Whither unemployment benefits

News: As per Centre for Monitoring Indian Economy, the average urban unemployment rate remained 9% in 2021.

Before COVID the unemployment rate touched its peak in 2017-18 at 6.1%, with urban unemployment as high as 7.8%. This was further exacerbated by the pandemic. As per Centre for Monitoring Indian Economy, the average urban unemployment rate remained 9% in 2021.

What are measures available for assistance of  unemployed?

  1. The Employee State Insurance Act, 1948 – Covers unemployment due to closure, retrenchment or permanent invalidity. This provides relief to those who have made contributions for two years to ESI.
  2. Atal Beemit Vyakti Kalyan Yojana (ABVKY, 2018) – in this unemployed insured persons are provided allowances.
  3. Industrial Disputes Act, 1947 – Industrial establishments employing 100 or more workers must pay retrenchment compensation to workers. Employment intensive industries like construction and services are excluded.
  4. Social Security Code, 2020 – This included unemployment protection in its definition of ‘social security’ but it did not provide a scheme for the same.

Unsuccessful Schemes:

  1. Annual Reports of Employee State Insurance Corporation reveal that only 0.043% of employees availed of unemployment allowance from 2007-08 to 2019-20.
  2. Under ABVKY – From July 2020 to June 2021, only approx 45,000 people benefitted with an average daily cash relief of Rs. 148.

Hence, the government cannot solely rely on these schemes.

What can be done?

During the pandemic, MGNREGA played a significant role in providing relief to millions of workers. Economists have shown that relief to workers does not cause much as a proportion of GDP. Hence, an urban employment guarantee scheme should be framed to alleviate the sufferings of workers in the urban labour market.

Source: This post is created based on the article “Whither unemployment benefits”, published in The Hindu on 22nd March 2022.

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