Let’s universalize India’s employment assurance

News: Recently head of Hindustan Unilever has suggested that it’s time for the government to launch an urban job guarantee along the lines of India’s rural employment scheme.

What is the need urban employment scheme?

First, India’s rural employment scheme helped village-dwellers during the covid crisis.

Second, service sector has been severely affected by the pandemic and the livelihoods of large numbers in cities depend on this sector.

For example, restaurants, hotels, tourism-reliant businesses, and proximity-based services were hit so severely that only a few could sustain their payrolls. Jobs in cities remain scarce, which has ultimately resulted in income loss.

Third, acute distress was witnessed in 2020 when people started moving away from urban centers to the interiors after an all-India lockdown.

Fourth, According to ICE360 Survey (2021) conducted by People’s Research on India’s Consumer Economy, the country’s poorest 20% saw their household incomes decline by 53% over the last five years. On the other hand, the richest fifth saw a 39% increase.

Fifth, the burden of formalizing the economy through GST rollout and demonetization was also borne by informal-sector workers. Similarly, COVID restrictions also targeted informal workers.

What are the challenges associated with the urban job guarantee schemes?

One, the fiscal strain is one of the major concerns, and opponents argue that it will attract jobless to cities, which will create a further burden on public infrastructure.

Two, urban living is costlier, and it would be difficult for migrants if wages are kept the same as for rural jobs.

What is the way forward?

First, rural jobs were discussed in the 2000s on the ground that an emergent economy must not let anyone go hungry for want of work. Hence, the safety net must cover everyone to ensure minimal welfare conditions.

Second, a universalizing job guarantee is both fair and useful as a relief measure. India’s e-Shram portal is seen as an opening to an urban employment program.

Third, post-covid circumstances have pushed up the rural employment scheme’s annual allocation to over ₹1 trillion. Now, additional resources must be made available for urban coverage.

Fourth, a job guarantee should be available for all adults, with proof of identity as the sole requirement. It may prove fiscally expensive, but it would also help in increasing consumption among those with a high tendency to spend. Hence, it will help in the revival of the economy.

Source: This post is based on the article “Let’s universalize India’s employment assurance” published in Livemint on 25^th Jan 2022.