Santosh Mehrotra & Kingshuk Sarkar

The Ministry of Labour and Employment launched the e-Shram portal on August 26, 2021, with the apparent objective of developing a national database of unorganized workers. The ministry estimates that there are 38 crores, unorganized workers, in the country.

After registration on the portal, workers will receive their e-Shram card with a unique 12 digit number and will be able to avail themselves of welfare benefits under social security schemes anywhere in India. Any worker, aged between 16 and 59 and working in the unorganized sector, is eligible for the e-Shram card. 

The official website states that 12,40,53,451 beneficiaries have registered thus far and an average of 12 lakh daily registrations are seen; an impressive number. The majority (60%) of individuals registering fall in the age bracket of 18-40 years and surprisingly, the proportion of females registering (52.4%) is higher than that of males (47.6%).

The majority of registrations (80.21 %) have come through common service centers (CSC) while self-registration accounts for 19.1%.

Workers’ bank account details have been furnished in 91.8% of cases and 94.3% of registered beneficiaries fall in the income bracket of Rs 10,000 or below per month. SC, ST, and OBC beneficiaries constitute 73% of total registrations.

Uttar Pradesh, West Bengal, Bihar, Odisha, Jharkhand are the five states with the highest numbers of registrations recorded. It’s not surprising that the majority of India’s unorganized sector workers are from these states. UP accounts for 21.3% of registrations, West Bengal for 18.5 %, and Bihar for 10.3 %.

Occupation-wise, agriculture constitutes the overwhelming majority of 51.2 % of registrations, followed by construction with 11.4 % and the domestic and household sector with 9.6 %. The fact that construction is predominantly a formal sector activity that employs an almost entirely informal labor force, is another matter.

The immediate benefit that an e-Shram cardholder will get is the accident insurance coverage of Rs 2 lakh in the event of death or permanent disability and that of Rs 1 lakh for suffering a partial disability. 

Problems plaguing the informal sector

Recently, when questioned by Lok Sabha MPs in the Monsoon session of Parliament, the government failed to provide any numbers pertaining to migrant workers who had either died or suffered during the COVID lockdowns. 

Unorganized workers, by definition, remain undocumented, as do most activities in the unorganized sector. The absence of such data is not an accident; it’s by design. The informalization of the labor force is done to reduce labor costs by making workers casual and, subsequently, anonymous. 

Workers are supposed to register on e-Shram based on self-declaration and Aadhaar is a mandatory criterion. The registration of workers on the portal will be coordinated by the Labour Ministry, state governments, trade unions, and the CSCs and will “bring welfare schemes to their doorstep”.

The point here is that unorganized workers are required to volunteer on their own to register on the e-Shram portal using their Aadhaar cards and bank account details. While the state is providing the framework for the registration, the employers have no role.

An e-Shram registration camp organized by labor rights NGO Ajeevika Bureau. Photo: Singal Mewad.

An alternative way of doing this could have been for the state to take the initiative in identifying unorganized workers and collecting data while also involving the employers in the informal sector in the process. Employer-employee relations, which are a primary requirement for protection under labor laws and access to institutional social security, could have been determined in the process. However, the state opted for the easy way out by putting the onus of registration on the workers.

What’s more, such provisions emanate from sections of the Social Security (SS) Code, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020. Under Sections 109 and 113 of the SS Code, the Union and state governments are expected to formulate social security schemes for unorganized and gig/platform workers respectively.

But there are severe limitations to this process. 

First, there is a lack of awareness among unorganized workers. There are serious information asymmetries in labor administration and experience shows that when social security schemes were introduced by governments in the past, registrations took a long time, and even decades later, large numbers of beneficiaries are still outside their purview (for example, in the Atal Pension scheme).

Moreover, the registration of construction workers under construction welfare boards constituted in all states is still unsatisfactory, even after 15 years or so have passed. A lack of awareness among the workers is the primary reason behind this phenomenon. 

Secondly, the majority of unorganized workers are incapable of registering online. The provision that any person can register online by uploading the necessary documents is predicated on widespread digital literacy and access, something which is not true of the Indian context.

The immediate benefit that an e-Shram cardholder will get is the accident insurance coverage of Rs 2 lakh in the event of death or permanent disability and that of Rs 1 lakh for suffering a partial disability. 

Problems plaguing the informal sector

Recently, when questioned by Lok Sabha MPs in the Monsoon session of Parliament, the government failed to provide any numbers pertaining to migrant workers who had either died or suffered during the COVID lockdowns. 

Unorganized workers, by definition, remain undocumented, as do most activities in the unorganized sector. The absence of such data is not an accident; it’s by design. The informalization of the labor force is done to reduce labor costs by making workers casual and, subsequently, anonymous. 

Workers are supposed to register on e-Shram based on self-declaration and Aadhaar is a mandatory criterion. The registration of workers on the portal will be coordinated by the Labour Ministry, state governments, trade unions, and the CSCs and will “bring welfare schemes to their doorstep”.

The point here is that unorganized workers are required to volunteer on their own to register on the e-Shram portal using their Aadhaar cards and bank account details. While the state is providing the framework for the registration, the employers have no role.

An e-Shram registration camp organized by labor rights NGO Ajeevika Bureau. Photo: Singal Mewad.

An alternative way of doing this could have been for the state to take the initiative in identifying unorganized workers and collecting data while also involving the employers in the informal sector in the process. Employer-employee relations, which are a primary requirement for protection under labor laws and access to institutional social security, could have been determined in the process. However, the state opted for the easy way out by putting the onus of registration on the workers.

What’s more, such provisions emanate from sections of the Social Security (SS) Code, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020. Under Sections 109 and 113 of the SS Code, the Union and state governments are expected to formulate social security schemes for unorganized and gig/platform workers respectively.

But there are severe limitations to this process. 

First, there is a lack of awareness among unorganized workers. There are serious information asymmetries in labor administration and experience shows that when social security schemes were introduced by governments in the past, registrations took a long time, and even decades later, large numbers of beneficiaries are still outside their purview (for example, in the Atal Pension scheme).

Moreover, the registration of construction workers under construction welfare boards constituted in all states is still unsatisfactory, even after 15 years or so have passed. A lack of awareness among the workers is the primary reason behind this phenomenon. 

Secondly, the majority of unorganized workers are incapable of registering online. The provision that any person can register online by uploading the necessary documents is predicated on widespread digital literacy and access, something which is not true of the Indian context.

Third, the voluntary registrations of workers on the e-Shram portal entitle them to benefits under a social security scheme. However, entitlements under social security schemes and institutional labor rights are entirely different things. Social security needs to be mandatory, not voluntary. Globally, this is done through legal statutes. Schemes offered by governments are akin to social welfare initiatives and labor rights are altogether different.

For example, the maternity benefit offered under the Maternity Benefit Act is 26 weeks of paid leave to be provided by the employer whereas the maternity benefits under various social security schemes are usually monetary assistance of about Rs 5,000, confined only to poor mothers. The latter is never equivalent to 26 weeks of paid leave.

Unorganized workers deserve labor rights and the benefits of legislative protection. The e-Shram portal can, at best, ensure entitlements under social security schemes as and when they are formulated. Registration with e-Shram portal has nothing to do with labor rights. 

An opportunity missed

India does need a database for unorganized workers but here, the opportunity to formalize employer-employee relations is being lost. Formalizing the informal sector is an avowed component of a decent work paradigm. International Labour Organisation (ILO) Recommendation Number 204, 2015 even proposes a strategy for the transition from an informal to a formal economy.

The creation of this database could have been seeded with the establishment of employer-employee relations within the prevailing informal work arrangement. The informal sector, which accounts for 91% of the workforce in India (a statistic only seen elsewhere in Africa) is based on mystifying these relations and, in the process, bypassing employers’ responsibilities as enshrined in labor legislations.

What’s more, the twin goals of database creation and reclaiming employer-employee relations could have been achieved through an appropriately designed labor census to be conducted by the state. This would have been a more active way of putting a database in place.

In fact, the Economic Census of 2013-14 conducted by the Ministry of Statistics already was just such an appropriate census; it collected information about non-farm enterprises, along with their workers and included enterprises such as government/public sector undertakings as well as private enterprises (such as proprietorships, partnerships, companies, self-help groups, cooperatives, Non-profit institutions and more).

It also included all units engaged in various agricultural and non-agricultural activities, except those in crop production and plantations. The next Economic Census could have served this purpose.

Finally, in the normative sense, employers should be held responsible for providing certain benefits like social security, compensation in case of accidental death and injury, ensuring occupational safety and health, and the like to their employees. Employers reap the gains accruing from labor productivity and they should thus be held accountable to labor laws. The e-Shram portal abdicates such employer responsibility and makes it an affair solely between the state and unorganized workers.

The ecosystem of self-registration for e-Shram precludes the employers’ participation in the process. An individual’s identity as a worker will become secondary and that of the beneficiary in a social welfare scheme will become their primary identity under e-Shram. As a result, labor rights will take a back seat.

First published in The Wire By Putting the Onus of Registration on Workers, E-Shram Ignores Responsibility of Employers on 20 January 2022.

Read another piece on Disappeared poor in India by Santosh Mehrotra titled A Curious Case of the Millions of “Disappeared” Poor in India in IMPRI Insights

Read another piece on Female Adolescent Aspirations by Santosh Mehrotra titled Managing Female Adolescent Aspirations Amid Rising Unemployment Rates

Read another piece on unemployment by Santosh Mehrotra titled India’s Unemployment Crisis: One that Predates the Pandemic

YouTube: Watch Santosh Mehrotra at IMPRI #WebPolicyTalk-Re-Form: Lessons for Urban Governance Futures from the Pandemic

About the Author

Santosh Mehrotra, Research Fellow, IZA Institute of Labor Economics, Bonn

Kingshuk Sarkar, Economist, and former Labour Commissioner