Towards national urban employment guarantee programme, as 20% youth are found to be jobless

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Excerpts from the paper “Strengthening Towns through Sustainable Employment: A Job Guarantee Programme for Urban India” by by Amit Basole, Mathew Idiculla, Rajendran Narayanan, Harini Nagendra, Seema Mundoli Amit Basole and Rajendran Narayanan*, and forming as part of the study “State of Working India 2019”, published by the Centre for Sustainable Employment, Azim Premji University, Bangalore:

We propose the creation of a National Urban Employment Guarantee Programme that strengthens small and medium-sized towns in India by providing urban residents a legal right to employment, improving the quality of urban infrastructure and services, restoring urban commons and ecology, skilling youth, and increasing the financial and human capacity of Urban Local Bodies.

The proposed programme seeks to address the following key problems:

  • Underemployment and low wages in the informal urban workforce
  • Migration to large cities from small and medium towns
  • Poor quality of urban infrastructure and services
  • Ecological degradation of urban spaces
  • Shortage of human and financial capacities of Urban Local Bodies
  • Unemployment and lack of skills in the educated labour force

This programme should have a strong legal basis in the form of a National Urban Employment Guarantee Act which provides a statutory right to employment at specified wage rates and number of days. While it draws on some principles of the rights-based framework of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) 2005, the programme has a broader scope as it deals with varied forms of employment.

We emphasise that the programme would not be at the cost of MGNREGA but rather the two would go hand-in-hand. 5. The programme should be applicable for all cities and towns with a population less than 1 Million (10 lakhs). It covers about 4000 Urban Local Bodies accounting for about 50 per cent of the urban population as per the 2011 census.

The proposal calls for providing 100 days of guaranteed work at Rs 500 a day. It also provides 150 contiguous days of training and apprenticeship at a stipend of Rs 13,000 per month for educated youth. The programme thus creates opportunities for urban informal workers as well as for educated youth, giving the latter a chance to acquire work experience as well as skills while enabling them to address needs of their communities.

A large variety of works that require a range of education and skills may be undertaken through this programme. These include public works such as building and maintenance of roads, footpaths, and bridges; creation, rejuvenation, and monitoring of urban commons like water bodies, forest land, wetlands, and parks; monitoring, evaluation, and surveying of environmental quality, apprenticeship in municipal offices, public schools, and health centres; and provisioning of care for children and the elderly.

The relevant Urban Local Body (ULB), such as the Nagar Panchayat, Municipal Council, or Municipal Corporation, shall be the principal authority responsible for administering this programme. It shall identify projects, prepare annual works plans and implement the programme in a participatory manner by involving the ward committees and ward sabhas. The programme shall be administered by a set of dedicated staff starting from the level of the Ward.

To make it truly demand-driven, we propose that the annual estimated pool of Central government funds be transferred to the states at the beginning of each financial year. The state governments, in turn, would transfer the Central and the state share of the budget to the ULB so that funds are locally available. To ensure timely payment of wages, the wages would be disbursed in a decentralised manner at the local ULB.

We propose proactive transparency and accountability structures such as mandatory periodic social audits and public hearing through a designated independent unit, as well as a mandatory grievance redressal architecture. The programme includes a ‘right to timely grievance redressal’ which ensures that the grievances of workers are addressed through Grievance Redressal Councils at the Centre and state levels, and dedicated Grievance Redress Officers at the ULB.

The total estimated programme budget would range from 1.7 to 2.7 per cent of GDP depending on whether employment is guaranteed to one adult from every household or every adult resident. We estimate that between 30 and 50 million workers in India’s small towns will be eligible for employment through this programme.

Why an urban employment guarantee programme: Rationale and benefits

India is facing a crisis of both quantity and quality of employment. Despite lack of recent official statistics, it seems clear, both from private data sources such as the Centre for Monitoring the Indian Economy (CMIE) as well as the leaked Periodic Labour Force Survey (PLFS) report of the National Sample Survey Organisation (NSSO), that the rate of open unemployment has steadily risen over the past few years .

As per the PLFS 2017-2018, open unemployment stands at a historic high of 6.1 per cent, and unemployment among educated youth has reached 20 per cent. Unemployment in urban areas at 7.8 per cent is higher than the unemployment rate in rural areas (5.3 per cent). In addition to this, Indian towns and cities continue to be plagued by the prevalence of low-wage, poor quality, informal work. PLFS data show that despite a rise in the prevalence of regular-salaried work, just over 50 per cent of the urban workforce remains either self-employed or in casual wage work.

At the same time that our towns and cities are facing a crisis of jobs, there is also a crisis of the quality of life due to ecological stress and lack of adequate public services. As malls, motorcycles, and mobiles proliferate, our streets are in disrepair, water-bodies are rapidly being degraded, green spaces are disappearing, the quality of air is deteriorating, and common spaces are shrinking. Thus, we see a dramatic divergence between the quality of private and public goods. Centrally funded programmes like the Smart Cities Mission and Jawaharlal Nehru National Urban Renewal Mission (JNNURM) have disproportionately focused on development of bigger towns and cities.

Hence, it is important to re-focus our attention to improving the livelihoods and ecology of urban areas beyond India’s major cities. However, Urban Local Bodies (ULBs), which are largely responsible for developing and administering our towns and cities, find themselves unable to carry out their core tasks adequately due to lack of financial as well as human resources. Most ULBs in India are severely understaffed and are unable to hire more workers since they are financially restrained.

A centrally funded programme that covers the wages of different kinds of workers will allow the ULBs to fulfil tasks they are mandated to perform but are failing to, because of a shortage of financial and human capacity. Further, the present staff of most ULBs are not fully suitable for performing the tasks related to the renewal of urban commons and monitoring urban environment.

This programme can generate a new set of ‘green jobs’ that can strengthen the capacity of ULBs as well as promote sustainable urban development. Creating jobs, improving the capacity of urban local governance, and supplying quality public goods and services requires serious public investment. But if made to an adequate extent, such investment has the potential to pay for itself many times over. Not only does it directly improve welfare by raising incomes and creating assets, there are many positive spillover effects too, such as:

  • It increases demand by raising incomes directly, and indirectly in the informal sector, by improving the fallback position of workers
  • It provides a better trained workforce to the private sector by allowing educated young workers to acquire skills and improve their employability
  • The work undertaken will create assets that improve the town’s ecology and quality of public services, which have a direct impact on productivity and quality of life
  • It creates a shared sense of public goods in which every resident has a stake.

While cities and towns do not yet have an equivalent of MGNREGA, India has a history of urban employment schemes. One of the most prominent central programmes in this regard was the Swarna Jayanti Shahari Rozgar Yojana (SJSRY) launched in 1997 which provided employment to the unemployed and underemployed urban poor through self-employment and wage employment. The Urban Wage Employment Programme component of SJSRY covered those living below the poverty line in ULBs with less than 5 lakh population. The SJSRY was replaced by the National Urban Livelihoods Mission (NULM) in 2013. This programme, and its subsequent version, laid more emphasis on self-employment and entrepreneurship than on wage employment.

However, unlike MGNREGA, India’s past urban employment schemes were not demand-driven and only a set of identified beneficiaries could avail their benefits. More recently, the idea of an urban job guarantee has been gaining prominence in political and policy debates in India. According to news reports, an employment guarantee programme for urban areas has emerged as a core element of a possible Common Minimum Programme from the opposition parties for the 2019 General Election.

Further, the newly elected government in Madhya Pradesh recently announced a 100-day urban job guarantee scheme, the Yuva Swabhiman Yojana, which provides urban youth with varying educational qualifications with a wide set of jobs. Since 2010, Kerala has also been running a programme called the Ayyankali Urban Employment Guarantee Scheme (AUEGS) which guarantees 100 days of wage-employment to an urban household for manual work.

We are also witnessing a growing popularity of employment guarantee programmes across the world. For example, in the United States of America, employment guarantee is a core component of the ‘Green New Deal’, a set of policy proposals for addressing climate change and economic inequality, supported by several presidential candidates. It provides for a ‘Green Job Guarantee’ which enshrines ‘a legal right that obligates the federal government to provide a job for anyone who asks for one and to pay them a liveable wage’. The Green New Deal proposes public expenditure of up to 8-10 per cent of GDP reflecting the scale of concerns as well as boldness of vision.

Further, an employment guarantee programme also strengthens the ‘Right to Life’ enshrined under Article 21 of the Constitution of India. As the Supreme Court of India has held in multiple cases, the ‘Right to Life’ is not restricted to mere existence but also includes the ‘right to livelihood’ 6 and the ‘right to live with human dignity.’  In the last two decades several rights-based legislations have been introduced to further these constitutional ideals. In particular, the MGNREGA is a legislative realisation of the ‘Right to Life’ through a ‘Right to Work’.

A legally enforceable ‘Right to Work’ in urban areas appears to be a natural extension. Finally, we note that the idea of a minimum or basic guaranteed income has gained traction in policy circles across developing and developed countries. The specifics differ from proposal to proposal but the key aspect is an unconditional cash transfer to some identified group of beneficiaries. While modalities of an income guarantee are worth debating, we believe that an employment guarantee has three key advantages over the former:

  1. Employment guarantee schemes are generally selftargeting and demand-driven. In a country like India with scarce income data, an employment guarantee programme circumvents the complicated process of identifying beneficiaries.
  2. Employment guarantee, such as the one proposed here, enables people to contribute productively to the creation of useful public goods and services.
  3. An employment guarantee has the potential to foster active citizenry. It enhances engagement in democratic decision-making through public meetings and public hearings. On the one hand, it would increase people’s political capacities in community building and on the other it strengthens local accountability.

Criticisms of an urban employment guarantee scheme that have recently been made are that it does not aid India’s structural transition from rural to urban and from low-productivity to high productivity work. It is true that a jobs guarantee programme cannot make the growth process distributionally more equal by itself. But the programme that is implicitly assumed in this criticism is simply a direct extension of MGNREGA to urban areas.

An urban programme can, and perhaps should, take a very different form. If an ambitious urban employment guarantee programme along the lines proposed here is implemented, it has the potential to transform the structure of the economy as well as contribute significantly to an improved quality of life for millions of people. Specifically, the following effects may be envisaged on the economy at large:

  1. A multiplier effect resulting from reduced unemployment and underemployment and increased incomes. This will boost demand in small towns and create conditions for successful entrepreneurship in a distributed fashion.
  2. Increased productivity as well as improved quality of life due to better functioning public goods and services.
  3. Increased employability and productivity in the private sector due to skilling in the programme.
  4. Rising informal sector incomes due to an effective wage floor.
  5. Reversal of ecological degradation.

The key steps involved in the rollout of such a programme are:

  1. Passage of a National Urban Employment Guarantee Act – This Act will legally bind the state to provide a fixed number of days of work for all eligible people who apply under the programme, lay down the governance structure for administering the programme, and provide accountability mechanisms for its operation.
  2. Creation of a Ministry of Employment – We propose that this programme be administered by a newly created Ministry of Employment under the Government of India. Such a Ministry will be responsible for all matters related to employment generation including the administration of MGNREGA.
  3. Establishing functionaries for administering the programme – The Central and state governments have to hire, through an open process, a set of dedicated staff who are responsible for administering this programme as well as staff responsible for accountability measures under this programme. We believe that the time is right for India to embark on this path.

*Inputs by Nikhil Dey, Jean Dréze, Jayati Ghosh, Arjun Jayadev, A. Narayana, Anand Shrivastava and Rakshita Swamy. Contact: amit.basole@apu.edu.in

Download the study “State of Working India 2019” HERE


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