UPSC Daily Editorial Analysis | 22 March 2022

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What the article is about?

  • Talks about the unemployment crisis and the need for an unemployment allowance scheme.

Syllabus: GS-III Indian economy, Unemployment, Inclusive growth

Unemployment picture and need of unemployment benefit scheme:

  • As per the Centre For Moni­toring Indian Economy, the average ur­ban unemployment rate remained higher at 9.04% in 2021 and above 7% in January­-February 2022.
    • Meanwhile, the rural unemployment rate rose to 8.35% in February 2022 after mild fluc­tuations around 5­7% since June 2021 (8.75%).
  • Even before COVID­19, the unemploy­ment rate touched a peak in 2017­-18 at 6.1%.
  • The urban unemployment rate was 7.8% and the rural unemployment rate was 5.3%.
    • Ur­ban unemployment is of grave con­cern, at least since the pandemic. 

Unemployment relief system- Status:

  • Unlike in China, the labour laws do not expressly pro­vide for unemployment benefits.
  • Ho­wever, under the Employees’ State In­surance Act (ESIA), 1948, the Rajiv Gandhi Shramik Kalyan Yojana (RGSKY) provides unemployment allo­wance to involuntarily unemployed in­sured persons who have made contri­butions for two years to ESI.
    • It covers unemployment due to retrenchment, closure or perma­nent invalidity.
    • It provides medical care during unemployment tenure and vocational training.
  • In 2018, the government introduced the Atal Beemit Vyakti Kalyan Yojana (ABVKY) under which unemployed in­sured persons are provided allowance at the rate of 50% of the average per day earning of the claimant for 90 days on a pilot basis for two years.
  • Under the Industrial Disputes Act (IDA), 1947, industrial establishments employing 100 or more workers must pay retrenchment compensation of 15 days of average pay for the completed years of service to workers in case they lose jobs due to government sanc­tioned workers’ retrenchment or clo­sures of establishments.
  • Though the Social Security Code (SSC), 2020, included unemployment protection in its definition of ‘social se­curity’, it did not provide for a scheme for the same. 

Unsuccessful schemes:

  • Annual Reports of the Employees’ State Insurance Corpo­ration (ESIC) – analyse the working of unemployment allowance schemes
    • Under the RGSKY, from 2007­-08 to 2019-­20, 0.043% (13,341/ 3,09,66,930) of the employees availed of unemployment allowance during this period
    • Unemployment al­lowance’s share in total cash expendi­ture of ESIC ranged from 0.25% to 0.99% 

Way Out:

  • The SSC must be amended to provide for a universal unemployment allowance scheme with tripartite con­tributions
  • The 2nd National Commission on Labour in 2002 recommended an unemployment scheme for organised workers financed by employers, work­ers and the government.
  • An urban employment guarantee scheme should be framed to alleviate the sufferings of workers in the urban labour market. 

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