««««««««««««««««16 7.1 SCHEMES«««««««««««««««««««««««««««...17 8. UNEMPLOYMENT BENEFIT SCHEMES IN EUROPE«««««««««««26 9. LESSONS THAT CAN BE LEARNED FROM EAST ASIAN COUNTRIES«««30 10. CONCLUSION«««««««««««««««««««««««««««.33 REFERENCES««««««««««««««««««««««««««««....34

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ABSTRACT
The growth performance of the Indian economy, though not spectacular, has been decent by the standards of developing countries. But growth has failed to improve employment conditions in the country even though the rate of labour force growth has so far been quite low. It is hardly surprising that problems of unemployment and underemployment worry policy planners of today as much as they did Mahalanobis at the time of formulating the Second Five-Year Plan. The rate of labour force growth is currently accelerating and is expected to remain high for quite some time to come. If the past patterns continue, the country will soon be confronted with an employment crisis. The Indian government has come up with various schemes to tackle with the acute obstacle of unemployment in its growth. However the major problem is that there is no clear distinction between unemployment benefit schemes and the employment generating schemes. Another hitch is in the implementation and coverage of these schemes though these schemes appear to be quite comprehensive on paper. This paper looks at the problem of unemployment in the country and the various schemes that the government has initiated to combat this problem and their performance. The paper also glances at the policies in European countries and tries to draw some lessons from the East Asian countries as well.

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2. 3.JAWAHAR ROZGAR YOJNA NREP. SRY.SWARNJAYANTI ROZGAR YOJNA 9. 4 .SAMPOORNA GRAM ROZGAR YOJANA 8. 4.ABBREVIATIONS EAS.RURAL LANDLESS EMPLOYMENT GARUNTEE PROGRAMME 7. SGRY. 6.NATIONAL RURAL EMPLOYMENT PROGRAMME NSS± NATIONAL SAMLPE SURVEY RLEGP. WPR ± WORKERS POPULATION RATIOS 1.JAWAHAR GRAM SAMRIDHI YOJANA JRY.EMPLOYMENT ASSURANCE SCHEME JGSY. 5.

Social security is a government program designed to provide for basic economic security and welfare of individuals and their dependants. survivorship. communities in better management of income risks. households. Social protection deals not only with social risks (sickness. unemployment or rearing child. and education etc. form part of a country¶s social security system. There is need to increase demand. and enhancing their capacity to protect themselves against hazards and interruption/loss of income.1. The ILOµs definition of social protection is the public action taken in response to levels of vulnerabilities risks and deprivation which are deemed socially acceptable within a given policy of society. It may also offer access to curative or preventive medical care. employment. Social protection programs can increase demand. incapacity. old age. WHAT IS SOCIAL PROTECTION AND SOCIAL SECURITY? Social protection is defined as the set of policies and programs designed to reduce poverty and vulnerability by promoting efficient labour markets. absolute deprivation and vulnerabilities of poorest and non-poor of the society. national provident funds. unemployment and social exclusion) but also with programmes that secure income such as food security. mutual benefit schemes. in accordance with national law or practice. According to World Bank social protection consists of public interventions to assist individuals. diminishing people¶s exposure to risks. supply side management is not enough. 5 . universal programmes. Social protection deals with both. Social security may be defined as any mandatory arrangement that provides individuals with a degree of income security when faced with the contingencies of old age. In the financial crisis. and other arrangements including market-oriented approaches that. The programs classified under the term social security differ from one country to another. social assistance programmes. disability. but all are the result of government legislation and all are designed to provide some kind of monetary payment to defray a loss of or a deficiency in income. As defined by the international social programmes. presence of social cohesion and can prevent irreversible losses of human capital.

2. Social Security is increasingly viewed as an integral part of the development process.e. The State bears the primary responsibility for developing appropriate system for providing protection and assistance to its workforce. In keeping with its cultural traditions. assure the individual of a basic minimum income for himself and his dependents and to protect the individual from any uncertainties. The remedial measures for reducing unemployment may lay greater emphasis on creation of opportunities for self -employment. family members and relatives have always discharged a sense of shared responsibility towards one another. information and awareness are the vital factors in widening the coverage of Social Security schemes. shift in emphasis from creation of relief type of employment to the building up of durable productive assets in the rural areas and instead of attempting to revert somewhat to protectionist policies the pace of privatization may be accelerated 6 . Thus the main strength of the Social Security system is that it acts as a facilitator . This is where the formal system of social security gains importance. Social Security is a comprehensive approach designed to prevent deprivation. 2. WHY DO WE NEED SOCIAL SECURITY? Social Security protects not just the subscriber but also his/her entire family by giving benefit packages in financial security and health care. However with increasing migration. dies or suffers a disability. Social Security Benefits in India are Need-based i. The success of Social Security schemes however requires the active support and involvement of employees and employers. To the extent that the family has resources to draw upon. However. It helps to create a more positive attitude to the challenge of globalization and the consequent structural and technological changes.1 BACKGROUND INFORMATION ON SOCIAL SECURITY India has always had a Joint Family system that took care of the social security needs of all the members provided it had access/ownership of material assets like land. urbanization and demographic changes there has been a decrease in large family units.it helps people to plan their own future through insurance and assistance. augmentation of productivity and income levels of the working poor. As a worker/employee. this is often the best relief for the special needs and care required by the aged and those in poor health. the component of social assistance is more important in the publicly-managed schemesIn the Indian context. Social Security schemes are designed to guarantee at least long-term sustenance to families when the earning member retires. you are a source of Social Security protection for yourself and your family. Our State right from the beginning of Five year plans has introduced several employment generating schemes and programmes over the years but in the absence of proper implementation and monitoring have failed to achieve the required targets. As an employer you are responsible for providing adequate social security coverage to all your workers.

a. Here. Either he wants higher wages or doesn't want to work at all. political corruption mounting unemployment and crime etc. 3. The incidence of unemployment is much higher in urban areas than in rural areas. Some features of unemployment have been identified as follows: a. In such a system. threaten the smooth working of society. Since such an economic crisis is the result of trade cycle. TYPES OF UNEMPLOYMENT India as a nation is faced with massive problem of unemployment. It all happens in the industries. c. 7 . Forms and types of unemployment according to Hock are. Sudden unemployment . At the same time. The incidence of unemployment among the educated is much higher than the overall unemployment. people are not is a position to reject the old completely and accept the new altogether.3.This is the result of the trade cycle which is a part of the capitalist system. Generally unemployment can be classified in two types: 3. Unemployment can be defined as a state of workless-ness for a man fit and willing to work. Cyclical unemployment . Unemployment rates for women are higher than those for men. But due to rapid social change new values come up and some of the old values decline. There is greater unemployment in agricultural sector than in industrial and other major sectors. b. conflict between the old and the new is the inevitable result which leads to the social disorganization in imposed situation. Economists and social thinkers have classified unemployment into various types.When at the place where workers have been employed there is some change. b. It is in fact social problem leading to social disorganization. d. It means that a person is separated from remunerative work and devoid of wages although he is capable of earning his wages and is also anxious to earn them. there is greater unemployment and when there is depression a large number of people are rendered unemployed.1 VOLUNTARY UNEMPLOYMENT In this type of unemployment a person is out of job of his own desire doesn't work on the prevalent or prescribed wages. In economic terminology this situation is voluntary unemployment. trades and business where people are employed for a job and suddenly when the job has ended they are asked to go. a financial or economic crisis a war between nations. mental illness.2 INVOLUNTARY UNEMPLOYMENT In this type of situation the person who is unemployed has no say in the matter. It is a condition of involuntary and not voluntary idleness. a class struggle. a social upheaval. They contribute to the strength and stability of social order. Social problems and forces such as a revolution. Social values are often regarded as the sustaining forces of society. the unemployment is a part of it. a large number of persons are unemployed.

Since workers do not get any salary or wages during the strike period they suffer from economic hardships. Seasonal unemployment . keen competitions less profit etc. Business field is subject to ups and downs of trade cycle and globalization. 8 . the business may give huge loss or the business may not turn out to be useful and so on.Certain industries and traders engage workers for a particular season. a business a factory or an industry has to close down. Our educational system has its own irreparable defects and its contribution to the unemployment is an open truth. Unemployment caused by failure of Industries . Our education does not prepare the minds of young generation to become self-employed on the contrary it makes them dependent on government vacancies which are hard to come. Every year India adds to her population afresh. More than this every year about 5 million people become eligible for securing jobs. The problem of unemployment has becoming a colossal.c. Economic depression or sick industries are often close down compelling their employees to become unemployed. d. There is enormous increase in the population. They become permanently or temporarily unemployed. Strikes and lockouts have become inseparable aspect of the industrial world today. Unemployment caused by deterioration in Industry and business .In many cases. Various problems have caused this problem. Today young people are not ready to take jobs which are considered to be socially degrading or lowly. Sugar industry is an example of this type of seasonal unemployment. there is deterioration.In various industries. There may be various factors responsible for it there may be dispute amongst the partners. trades or business. sometimes. There are individual factors like age. Due to these industries often face economic loses and production comes down. In efficiency of the employers. When the season has ended the workers are rendered unemployed. This deterioration may be due to various factors. External factors include technological and economic factors.But unplanned and uncontrolled growth of technology is causing havoc on job opportunities. e. are some of the factors responsible for deterioration in the industry and the business. Technological advancement contributes to economic development . The computerization and automation has led to technological unemployment. vocational unfitness and physical disabilities which restrict the people.

Third. 2000 by rural-urban location and by gender along with corresponding estimates for January 1. over the same period. population estimates for March1 of 1999 and 2000 separately for the four segments.75 per cent per annum (pcpa) between 1994 and 2000. rural females. Table 1 presents the estimates of population and workforce as on January1.000 to 9 per 1. This has the implication that. 2000 by gender and rural-urban location are obtained. 9 . WORKFORCE IN INDIA For the country as a whole we have in the Population Projections for India and States 19962016o f Registrar General of India [GoI 1996]. It is in fact present in each and all the four population-segments.000 in 1999-2000.30pcpa is much lower than the rate of growth of the population of women in urban India which is projected to have grown at 3. the rate of growth of workforce over the six-year period will be lower than the rate of growth of population over the same period. For rural females this ratio is unchanged at 3 per 1. in every segment. age-specific WPRs have declined between 1993-94 and 19992000 in each and every single age-group (five-year age-groups between 5 and 59 years and the open-ended interval '60 years and above') distinguished in the NSS Report. but also in the 15-19 and the 20-24 age-groupsin dictating a rising participation in secondary and higher-level education.3 Applying to these population estimates the segment-specific (crude) worker-population ratios (WPRs for short) as per the NSS 55th Round Survey. Thus.000. the total (rural plus urban and males plus females) workforce would have grown by just 0. in each of the four segments. while the population is projected to have grown at a little over 1. to a significant extent. Also presented in this table are the underlying (crude) workerpopulation ratios drawn from the two quinquennial surveys. A striking result is the nearstagnation in the number of female workers in the country as a whole and an absolute reduction in the number of women workers in rural India. So the observed decline in crude worker-population ratios is not due merely to shifts in the agestructure of the population. Three points need to be noted in connection with the decline in the (crude) workerpopulation ratios noted above. By interpolation.81 pcpa. 2000 . These gains have been particularly impressive for rural girls below 20 years of age (Table 3).4 The above is a consequence of a sharp reduction in the WPRs between 1993-94 and 1999-2000 for both rural and urban women. First. while for urban females there is a marginal decline from 10 per 1.the mid-point of the Survey Year 1999-2000 . The WPRs and therefore also the work-force estimates are those based on "usual activity category taking also into consideration the subsidiary economic status of persons categorised' not working" 'or the Usual Status (PS+SS) categorisation for short. Second. As already noted the estimates for female workers as on January 1.not only in the 5-9 and the 1014 age-groups covering the primary and middle-school system. So that. 1994 drawn from Visaria (1998) with WPRs drawn from the NSS 50th Round Employment-Unemployment Survey (July 1993-June 1994). urban males and urban females. we obtain estimates of population as on January 1.4 million). is just about offset by arise in the number of urban women workers (1. at 1. This decline in WPRs is. the rate of growth of women workers. crude labour force participation rates (WPRs) would also show a decline between 1993-94 and 1999-2000 in all the four population segments. in the countryas a whole. the declines in WPR are not offset by any significant rise in the ratio of unemployed in the population on the Usual Status ( PS+SS) categorisation.4. by a little over 1.000) are marginal. the estimates of workforce as on January 1.000 in 1993-94 to 8 per 1. Even in urban India.3 million. however.separately for rural males. not confined to women.000) and for urban males (from 22 to 24 per 1. This reduction in the number of women workers in rural India. The increase in this ratio for rural males (from 8 per 1.05 pcpa. the reduction in worker population ratios reflectsa beneficial rise in the student-population ratios . 2000 imply virtually no growth in the aggregate and negative growth for women workers in rural India.

trade. 5. bee-keeping. the decline in WPR (from 456 per 1. sizeable declines in the principal status WPRs in the 50-54. is characterized by the lack of labour law coverage. small and marginal farmers. garment makers. all of which make it vulnerable to socio-economic hardships. as noted earlier. the Industrial Employment Standing Orders Act. PROBLEM OF UNEMPLOYMENT IN INDIA 10 . there is no offsetting beneficial rise in the student-population ratios. These declines in the 25 and above age-group accounted for over 40 per cent of the decline in the crude WPR for rural women and for over 59 per cent of the decline in overall WPR for urban women. 55-59 and 60+ age groups for males in both rural and urban India remain an unresolved puzzle. and also includes street vendors. This is also the case for rural males in the three agegroups 10-14. and 20-24. however. communication etc. 1948. shows that. even though the declines have been quite sharp in a few states. transport. seasonal and temporary nature of occupations. two caveats are in order: First. Second. This sector already has a structure through which social security benefits are extended to workers covered under these legislations. toddy tapping. the decline in the age-specific WPRs extends to all age groups in all the four population segments. for urban males in the 10-14 and the 15-19 age-groups. horticulture. etc. casualization of labour. But.000 in 1993-94 to 409 per 1. share croppers. and. in all the four segments the decline in WPRs has been widespread across states and. etc. lack of organizational support. In the rural areas it comprises of landless agricultural labourers.1 ORGANIZED AND UNORGANIZED SECTORS The organized sector includes primarily those establishments which are covered by the Factories Act. The nature of work in the unorganized sector varies between regions and also between the rural areas and the urban areas.000 in 1999-2000) is much greater than the 10 point rise in the corresponding student populationratio from 19 to 29 per 1. cobblers. it comprises mainly of manual labourers in construction. etc. 15-19. in agegroups 25 years and above. at least for rural women.000. in the case of rural women in the 20-24 age group. tin smiths. So that. dispersed functioning of operations. persons engaged in animal husbandry. the decline in WPRs observed at the all-India is not due to a sharp but concentrated decline in a few states. 1946 etc. at least in their case the declines in the WPRs (on the principal Plus Subsidiary Status) in these groups is due to entirely to declines in WPRs on the Subsidiary Status. in the 20-24 age-group as well. carpentry. not reported here. fishing. However. WPRs on the Usual Principal Status in the 25 and above age group (except 50-54) are higher in 1999-2000. high labour mobility. to a lesser extent. The unorganized sector on the other hand. hawkers. head load workers. which may include the remote rural areas as well as sometimes the most inhospitable urban concentrations. forest workers. where as in the urban areas.94 and1 999-2000. 4. rural artisans. the Shops and Commercial Establishments Acts of State Governments. Our state-level review of changes in workerpopulation ratios between 1993. And.In relation to the last noted point. low bargaining power.

those with 'secondary and above' level of education as also for the sub-set of those with 'graduate and above' level of education . This is presented separately by gender and rural-urban location and within each population segment this information is presented separately for the self-employed workers and casual labourers in addition to all workers. To focus on the self-perceived underutilisation of labour time. those who had sought or were available for additional work on most days.000. Before proceeding further. at 7 per cent the increase is relatively modest. the proportion of usual status workers reporting that they had not sought (nor were available for) additional work may be treated as those who perceive themselves to be fully employed during the 365-day reference period.000 distribution of adult usually working persons as between those who had not sought (nor were available for) additional work. with 'to supplement income'.either on most days or on some days of the year. A striking result to emerge from Table 7 is the reduction over the 1990s in the proportion of usual status workers who had not sought additional work in every segment and category of workers distinguished.separately for those who did so on most days and those who did so on some days . The increase in the daily-status unemployment rate is the steepest for rural males (29 per cent) followed by rural females (21 per cent). with urban women as the sole exception.in almost all the four population segments. among casual labourers it 11 . the rise in the proportion who had sought additional work is the highest for casual labourers in each of the four segments. 'not enough work'. equivalently. For urban males. The exception was rural females with 'graduate and above' level of education who experienced an increase in usual status unemployment rate from 323 to 351 per 1. This increase in the unemployment rate for rural males has to be seen in the context of the rise in the share of casual labour (from 338 to 362 per 1.000) and a decline in the share of self-employed among rural male workers on the usual status (principal plus subsidiary). this widely accepted measure of open unemployment indicates a worsening of the unemployment situation over the 1990s in three out of the four population segments. Given that the daily status unemployment rate better captures the unemployment among casual labourers than that among the self-employed (where we could be faced with the phenomenon of work spreading) the rise in the daily status unemployment rate among rural males could well be due to the change in the status-composition of the workforce [ Sundaram and Tendulkar 1988].At the all-India level. and 'not enough work and to supplement income' as the principal rubrics of 'reasons'. This points to an unambiguous increase in self-perceived underemployment among those classified as workers on the Usual Status (principal and subsidiary).who reported either 'not enough work' or 'not enough work and to supplement income' as the reason. When we look at the data for 1993-94 and 1999-2000 the per 1. And. One of the indicators of underemployment among those classified as workers on the Usual (principal plus subsidiary) status available from the NSS EmploymentUnemployment Surveys is the proportion of such workers (adults above 15 years of age) who had sought or were available for additional work . those who did so on some days. we may note a reduction in the unemployment rates on the usual principal status for the educated . Those who reported themselves as seeking or available for additional work are further classified by reasons for seeking or being available for additional work. In this tabulation. we also present the proportion of those who had sought additional work . and. The decline in the proportion of workers who had not sought additional work or.

urban males and urban females.8 per cent per annum and that the rate of growth of real average daily wage earnings of rural male casual labourers employed in non-agricultural activities is only marginally lower. In fact among urban casual labourers there is a reduction. these estimates are separately available in respect of employment in public works. much of this is reflected in an in-crease in the proportion of usual status workers who sought additional work on 'some days' rather than 'on most days'. in that order. albeit marginal. For rural India. a major portion of the reduction in the proportion who had not sought additional work is accounted for by an increase in the proportion of those who had sought additional work on 'some days'. in rural India. For urban India. the principal reason was the need to supplement income rather than lack of work per se. in real terms. It is readily seen that. by over 3. the average daily wage earnings of adult male casual labourers finding employment in public works have grown. In sum. For rural female casual labourers¶ employed in agricultural activities.9 per cent per annum. Significantly. Within agriculture estimates are separately available by operations.is the highest for rural males. employment in agriculture and employment in non-agriculture.70 per-cent per annum. for both males and females. real average daily wage earnings of casual 12 . even among those adding to the proportion of workers who had sought additional work 'on most days¶. The growth in real average daily wage earnings of male casual labourersin agriculture. Overall. accounted for only about a third of such cases. the rate of growth of their average daily wage earnings in real terms was over 2. The NSS Employment Report provides estimates of average daily wage earnings received by casual labourers by gender and rural-urban location. in the proportion that had sought or was available for additional work 'on most days'. This is overwhelmingly the case among all the categories of urban workers . these estimates are separately available by industry divisions at 1-digit detail.males and females alike. Also noteworthy is the fact that. while there is clear evidence of increase in self-perceived underemployment. For rural female casual labourers. at 3. accounted for 50 per cent or more of the rise in the proportion of those who had sought additional work 'on some days' in almost all cases .8 per-cent per annum. followed by rural females. Those citing either of these reasons. is still quite significant at 2. those citing either 'not enough work' or 'not enough work and to supplement income'. the rate of growth of real daily wage earnings of those employed in public works and in non-agricultural activities is substantially higher than that for males at a little over 5 per cent per annum. the 1999-2000 estimates have been adjusted for inflation between 1993-94 and 1999-2000 by reference to the Consumer Price Index for Agricultural Labourers (CPIAL with base 1986-87= 100) while for urban India this adjustment has been made by reference to the Consumer Price Index for Industrial Workers (CPIIW with base 1982=100). however. Also.For rural India. though lower than that for those employed in non-agricultural activities by nearly 1 percentage point.with the category 'all urban female workers' as the exception. except for rural female self-employed workers. This leads us to consider next the changes in the average number of days worked and the changes in the average daily wage earnings of casual labourers in the four population segments. even in rural areas where there is some rise in the proportion of those who had sought additional work 'on most days'. The data available from the NSS for rural and urban India the estimates of average daily wage earnings of adult (15-59) casual labourers for 1993-94 and 1999-2000. among them.

In the case of female usual status workers. of those classified as workers on the Usual (Principal plus Subsidiary) Status per year in 1993-94 and 1999-2000 at the all-India level for the four population segments. both among rural women and among urban women.which in fact. at least among the usual status workers among rural females. the rise in the average rate of daily-status unemployment would follow not from an increase in the number of days in unemployment but from a reduction in the number of days spent in the labour force. there is a reduction of days at work of 4 days in the year.8 real average daily wage earnings have grown for both males and females in all industrial activity categories at close to or above 3 per cent per annumin most cases. we examine the issue of average number of days worked during the year of usually employed (Principal plus Subsidiary Status) workers. with no change in the number of days in unemployment.labourersin rural India have grown atclose to or above 3 per cent per annum over the period 1993-94 to 1999-2000. This would suggest that. In principle. storage and communication has been somewhat slower. there is a reduction in the number of days in the year that is spent outside the labour force on the average. With the two exceptions noted above. The computation of average number of days worked.but is due to a shift in daily status 13 . but still significant at2 per-cents per annum. In the case of urban males the reduction in the number of days worked by 2 days is offset by an increase in the number of days outside the labour force. Thus. real average daily wage earnings of urban female casual labourers have grown at close to 4 per cent per annum. the regular wage/salaried workers and the casual labourers. in all the four population segments. the increased number of days in unemployment is not due to any fall in the average number of days worked . This widespread and significant growth in average daily wage earnings is fully consistent with the strong and generalised growth in labour productivity witnessed over the same period.9 However. In the case of rural females. in 1999-2000 compared to 1993-94 and an off-setting increase in the number of days in unemployment with no change in the number of days not in the labour force. published tables reporting such a cross-tabulation (Usual (PS+SS) x Daily Status) restricts the scope of such analysis to the broad categories of workers. So that. Next. This is possible since the surveys simultaneously canvass the activity status of the individual on the usual and the current daily (as well as the current weekly) statuses. while for urban male casual wage labourers this growth rate is close to 3 per-cent per annum. Community and Personal Services) who have suffereda decline in real average daily wage earnings. with the exception of urban female workers employed in Industry Divisions 8 (Financial and Business Services) and 9 (Social. Taking all industries together. For rural males. on the average. The rate of growth in real average daily wage earnings of urban male casual labourers employed in construction and in transport. urban female casual labourers have experienceda faster rate of growth of real average daily wage earnings relative to the male counterparts in all other cases. For casual wage labourersin urban India. a reduction of 9-days in the number of days outside the labour force is offset by an increase in the number of days worked (of 5 days from 241 to 246 days) and an increase in the number of days in unemployment. the unemployed and those outside the labour force. average daily wage earnings of casual labourers have grown at a rate close to or above 3 per cent per annum over the period covered by the two surveys. shows an increase . average days in unemployment and days outside the labour force. this can be done for each category of usual status workers such as the self-employed (further distinguished by broad industry). at least for the urban male workers on the usual status.

the share of the agriculture sector recordsa significant decline to just below 60 per cent to reduce marginally the absolute number of workersin agriculture for the first time since independence. In terms of industrial distribution. In terms of labour productivity. communications and storage sectors recording sizeable growth in both share and number of workers. to raise average wage earnings per capita at over 2. in poverty ratios in both rural and urban India. this growth in real wage earnings. In turn. transport. hotels and restaurants. This significant growth in labour productivity has translated into an equally significant and widespread growth in daily average wage earnings of casual wage labourers both for males and females and in both rural and urban India. there was an increase of 9 days in employment on the average during the year . In the case of usual status workers among urban women. a decline has been recorded in share and in the number of workers in the community.largely reflecting a shift out of days not in the labour force (a reduction of 8 days) and a small (1-day) reduction in the number of days in unemployment. To a significant extent. This result is consistent with a decline. REGIONAL VARIATIONS IN UNEMPLOYMENT 14 . and.of labour force. Thus between 1993-94 and 1999-2000 there has been a significant decline in the crude worker-population ratios in all the 4 population segments resultingin a slower growth of workforce relative to the growth in population and an absolute reduction in the number of women workers in rural India which is just about offset by a rise in the number of urban women workers. over the same period. and a rise in the number of days worked by females. has been sufficient to more than offset both a reduction in the crude worker-population ratios and a marginal reduction in the average number of days worked for male workers.construction. the gross value added per worker has grown significantly in all the sectors with a 6 per cent per annum growth in the economy as a whole and in two of the three largest employing sectors outside of agriculture. social and personal services sector with trade.from the category 'outside the labour force' to both components . Also.the employed and the unemployed .5 per cent per annum in both rural and urban India over the period 1993-94 and 1999-2000. except for the construction sector. 6. the reduction in worker-population ratios reflects a beneficial rise in the student-population ratios.

INITIATIONS BY THE GOVERNMENT 15 . Rajasthan and Uttar Pradesh. there are a number of problems that are ignored completely: duration of unemployment and search unemployment (that often is thought to be a major factor in the unemployment of relatively highly educated youths from middle and upper class families in most Asian countries. The traditional measures of unemployment do not provide the same ranking to the states. The interstate variations in the level of unemployment in the rural sector are much higher than those in the urban sector. the level of unemployment among self-employed is lower than others. In the urban sector. 7. The level of unemployment is the lowest in Madhya Pradesh followed by Himachal Pradesh. However. In the rural sector. The level of unemployment varies from state to state. The agricultural productivity and the percentage share of wagebased households in labour force are found to explain interstate variations in the level of rural unemployment. All the agricultural and non-agricultural labour households taken together contribute about 70 per cent towards total unemployment in the rural sector. By and large the empirical results of this study are quite comprehensive and useful. The nonagricultural labour households have the second highest level of unemployment.According to the 32nd NSS survey. the level of unemployment is the lowest among selfemployed households and the highest among agricultural labour households. the level of unemployment varies from occupation to occupation. These findings are of great relevance to the policy-makers in devising appropriate employment strategy. If the government believes in eradicating unemployment from all the occupations simultaneously then about 70 per cent of the additional person days of employment generated during a particular period must go to the agricultural and non-agricultural labour households. In the urban sec-tor. the percentage share of self-employed households in labour force has turned out to be the single-most important determinant of interstate variations in the level of unemployment. Kerala shows the highest level of unemployment followed by Tamil Nadu and West Bengal.

Alarmed by the growing backlog of unemployment. The primary objective was to provide gainful employment to every able bodied person. They have been subsequently conceived.To tackle with the acute unemployment problem the government came up with various unemployment alleviation programmes and yojnas were introduced. stability and justice have not recognized this as a matter of direct and explicit importance and attention. numerous Para-military and security forcesetc. army. Many of these schemes are anti-poverty programmes but are also aimed at ensuring increased in employment opportunities. interalia. which had not directly focused on employment angle. a considerable part of employment which has been created in government and other services.1 SCHEMES 16 . In other words. Thus. They reflect the admission that the eradication of poverty and unemployment through percolation or trickledown effect is not possible within the desirable time frame. special programmes/schemes were devised from the fourth five year plan onwards to provide the poor with adequate purchasing power through giving them employment at rates above the poverty level. police. Thus the UAP¶s can be said to have originated with the submission of the Bhagwati committee report. an imperative condition for human beings. the government of India appointed Bhagwati committee which submitted its report in 1973 in which it recommended. public sector. therefore. and technology resulted in a colossal and alarming backlog of unemployment by the end of 1960¶s itself. a direct attack on these problems is essential. one would be afraid to say that the employment objective has not received enough attention from the policy makers in India. It is rightly demanded that µthe right to work¶ should be enshrined as a fundamental right to all the citizens of the country. introduced and implemented as a direct means of employment creation policy under the planned development. finding that five year plans. and of not allowing the maximization of growth to be adversely affected by targeting maximization of employment creation. The philosophy of development in India has remained one of increasing employment indirectly through the maximization of growth. itself can be regarded as disguised unemployment from the view point of materiality of production. Over the years. 7. and. undertaking specific schemes to alleviate unemployment problem in the country. had not been able to make an appreciable impact on employment creation. designed. The economic policy and planning in India with their triune objectives of growth. Incidentally. particularly in backward areas and groups. To have work is a basic necessity. The consequent choice of development strategy. After looking at the sheer number. the development process has partly resulted only in shifting the disguised unemployment from rural/unorganized sector to urban/organized sector. the number of these programmes has grown to be bewilderingly large. structure of growth (of output).

Desert Development Program (DDP) (1977. adult employment at a minimum living wage in rural areas through labour-intensive and durable-assetsproducing activities. and to take up subsidiary activities such as dairying.75). Command Area Development Program(CADP)(1974. A unique state-level scheme that tried to offer work to everyone and give practical expression to the . y 17 Food for Work Program (FFWP) (1977) . Crash Scheme for Rural Employment (CSRE)(1971) This scheme takes up projects of durable nature such as minor irrigation. and repairing and hiring facilities. to mitigate scarcity conditions. In 1974 the two were merged into an expanded SFDA. to diversify agriculture.y Rural Works Program (RWP)(1970. livestock. water. MFALS emphasized employment generation and improvement of examining capacity of landless agricultural labourers. fishing.73) To provide gainful. to bring about integrated area development. to restore ecological balance to raise productivity of land. y Drought-Prone Area Program (DPAP)(1973). afforestation. y Maharashtra Employment Guarantee Scheme (MEGS)(1972. and so on). and to promote integrated development in drought-affected areas. and horticulture. poultry. afforestation. unskilled. to control the process of desertification. and land reclamation. and human resources in respective types of areas. anti-water-logging to alleviate unemployment and underemployment in rural areas. productive. to increase productivity and employment opportunities. multiple cropping. y y Small Farmers Development Agency (SFDA)(1971) and Marginal Farmers and Agricultural Labourers Scheme (MFALS)(1971) To make credit available to farmers of various capacity and agricultural laborers to enable them to use the latest technology. manual.78) All of these are Area Development Programs (ADPs). which in turn was merged with IRDP in 1980. road construction.71) It is an employment-oriented program to create permanent civil works (soil conservation.right to work. and to promote afforestation and pasture development. y Agro-Service Centres (ASS)(early 1970s) It provides assistance for self-employment to the unemployed graduates and diploma holders by enabling them to set up workshops. soil conservation. DPAP was a redesigned RWP. Hill Areas Development Program (HADP)(1974).. practice intensive agriculture. to mitigate the effects of drought. Their aims: to deploy adequate infrastructure.

and services in rural areas. To provide gainful wage employment during periods of seasonal and sporadic unemployment. y Integrated Rural Development Program (IRDP)(1976.To generate additional gainful employment in rural areas to create durable community assets. Wage employment program in which a part of the wages was paid in the form of subsidized foodgrains. industry. Toward this end. services and business. y National Rural Employment Program (NREP) (1980) This is a restructured and renamed RWP.83) It is a supportive program for IRDP. to secure minimum wages to agricultural workers. spatial dimensions. to strengthen social and rural infrastructure. and to raise living standards.35 years with a minimum qualification up to matriculation in industry. with a focus on women. to assist liberated bonded labour. and to enable them to take up self-employment in agriculture. to create community assets. The wages were paid not in cash but in the form of food grains from Government surplus stocks. y Development of Women and Children in Rural Areas (DWCRA)(1982. and to strengthen rural infrastructure. y Training for Rural Youth in Self-Employment (TRYSEM)(1979) To provide technical skills and to upgrade traditional skills of rural youth (18 to 35 years old and from families living below the poverty line).84) To provide self-employment to the educated unemployed youth in the age group of 18. to increase the income of rural women and to provide them with child care facilities and other support services and financial assistance so that they could take up self-employment in viable economic activities.80) To promote self-employment and to raise the level of living of the poorest families in rural areas above the poverty line on a lasting basis by giving them income generation assets and access to credit as well as other inputs. y Rural Landless Employment Guarantee Program (RLEGP)(1983) A program to supplement NREP. y Self-Employment Scheme for Educated Unemployed Youth (SEEUY)(1983. individually or in homogeneously organized groups. social and economic process and policies. to play a supportive role in IRDP and ADPs. 18 . It aimed at guaranteeing employment to at least one member of landless households up to 100 days in a year. the program aimed at achieving integration of sectoral programs.

y Jawahar Rozgar Yojana By merging the two erstwhile wage employment programme ± National Rural Employment programme (NREP) and Rural Landless Employment Guarantee Programme (RLEGP) the Jawahar Rozgar Yojana (JRY) was started with effect from April. 19 . 2. Setting up micro enterprises and providing training and infrastructure support for urban poor beneficiaries. semiurban areas to undertake self-employment by providing subsidy and credit.000 population.000 3.87) To encourage families living below the poverty line in metropolitan. Scheme of employment through Housing and Shelter Upgradation in low income neighbourhoods mainly for the urban poor and economically weaker sections and training and infrastructure support for promotion of construction skills among beneficiaries. the preference was to be given to the Scheduled Castes. The employment contemplated isof two typessetting up of self-employment venturesand provision of wage employment through the creationof socially and economically useful assetsshelter upgradation programmes in urban areas. and (ii) towns with population from 20.y Self-Employment Program for Urban Poor (SEPUP) (1986. 1. This scheme is operative in all urban settlements. Though the people below the poverty line were the target group for employment. Scheme of wage employment for creation of socially and economically useful public assets¶ In the jurisdiction of urban local bodies! This scheme is applicable in : (i) towns with less than 20. Scheduled Tribes and freed bonded labourers. 1989 on80:20 cost sharing basis between the centre and the States. The share of Scheduled Castes/Scheduled Tribes (SC/ST) beneficiaries was to be 30 per-cent in terms of number and amount. y Nehru Rozgar Yojna T h e Nehru Rozgar Yojana has been designed to provide employment to the urban unemployed andunder-employed poor. The main objective of the yojana was additional gainful employment for the unemployed and under-employed persons in rural areas. The other objective was the creation of sustained employment by strengthening rural economic infrastructure and assets in favour of rural poor for their direct and continuing benefits. This scheme is applicable in settlements with population between 1 lakh and 20 lakh. The programme has three schemes: 1. Thirty percent of the employment opportunities were reserved for women in rural areas. Gram Panchayats were involved in the planning and implementation of the programme. urban.

000. at a cost of Rs.5 million people of approximately 10 million families. Element relates to training.e. 1200 per trainee.68 crore) involving upgradation of 5. The average per-capita training expenditure is expected to be Rs.500 will be incurred on trainees. During 1992-93 it is.02 crore (subsidy of Rs . loans could be taken from HUDCO under the scheme for E W S Built Houses of from Scheduled Banks.93. Scheme of Urban Wage Employment: Under this scheme. On an average. With this.expected that about 1.) i. µ42.47. three times of the subsidy were sanctioned to the beneficiaries. This element is funded entirely by the Central Government. 127 crore (approx. it is proposed to provide wage employment to urban poor beneficiaries by utilising the labour for construction of socially and economically jurisdiction of urban local useful public assets.the scheme of housing and shelter upgradation.39 crore and loans up to Rs. percapitaµ expenditure of Rs.000 would be available for this purpose and a loan of Rs. 40.500 beneficiaries were assisted. 2. 1 . more than 142 lakh man-days of wage employment will be generated under the schemes of Urban Wage employment and Urban & Housing Shelter Upgradation during the same period. In case Of additional financial requirements. Training will be provident to urban poor beneficiaries under. households belonging to economically weaker sections would be assisted to construct simple dwellings or to upgrade their dwellings with improvement of roof. 4.000 from HUDCO at 7 per cent rate of interest. walls. floorings.00 crore has been made for the programme during the year 1992. 3. designs.30 crore with the result that 167. Fifteen per cent of the funds earmarked. marketing etc. drainage related earthworks community facilities etc. 20 .According to Seventh Plan Estimates the urban poor account for 50. The scheme progressed well despite initial difficulties the main achievements of the scheme for the period ending December. 95. The Urban Micro Enterprises Scheme is design t o encourage unemployed and underemployed urban youth to take up self-employment ventures. Under the Scheme of Wage Employment. 25 per-cent subsidies with a ceiling of KS. 71. 42. 1. This is similar to the Integrated Rural Development Programme (IRDP) and the expenditure on the subsidy portion IS to be shared between the Centre and the State Urban Local Bodies on a 50: 50 basis. for training and infrastructure support will be available for support to training institutions. there are two elements. about 2. Under Urban Micro Enterprises Scheme. Under the Training & Infrastructure support component. in the bodies such as low cost water supply. The second where beneficiaries are would be provided for technological upgradation. 1991 are:-1. Further. the States UTs have reported expenditure of Rs. pour-flush community latrines.35 Crorea n d institutional finance (in the form of bank loans) to the tune of Rs. HUDCO has sanctioned scheme from various¶States UTS worth Rs. Under the scheme of employment through Housing and Shelter Upgradation. The first is loan-cum-subsidy assistance for setting up selfemployment ventures.While the target group of the yojana is urban poor. 232. Scheme of Urban Micro Enterprises: Subsidy to the tune of Rs.042 beneficiaries were either trained or are undergoing training for skill upgradation. A central plan provision of Rs. 184.92 lakh dwelling units.00 lakh urban poor beneficiaries will be assisted to set up self-employment ventures under the scheme of urban micro enterprises.72 lakh man-days of wage employment has been generated Scheme of Housing & Shelter Upgradation . women beneficiaries and beneficiaries belonging to Scheduled Castes and Scheduled Tribes constitute special target groups. additional room etc.

the Food for Work Programme was introduced in January 2001 and was also continued in the year 2001-2002. y The Sampoorna Grameen Rozgar Yojana (SGRY) has been launched w.000 crore (at economic cost) will be provided every year.5. The EAS was basically meant for creation of additional employment opportunities during the period of acute shortage of wage employment through manual work for the rural poor living below the poverty line and the JGSY aimed at creation of need based rural infrastructure at the village level. these two Schemes will be implemented as a part of the SGRY during the remaining part of the year 2001-2002. However the Cash Component is shared between centre and state in the ratio of 75.5:12. 50 lakh tonnes of foodgrains amounting to Rs. The remaining funds will be utilized to meet the cash component of wages and the material cost.000 crore. 50 lakh tonnes of foodgrains amounting to Rs.e. To meet an unusual high demand for wage-employment and food security due to occurrence of calamities. free of cost.5. Salient Features of Sampoorna Grameen Rozgar Yojana (SGRY). in order to avoid confusion. y y y y 21 . The payment of foodgrains will be made by the Ministry of Rural Development to the Food Corporation of India (FCI) directly.000 crore (at economic cost ) will be provided every year free of cost to the State Governments and Union Territory Administrations. to the State Governments and Union Territory Administrations. 2001 to provide Wage Employment in the rural areas.5 : 12.000 crore). 5.10. will be utilized. additional wage-employment and village infrastructure at the same time. The remaining funds (Rs. The need was felt that the different programmes for wage-employment in the rural areas be merged and one ambitious programme be introduced which would take care of food security.5. The new programme was launched on 25th September 2001 with an annual outlay of Rs.25. With this noble idea. Under the Scheme. to meet the cash component of wages and material cost. Under the Scheme. Under the Scheme.y Sampoorna Grameen Rozgar Yojna: There were two major Programmes of this Ministry for Wage-Employment Generation in the rural areas. about 100 crore man-days of wage-employment is envisaged to be generated every year.f. September 25. Even though the EAS and the JGSY have been merged with this new Scheme. a new Wage-Employment Programme namely the Sampoorna Grameen Rozgar Yojana (SGRY) was announced by the Hon¶ble Prime Minister from the ramparts of the Red Fort on 15th August 2001. The expenditure of the scheme will be shared by Central and States in the ratio of 87. The expenditure of the scheme will be shared by the Centre and State in the ratio of 87. These programmes contributed to a great extent in alleviating rural poverty and in improving quality of rural life. 5. one dedicated to wage employment itself namely the Employment Assurance Scheme (EAS) and the other for Infrastructure creation at the village level known as the Jawahar Gram Samridhi Yojana (JGSY).

desert. y y Though. y Employment Assurance Scheme (EAS) The Employment Assurance Scheme (EAS) was introduced w. Diversion of funds from one district to another and. Main Features of the Employment Assurance Scheme (EAS) 1. The secondary objective is the creation of durable community. With effect from 1. The primary objective of the EAS is creation of additional employment opportunities during the period of acute shortage of wage employment through manual work for the rural poor living below the poverty line. 22 .e.99 it became an allocation-based Scheme. The SGRY will be implemented in two streams. 3. social and economic assets for sustained employment and development. tribal and hill areas. Prior to 1. Over the years the Scheme was extended to all the Rural Blocks of the country. the component of food security has been added in the EAS and the JGSY during the current year itself as envisaged under the SGRY. 2. Resources under the Scheme are shared between the Centre and States in the proportion of 75:25. it is expected that only persons below the poverty line would come for the unskilled workers.99 the Scheme was a demand driven scheme. from one Panchayat Samiti to another is not permitted. 2nd October.f. but for the convenience of implementation and accounting. DRDAs release 70% of funds to the Panchayat Samitis. the funds are being released under the EAS and the JGSY separately as earlier during the current year i. Since the programme is self-targeting in nature and only the minimum wages are paid. 30% of the funds are reserved at the Zilla Parishad level and utilized in areas affected by endemic labour exodus/ areas of distress. However. similarly. 2001-02. The basic objective of the first stream would be to provide additional WageEmployment while the second stream would primarily aim at creation of need based rural infrastructure. 4. The Central Assistance under the Scheme is released directly to the District Rural Development Agency (DRDA).4.e. the EAS and the JGSY have been merged with the Sampoorna Grameen Rozgar Yojana (SGRY). The Scheme is open to all rural poor who are in need of wage employment. First Stream will be implemented at the District and Intermediate Panchayat levels and the Second Stream will be implemented at the Village Panchayat Level.y About 100 crore man-days of employment are envisaged to be generated every year in the rural areas through the SGRY. 1993 in the rural areas of 1778 blocks of the country situated in drought prone areas.4.The programme will be implemented as a single unit from 2002-03.

99 to ensure development of rural infrastructure at the village level by restructuring the erstwhile Jawahar Rozgar Yojana (JRY). The Zilla Parishad is the µImplementation Authority¶ for the funds released to both Zilla Parishad & Panchayat Samitis.e. 9. the generation of wage employment was getting overriding priority and the effort was to see that in the process of creating employment. 10. All works started under the EAS have to be labour intensive and have a wage material ratio of 60:40. JRY was restructured and renamed as the Jawahar Gram Samridhi Yojana. roads and other infrastructure. All works under the EAS are executed departmentally only by the respective Implementing Agencies and in no case any contractor is engaged for the execution of these works. Zilla Parishads/Panchayat Samitis are permitted to spend up to a maximum of 15% on maintenance of the assets created under the Scheme. Minimum equal wages fixed by the State authorities are paid in cash under the EAS. felt that a stage had come when the development of village infrastructure had to be taken up in a planned manner. both for unskilled and skilled labour. The Zilla Parishad has to maintain the Employment Register for the entire District. The Jawahar Rozgar Yojana was one of the major wage employment programmes launched in the year 1989 by merging the two wage employment programmes namely National Rural Employment Programme (NREP) & Rural Landless Employment Guarantee Programme (RLEGP). 1. 12. Under these programmes. which is of critical importance in the development of the village economy thereby improving the standard of living of the rural poor.4. 8. Both Jawahar Rozgar Yojana and Employment Assurance Scheme resulted in the creation of durable assets in the form of school buildings.f. It was the single largest wage employment programme implemented in all the villages of the country through the Panchayati Raj Institutions. This could best be done by the Village Panchayats who are closest to the ground realities and can effectively determine their local needs. y Jawahar Gram Samridhi Yojana (JGSY) Jawahar Gram Samridhi Yojana (JGSY) was launched w. drainage works. 23 . It was. Priority is to be accorded to the works of soil and moisture conservation. traditional water harvesting structures.5. minor irrigation. contributed in creating durable rural infrastructure. formation of Rural Roads (linking villages with other villages/block headquarters) and roads linking the villages with agricultural fields. 7. The new programme is entirely dedicated to the development of rural infrastructure at the village level and is being implemented by the Village Panchayats. to a great extent. forestry etc. The Zilla Parishad has to prepare an Annual Action Plan every year. 6. This programme came into effect from 1st April 1999. rejuvenation of drinking water sources and augmentation of ground water. works related to watershed schemes (not watershed development). however. durable assets were created. 11. Accordingly. It also.

Social Audit by is to be undertaken the Gram Sabha. 3% of annual allocation would be utilized for creation of barrier free infrastructure for the disabled. Main Features of JGSY 1. 15 per cent of funds can be spent on maintenance of assets. 13. 22. 100% of funds (both Central & State shares) are released directly to the Village Panchayats through the District Rural Development Agencies (DRDAs)/ Zilla Parishads (ZPs). However. 5.000/without technical or administrative approval. 10. The Gram Sabha has been empowered to approve the schemes/works. 24 . 7. 2. Village Panchayats are the sole authority for preparation of Annual Action Plan and its implementation with the approval of the Gram Sabha. Wages under the JGSY will either be the minimum wages notified by the States or higher wages fixed by States through the prescribed procedure. 8.5% of JGSY funds have been earmarked for individual beneficiary schemes for SCs/STs. Village level Monitoring & Vigilance Committee are to oversee and supervise the works/schemes undertaken. 4. 3. the Gram Sabha¶s approval is a must. Implementation of the JGSY is done entirely by the Village Panchayats. 11. 6. 9. 14. 50.The primary objective of JGSY is creation of demand driven community village infrastructure including durable assets at the village level and assets to enable the rural poor to increase the opportunities for sustained employment. 12. The main emphasis of the Jawahar Gram Samridhi Yojana (JGSY) is to create rural infrastructure at the village level. Wage employment under the programme shall be given to Below Poverty Line families. 30% of the employment opportunities are reserved for women. The secondary objective is generation of wage employment for the unemployed poor in the rural areas. Village Panchayats can execute individual works/schemes costing up to Rs. Panchayats can suitably relax 60:40 wagematerial ratio for building demand driven rural infrastructure.

e. deserts and sparsely populated areas. Group activities are to be given preference and progressively. majority of the funding should be for Self-Help Groups. It covers all aspects of self-employment of the rural poor viz. Supply of Toolkits in Rural Areas (SITRA) and Ganga Kalyan Yojana (GKY). However. Efforts have to be made to involve women members in each SHG. in which they participate fully and directly and take decisions on all issues that will enable them to cross the poverty line. 16. Social mobilisation enables the poor to build their own organisations Self-Help Groups (SHGs). The earlier programmes are no more in operation with the launching of the SGSY. Central assistance is provided for training of personnel including elected representatives involved in the implementation of JGSY. planning of activity clusters. The programme focuses on organisation of the poor at grassroots level through a process of social mobilisation for poverty eradication. The Swarnjayanti Gram Swarozgar Yojana (SGSY) is the major on-going programme for the self-employment of rural poor at present. It has been conceived as a holistic Programme of self-employment. y Swarnjayanti Gram SwarozgarYojana (SGSY) Programme for self-employment of the poor has been an important component of the antipoverty programmes implemented through government initiatives in the rural areas in India. infrastructure build up. coordination. The programme was started with effect from 01. and in difficult areas i. The programme aims at establishing a large number of micro enterprises in rural areas based on the ability of the poor and potential of each area. In the case of minor irrigation schemes. DRDA/ZP is responsible for overall guidance. An all a major shift of the SGSY from the erstwhile programmes is in terms of its emphasis on social mobilization of the poor. training. 8. UNEMPLOYMENT COMPENSATION SCHEMES IN EUROPE Unemployment compensation has been subject to many discussions on efficiency and incentive grounds. besides Million Wells Scheme (MWS). selection of key activities. Development of Women and Children in Rural Areas (DWCRA). The basic objective of the SGSY is to bring the assisted poor families (Swarozgaris) above the Poverty Line by providing them incomegenerating assets through a mix of bank credit and governmental subsidy. supervision. monitoring and periodical reporting. hills. An SHG may consist of 10-20 persons belonging to families below the Poverty Line and a person should not be a member of more than one group. the number of persons in a group may range from 5-20. 50% of Self-Help Groups in each block should be exclusively for women. Also.1999 after review and restructuring of erstwhile Integrated Rural Development Programme (IRDP) and allied programmes namely Training of Rural Youth for Self Employment (TRYSEM). if necessary 20% and in exceptional cases up to 30% of the members in a group may be from APL. technology and marketing support.15. The SGSY is different from earlier Programmes. organisation of the poor in to Self Help Groups (SHGs) and their capacity building. disabled persons. (marginally above the poverty line and residing continuously with BPL families) if agreed to by BPL members of the group. it is argued that increasing internationalization would 25 . in terms of the strategy envisaged for its implementation.04. It is claimed that generous benefits lead to lack of work its financial burden exceeds its benefits.

Sweden moved from an almost fully accessible unemployment insurance system to a fairly accessible one. except for slightly lower benefit rates in Sweden. is still broad and includes de facto participation in labour 26 . and the restoration of sickness benefit rates. One overall theme in the reform of unemployment compensation systems has been the reduction in the level. and sometimes the duration of benefits. Other legal changes in 1990s were the inclusion of so-called minor jobs (few hours. annual growth rates. For unemployed people with stable work histories. with globalization it is deemed necessary to be curtailed. In Germany. However. and sometimes even negative.Unemployment assistance has become more important over time. the number of people in unemployment increased. These cuts were justified on the basis of financial concerns. a slight increase in the income ceiling for social insurance contributions. have dramatically decreased after Thatcher government. however. Contributory benefits have remained important for also for the unemployed. The recessions of the 1990s had their effects on employment growth as well. Germany continued to show a rise in unemployment rates after a slight decrease. the spending on activation measures is remarkably higher in Sweden. however the levels are still higher than the other two nations and were increased after 1997. during the 1990s. there has been relatively little change. A substantial cut was adopted in Sweden.compel greater flexibility. Germany and England to have a comparison with the Indian context. The data of the year 2002 revealed that the unemployment compensation is most generous in Sweden (initial payment of 80% of the gross earnings for a maximum duration of 14 months) by roughly every indicator we take account of. the replacement rates and qualification weeks. Beneficiary rates for persons entering unemployment have declined considerably between 1980s and late 1990s (from about 68% to 52%). From 1990 to 1995. Here we will look at the unemployment compensation benefits in Sweden. In the early 1990s. especially in mid-1990s while unemployment spending remained lower than Germany. which conflicts with regulation in the labour markets and social insurance against unemployment. which are important elements in determining a countries international performance. Germany ranks the second and UK last. Related to this. Nevertheless. the work requirement was raised from 4 to 6 months of work within a year. In UK. but also simply to financial concerns. Germany reduced unemployment benefits by 3 per-cent from 1990 to 2002. the budget deficits of these countries got larger and reached a peak in Sweden in 1993 with a deficit more than 12% of GDP. spending on active labour market programs stayed stable. and this has become more pronounced since the 1980s. unemployment benefit rates were cut less severely for claimants with childrenand unemployment assistance became available only to claimants with prior receipt of unemployment insurance. low monthly earnings) into the contributory net. which can be seen as a response to incentive problems. it began to fall in Sweden and UK after 1995 and even hit lower levels than 1990 in the UK. In the UK. which were already lower than the other countries under study. This is because people with longer spells of unemployment tend to be better protected than those with short spells (who are generally younger). Among the countries under consideration. Between 1990 and 1995. all three countries experienced sluggish economic growth with falling. where as well. Since unemployment compensation has an effect on labour supply and cost of labour. but for the stock of the unemployed rates have not declined. The Swedish work concept. All countries seem to be quite stable in terms of qualification weeks. duration and coverage while the replacement rates declined slightly in Germany and Sweden. in all three countries.

The existence of fairly weak obligations from 1990 to 1996 and to accept job and ALMP offers should be judged on this background. 27 . and on the other. However. on the one hand. p. There are also reduced-waged community jobs for the ones having more barriers to employment (Handler 2002: 24). These have been main strategies for adapting the labour force to structural changes within the labour market (Kildal 2001). The authorities aimed to prevent large number of unemployment insurance claimants being excluded from the system. (Kvist 2000). Because of comparatively lax working requirements in the form of paid or credited National Insurance contributions within two years. labour market policies have been subject to several major changes which include cutbacks as well as tightening of work requirements. the UK kept unemployment insurance scheme was more or less accessible throughout the 1990s. the degree of marketization or workfare tendencies has been at a lower stage in Sweden compared to other countries. In the UK. training and other competence-building activities. Germany retained a more or less not accessible unemployment insurance mainly because that. frequent benefit changes in the 1980s contributed to the continual decline of the proportion of claimants receiving contributory unemployment benefits). self-employed are excluded from coverage and there are relatively strict working requirements. this is still possible for some cases. The other is more casual work in which there is no employment contract. however. Swedish labour market policy has always emphasized active labour market programs including educational programs. nevertheless. It halved the entitlement period for contributory benefits to 6 months and introduced reduced benefit rates for claimants under the age of 25. from the beginning the unemployment compensation system has strong activation orientations. participation in active measures does in principle not suffice for a renewed right to earnings-related benefit. Sweden offers support for education and training of unemployed relying mostly on workfare without any major cutbacks in social benefits. means-tested) JSA can be claimed by those unemployed who do not meet the qualifying conditions for contributory JSA or have exhausted entitlement to the latter. which will be analysed below. means-tested benefits instead of on contribution-based 17 benefits designed to guarantee the previously achieved living standards (Seeleib-Kaiser 2004). Also according to recent reforms. Income-based (i. The rules were made stricter in 1996 by increasing the sanction period threefold or more. access conditions remained stable in Germany and UK. 336). Since 1993. The introduction of Job Seeker¶s Allowance (JSA) in 1996 replaced unemployment benefit with a scheme which combines contributory and means-tested benefits within one program. In contrast. To receive full unemployment benefits participation in active labour market programs is compulsory. compulsory coverage. In that sense. The unemployment insurance benefit recipients were expected to enhance their employability or perform community-related work. The changes in unemployment compensation system in Germany have been gradual.market programs and leave schemes. The unemployment benefit system in Sweden has recently been subject to many reforms. on the whole. Throughout the 1990s Sweden continued to count active labour market policy participation as ordinary work towards new unemployment benefit. German activation policies called ³Help towards Work´ create two forms of work requirements: one is work under an employment contract which carries standard wages and is fit into the social insurance system. The work force administrators may also renew the eligibility for earnings-related compensation if prospects for employment look bad enough (Hytti 2002. these slow but steady disentitlements made unemployed workers more dependent on tax-financed.e.

the Employment Promotion Reform Act introduced a reorganization of active and passive benefits with the aim to increase incentives for the unemployed (Boenker & Wollman 2003). by defining any job offer as suitable. and the old basic unemployment benefit was subject to repeated cuts and more restrictive entitlement conditions in the 1980s and 1990s culminating in the introduction of the even more restrictive Jobseekers Allowance (JSA) in 1996 (Clasen 2001). By late 2003. the (re)training and public employment measures were primarily aiming to provide equivalent re-employment of unemployed workers. Since the µNew Deal¶launched by the first Blair administration in 1997. the jobs created by means of active labour market policy were no longer paid in line with the regular public sector pay scale. Then in 1997. Earnings-related supplements were also an early victim of Thatcherism. the federal government reformed the unemployment compensation payment system. active labour market policies in Germany at the beginning of 21st century have been changing in a way similar to those implemented in other West European welfare states a few years earlier (Clasen an d Clegg 2003). Moreover. now these measures are mostly intending to elevate the marketability of workers and are dominated by µactivation measures¶. much attention has also been 28 . With new regulations.Moreover. UK as the representative of liberal welfare state has the most deregulated labour market to begin with and it experienced a radical downscaling over the last twenty years. Contrary to the old unemployment benefit. creating a more flexible wage setting mechanism. Besides. which was based on a mix of means testing and social insurance principles. A large part of the burden of social expenditures was shifted towards means-tested. With this reform. workfare measures for unemployed individuals who receive social assistance benefits already had been intensified (Seeleib. which include subsidized re-employment in atypical employment relationships and subsidized self-employment (BMWA 2003). this reform will result in substantial benefit reductions for the unemployed workers that previously earned comparatively high incomes and had been eligible for unemployment assistance payments after their regular unemployment insurance benefit expired. This has been done in order to constrain social expenditure as well as to enhance financial and behavioural incentives related to employment. The regular unemployment benefits will be restricted to 12 months and workers who have exhausted their unemployment insurance benefit and are still needywill receive another type of unemployment compensation payment. the secondary labour markets were highly supportedand any kind of job has been advocated. the suitability of requirements has been considerably tightened for those receiving the new type of unemployment compensation payments. which will become fully effective after a transition phase. recipients were obliged to prove their efforts to find new employment. in work benefits and tax-based wage subsidies for low income earners. previously. Although. similar shifts in active labour market policy (ALMP) have occurred. acceptability criteria were redefined bringing conditions of not declining jobs that don¶t correspond to formal qualification and previous occupation. Furthermore. Besides. In addition to the above proposed changes. and accepting greater wage declines.Kaiser 2004). The most important deregulatory reform during the Conservative era was the abolition of wage councils (Robinson 1996). Essentially. Grover and Stewart have referred to this social-security based activation strategy as µmarket workfare¶. the unemployment compensation payment system would be divided into two. In comparative terms. this new payment will be flat and fully means-tested.

The reforms aimed at removing the barriers to work for groups such as long term youth unemployed. 9. Thus we see that the unemployment benefit schemes in European countries like Sweden. but recent trends suggest that performance in this regard has deteriorated drastically. their export performance remains poor. Accordingly.) The path of welfare reform in the UK is best demonstrated in the recent Labour Government's Green Paper on social security reform. The Green Paper was guided by several goals: 1) Targeting young social assistance recipients for welfare-to-work programs. so as to promote work incentives. the government introduced a series of µmake-work pay¶ strategies and acknowledged that µwork is the best way to social inclusion¶.paid to increased activation through employment and training programs. The goal is to maintain a flexible labour market with structures that do not contribute to extensive equilibrium unemployment. It is highly commodifying. the underlying worldview of UK policy makers results in interpreting the cause of unemployment as lack of incentives. which are understood to reflect their own compulsory workfare logic (Torfing 1999). 2) Focusing on programs for longterm unemployed. Pierson describes the goals of British labour market policy as compensated commodification (Pierson 2001). The UK labour market policy can be best summarized by the slogans like ³work for those who can. reduce poverty and welfare dependency and strengthen community and family life (Walker. Nevertheless. There was a period of rapid export growth during 1993. and welfare for those who cannot´. However in India the schemes are not renewed from time of time and thus can be termed as old and bucolic. and consequently the best method to achieve the specified goal is to minimize the disincentives by suitable employment policy measures. Germany and England are quite extensive and have evolved over the years according to the economic conditions to meet the needs of the unemployed citizens. the economy has been able to achieve neither efficiency nor equity. since the market is the primary mechanism enabling citizens to participate in society.95. lone parents and disabled people. and 3) Streamlining and modernizing tax and benefit systems. Often. Even after the reforms of 1991. the main problems are perceived to be disincentives to participate in the labour market. that of 29 . It is revealing that total Indian exports (in fact. it is compensated as long as the social programs do not interfere with the operation of the market. And. LESSONS THAT CAN BE LEARNED FROM EAST ASIAN COUNTRIES The bottom line of the Indian experience with regard to labour market policies and social insurance is that despite a plethora of legislation. As for the target of µmaking work pay¶ a new type of in-work benefit ± the Tax Credits ± was introduced. Indian industries lack of competitiveness has been evident for some time. The aim of this benefit is to increase the earnings of low paid families (Daguerre & Larsen 2003. 1998). Nine different New Deals were designed for these purposes.

the history of development shows that there are no magic bullets for success. which pretends to provide free access for medical services to the common individual. Similarly. However. Reality Check One such insight to be gained from the labour market and social insurance policies in East Asian countries is their focus on an . by studying success stories. it may be useful for India to make a thorough review of the existing legislation of labour and social insurance and subject them to a hard reality check. apart from labour costs. Their economies had not yet advanced to a point at which they would be able to handle the burden of social welfare. In that context. trade and communication facilities. However. The country¶s ethos suggests a strong individualistic bent: things move when they are in the private interest.Implementation Culture. on a large number of factors such as quality control. labour costs are a crucial element in competitiveness and the weakness of the Indian economy in this respect is clearly indicated by table 10. In fact. In India.all of South Asia) are lower than that of Thailand alone. the experience of each country is unique and policy profiles cannot be replicated in Toto. And the common individual regards the government less as a contributor to the people¶s welfare then as an instrument of taxation and power. and social assistance to the 30 . one can get some insights that may be of use while designing policy reforms in another country. it may have a lot learn from East Asian countries. implementation was not given much thought when designing the hospital system for the masses. If India is to join the ranks of the rapidly growing Asian economies. For example. and so on. and historical circumstances. as with economic services. it needs to introduce some profound reforms in its policies on labour market and social insurance. Acts and programs that are clearly beyond the implementation capacity should be scrapped.. India has higher wages and lower productivity of labour in manufacturing. market orientation and private sector incentives should be used to the maximum extent available rather than relying on the State. the role of NGOs should be carefully considered. In the Indian context. Building on India¶s Individualistic Ethos In the Indian context. In what follows. legal infrastructure. successful reforms grow from the roots of each country. In this context. In the light of the East Asian experience. As shown in the table. Government officials take the attitude of ruling rather than serving the people. The same goes for many other provisions of the State Insurance Act and the Employment Schemes in the unorganized sector. the Minimum Wage Act for the unorganized sector has been totally beyond the capacity for implementation. we make some observations on possible lessons of the East Asian experience. it is important to remember that economic policy in each country is the product of a complex set of factors relating to social. Greater Role for Nongovernmental Organizations (NGOs) In addition to private incentives. Japanese and Koreans did not introduce extensive social welfare provisions in the early phases of their development. financial infrastructure. The competitiveness of an economy depends. labour market policies and social welfare programs have often been running ahead of the implementation capacity and affordability for the country. compared with Southeast Asian countries such as Indonesia. therefore. While looking for lessons. it seems that for labour market and social service provision. education. India has a long tradition of charitable organizations in health. which India can utilize for redesigning its labour market and social insurance policies. it seems that the capacity of the State to implement social welfare programs is highly limited. Many of these countries started with a situation that was not too different from what India finds itself in today. political.

) Toward a Partnership Approach in Labour Relations 31 . Social Insurance Rather Than Social Welfare In the context of the role of the private sector. Singapore¶s policy on social security and welfare is clearly reflected in the following frequently cited statement. Even for labour safety and labour redeployment. employers and employees can make their contribution to an insurance company and in case of injury or unemployment. This is a welcome move and efforts should be made to implement these reforms as soon as possible. therefore.deprived. Everybody can be rich if they try hard... labour safety and pensions.. there is a growing consensus that State-managed pension funds have usually low rates of return and they can impose an unmanageably high burden on the State. It would be desirable to develop a largely . the Singaporean social assistance system should be studied carefully. the only realistic option is to encourage the development of the insurance principle with a strong regulatory framework provided by the government. Efforts should. (It should be useful to see to what extent East Asian countries used State intervention to improve the conditions of labour and social service provision in the unorganized sector in the early phase of their development.. Indian authorities are moving toward a greater acceptance of the insurance principle. The purpose of social insurance will be to give basic minimum protection to all those in need of assistance whether or not they qualify on the basis of the principle of commercial insurance business. it would be desirable to explore the scope for insurance. If there are properly developed insurance schemes. even foreign insurance companies will be allowed into the health insurance business. On the whole. it should be possible to treat the problem as a financial sector issue rather than a fiscal sector issue. it is not possible for the State to enforce Acts to ensure minimum wages or health or pension benefits. we offer equal opportunities. According to recent policy indicators. To the others.defined contribution system of pension and allow greater use of private sector investment opportunities to maximize the rate of return on pension funds. it would be useful to rely on private placement companies rather than on the state-run Employment Exchanges.. For labour deployment. restrict it only to those who are handicapped or old. Regarding health care. the functioning of these NGOs is much better than that of government organizations. Here again. labour redeployment. The contributions for these social insurance programs should not be a part of the general government budget and these contributions should be proportional rather than progressive with respect to income. Similarly for the pension issue. Market Forces and Insurance Principles for the Unorganized Sector For the unorganized sector.. We want to disabuse people of the notion that in a good society the rich must pay for the poor. Such placement services have developed in India in high-skill areas and there is a considerable scope for applying this approach for labour redeployment for a wider front. You get what you pay for. be made to see how the country can capitalize on its tradition of charitable trusts and involve NGOs in a more substantial way for the provision of social services. For health care. We want to reduce welfare to the minimum. the insurance company would pay the benefits. We want to teach the people that the government is not a rich uncle.

India has a lot to learn from the Japanese experience. If we look at 32 .In the area of labour relations. it would improve the competitiveness of the Indian industries. India now has the benefit of being a latecomer in this area and it can learn from the experiences of Southeast Asia and China to launch a serious program of attracting foreign direct investment and promoting exports. CONCLUSION The evaluation of performance of the unemployment benefit schemes must be made in terms of not only their targets but also their wider social and human impact. Imperatives of Rapid Growth for Harmonious Labour Relations and Effective Social Insurance One of the most important lessons of East Asia is that rapid growth helps in improving the conditions of labour and social insurance. The bonus system provides a linkage between wages and profitability. The more recent experiences of the Southeast Asian countries and China show how foreign investment and export promotion can become a mutually reinforcing process. Unless there is rapid growth in the system. The Indian wage system has the basic structure of the bonus payment but. If this link could be restored. The way Japanese labour relations succeeded in moving away from militancy in the late 1940s and early 1950s to a partnership approach in the late 1950s is worth studying for Indian policymaking. East Asian countries have also demonstrated that export orientation is one important source of increasing productivity and growth. It thus creates an incentive for labour to help increase productivity while at the same time providing flexibility to the management when profitability declines. 10. the bonus system has been delinked from profitability. as noted earlier. the problems of labour relations and social services will be much more manageable than has been the case in the past. With a determined effort for export promotion. it becomes difficult to find resources for effective provision of social services including labour redeployment. This system has also been found useful for increasing the savings rate in the economy. Japanese bonus practices as part of the wage package is also worth studying. As China¶s experience shows. even for a large country. India can perhaps achieve growth rates similar to what China has experienced over the last two decades. export orientation can make a big difference to its productivity and overall growth. With such growth. over time.

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