Analyze and assess the efficacy of the government’s initiatives to improve the working conditions and job security of informal workers. These initiatives include the extension of social security coverage, the streamlining of labor laws, and the provision of financial and ...
Skill development is a key strategy to realise India's potential of demographic advantage of having one of the youngest workforce (an average age of 29 years in comparison to the advanced economies) for iniproving its competitiveness and growth. Also, by 2027, India is expected to have the world's lRead more
Skill development is a key strategy to realise India’s potential of demographic advantage of having one of the youngest workforce (an average age of 29 years in comparison to the advanced economies) for iniproving its competitiveness and growth. Also, by 2027, India is expected to have the world’s largest workforce. In this context, India needs to focus on skill development as:
- In India 70 per cent of the labour force reside in rural areas and depend on low productive agricultural activity where there is huge underemployment leading to low level of productivity.
- The lack of access to good education and training keeps the vulnerable and the marginalized sections into the vicious circle of low skills; low productive employment and poverty. As per the latest ICE360° Survey, the proportion of formally skilled workers in India is extremely low at 4.69% of total workforce, as compared to other countries like China (24%), Germany (80%) etc.
- With low skill levels the profile of the enterprises is such that nearly 95 per cent of the units are micro in size engaging less than 5 workers. This inhibits the growth of the enterprises to medium and large scale leading to poor productivity and efficiency losses.
- With the emergence of new technologies like artificial intelligence and data analytics, there is need for skilling, reskilling and upskilling of persons to participate in the global knowledge economy. Rather, India can become a global source for skilled manpower for other ageing nations
In this context, the government has launched various schemes and programmes to push skill development in India. Skill India is the flagship campaign initiative launched by the Government in 2015 to train over 40 crore Indians in different industry-related jobs. Other measures include:
- Pradhan Mantri Kaushal Vikas Yojana (PMKVY): It enables a large number of Indian youth to take up industry-relevant skill training that can help them secure a better livelihood.
- Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY): It involves partner organisations who form a part of the skilling ecosystem with special focus on rural youth who are between the ages of 15 and 35 and are from poor families.
- Pradhan Mantri Yuva Yojana: It will provide entrepreneurship education and training to over 7 lakh students in 5 years (till 2020-21) through different institutions.
- National Apprenticeship Promotion Scheme (NAPS): It aims to promote apprenticeship training and incentivize employers who wish to engage apprentices.
- The Green Skill Development Programme (GSDP): It is an initiative for skill development in the environment and forest sector to enable India’s youth to get gainful employment and/or self-employment.
As per WTO, India’s GDP level can be increased further by 3%-5% till 2035, if it focuses on skill development and training. India’s demographic advantage is predicted to peak at around 2041, thus, India has a narrow timeframe to harness its demographic dividend and overcome its skill shortages.
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Integrating the informal sector into the formal economy is a significant challenge, particularly in countries with large informal sectors like India. The government has implemented various strategies to address this issue, focusing on expanding social security coverage, simplifying labor laws, and pRead more
Integrating the informal sector into the formal economy is a significant challenge, particularly in countries with large informal sectors like India. The government has implemented various strategies to address this issue, focusing on expanding social security coverage, simplifying labor laws, and providing financial and entrepreneurial support. Here’s an examination of these strategies and their effectiveness:
Government Strategies
1. Expansion of Social Security Coverage
Strategies:
Social Security Schemes: Introduction of schemes like the Pradhan Mantri Shram Yogi Maan-Dhan (PMSYM) for pension coverage and the Atal Pension Yojana (APY) targeting informal sector workers.
Health Insurance: Initiatives such as the Ayushman Bharat scheme aim to provide health insurance coverage to informal sector workers and their families.
Accident Insurance: Programs like the Pradhan Mantri Suraksha Bima Yojana (PMSBY) provide accidental death and disability insurance.
Effectiveness:
Increased Coverage: There has been an increase in the number of informal workers covered under social security schemes.
Challenges: Enrollment processes can be cumbersome, and awareness about these schemes remains limited. There are also issues with the adequacy of benefits and effective outreach to the most vulnerable workers.
2. Simplification of Labor Laws
Strategies:
Labor Code Reforms: The Indian government has consolidated multiple labor laws into four main codes: the Code on Wages, the Code on Social Security, the Industrial Relations Code, and the Occupational Safety, Health and Working Conditions Code. This aims to simplify compliance and regulation.
Online Compliance Platforms: Development of online platforms for labor compliance and registration to reduce bureaucratic hurdles.
Effectiveness:
Improved Compliance: Simplified laws and online platforms have made it easier for businesses to comply with regulations.
Challenges: Implementation has been uneven, and smaller businesses in the informal sector may still face difficulties in transitioning to the formal sector due to remaining complexities and costs. Additionally, enforcement and oversight are crucial for the success of these reforms.
3. Financial and Entrepreneurial Support
Strategies:
Microfinance and Credit Access: Programs like the Pradhan Mantri Mudra Yojana (PMMY) provide small loans to entrepreneurs in the informal sector to help them grow their businesses.
Skill Development: Initiatives such as the Skill India Mission aim to provide training and upskilling to informal sector workers, enhancing their employability and entrepreneurial skills.
Business Incubators: Support for small businesses through incubators and entrepreneurship development programs.
Effectiveness:
Increased Access to Finance: There has been greater access to microfinance and credit for informal sector entrepreneurs, which helps in formalizing their businesses.
Skill Enhancement: Skill development programs have improved the capabilities of informal workers, though the scale and impact vary.
Challenges: Many informal sector workers face barriers to accessing financial support, such as lack of collateral and formal documentation. Additionally, the effectiveness of skill development programs can be limited by mismatches between training and market needs.
Evaluation of Effectiveness
Strengths:
Enhanced Integration: The strategies have contributed to the gradual integration of informal workers into the formal economy, with more workers gaining access to social security, financial services, and regulatory compliance.
Increased Awareness: There is greater awareness of available support schemes and opportunities for informal sector workers and entrepreneurs.
Challenges:
Implementation Gaps: Despite reforms, many informal sector workers still face challenges in accessing benefits and integrating into the formal economy due to bureaucratic hurdles, lack of awareness, and inadequate outreach.
Limited Impact: The impact of some schemes has been limited by insufficient coverage, inadequate benefits, and difficulties in reaching the most marginalized workers.
Enforcement Issues: Effective enforcement of labor laws and regulations is crucial, and gaps in enforcement can undermine the benefits of simplification and support measures.
Proposed Additional Measures
Strengthen Outreach and Education:
Awareness Campaigns: Increase efforts to educate informal sector workers about available social security schemes and compliance requirements.
Simplified Enrollment: Streamline the enrollment process for social security and financial support programs.
Enhance Financial Inclusion:
Access to Credit: Develop innovative financial products tailored to the needs of informal sector workers and small entrepreneurs.
Digital Financial Services: Expand digital financial services and support for cashless transactions to include informal workers.
Improve Policy Implementation:
Monitor and Evaluate: Regularly monitor and evaluate the effectiveness of policies and programs to identify gaps and make necessary adjustments.
Strengthen Enforcement: Enhance enforcement mechanisms to ensure compliance with labor laws and standards.
Increase Support for Transition:
Incentives for Formalization: Provide incentives for informal sector businesses to formalize, such as tax breaks or simplified compliance requirements.
See lessBusiness Development Support: Offer comprehensive support for business development, including mentorship and market access.
In summary, while the government’s strategies to integrate the informal sector into the formal economy have had positive effects, significant challenges remain. Addressing these challenges through enhanced outreach, improved financial inclusion, and better policy implementation will be key to improving the working conditions and job security of informal sector workers.