RBI suggests unemployment insurance fund, universal access to social security for workers

Almost 79% of the working population in the informal employment sector do not have a written contract, according to a report by the Reserve Bank of India (RBI). About 5% of these workers have a contract of less than one year, less than 3% have a signed contract of one to three years, and only 15% have a written contract of more than three years, the report adds.

The central bank, in view of the plight of employees in the informal workspace, suggested companies set up an unemployment insurance fund during the boom period to temporarily support workers when they are laid off.

The prevalence of high informal employment is a major challenge, with 71% of the total employed labor force being self-employed. Worse still, 77% of independent businesses are small and employ fewer than six workers, according to data released by the RBI in its latest “Money and Finance” report.

Citing the Periodic Labor Force Survey, he said that 78% of the working population in India has not received any type of training, less than 10% are learning on the job, just over 4% are self-employed. apprenticeship and only about 3% received formal training.

Read | Covid-ravaged economy may take 15 years to fix: RBI

Regarding the education profile of the workforce, he indicated that 28% of them are illiterate and 26% have only received a primary education. Only 9% have a graduate/postgraduate degree.

The RBI has highlighted the need to improve the quality of the workforce through a large-scale expansion of public spending on education and health and the Skill India mission. Crucially, he asked companies to have labor reforms with flexibility to hire and fire workers, which can allow companies to adjust their workforce according to economic cycles.

“An option here could be to create an unemployment insurance fund during times of economic booms at the company level, which can be used to financially support workers until a limited period after the cut,” said the central bank.

He observed, however, that many of the social security measures apply to companies that have a certain minimum number of workers, which creates an incentive for companies not to expand. To address this issue, one policy option could be universal access to social security regardless of company size, with each company required to allocate a certain percentage of its profits to workers.

Watch the latest DH videos here:

Comments are closed.