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Proceedings of Roundtable on Social Security for Self-Employed Workers in the Informal Sector

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By Social Protection Initiative[1]

The Social Protection Initiative at Dvara Research organised a closed-door virtual roundtable discussion on Zoom on 27 August 2020. The purpose of this roundtable was to refine and develop research questions on social security for self-employed workers, which the Social Protection Initiative will take forward in the coming months. The four broad questions discussed were:

  1. Who is a self-employed worker? What are the characteristics of self-employed workers in low-income households?

  2. How should we study the finances of self-employed workers? What types of shocks do self-employed workers experience and what are their coping mechanisms?

  3. What factors influence the decision to take up self-employment as opposed to casual or salaried employment?

  4. What types of social protections are most needed for self-employed workers in the informal economy?

The following themes emerged from the discussion:

  • Heterogeneity and vulnerability of self-employed workers:

    The participants discussed data with respect to self-employed workers, as seen in the Consumer Pyramids Household Survey (CPHS) released by the Centre for Monitoring the Indian Economy (CMIE) data set and the Periodic Labour Force Survey 2018-19. The participants then discussed the degree of heterogeneity and vulnerability in the self-employed labour force. Many self-employed workers are in fact part of a global or local supply chain, while many employers are in fact marginal employers who work alongside those they employ. This makes them uniquely vulnerable to many different shocks to their income. It is even more important to consider this in light of the growing importance of the gig economy and technological platforms. Further, self-employment is not a static category and many workers switch between self-employment and casual work. These characteristics were amplified during the COVID-19 pandemic, when many self-employed workers lost their livelihoods, and many others took up casual wage work.
  • Registration and formal social security net:

    Next, the participants considered the importance of a formal social security net, specifically, the need for a system for registration for all workers. Many grassroots organisations have supported registration, as this will provide self-employed workers with an identity as workers, rather than as beneficiaries of a scheme. However, it was pointed out that there are few incentives for individual workers to register for various identification programmes, as there is little clear link between registration and a state benefit. Moreover, the present systems are fragmented and very complicated. There is an urgent need for simple and inclusive registration procedures which also protect the privacy of workers registered with it.  
  • Savings and financial tools for self-employed workers:

    The participants also discussed the needs of self-employed workers in terms of savings tools and financial products. There is a need for flexibility to be built into financial products. Self-employed and casual workers experience a high degree of volatility in incomes, and this problem has become even more severe during the COVID-19 lockdown. There is a need to study wages and the surplus available to self-employed workers and how this impacts the access to savings products and social security measures.
  • Legislation on Self-Employed Workers:

    Finally, there is a need to rethink current legislation on social security for self-employed workers in the informal sector. There is a need for a mix of citizen-centric measures (e.g., a Universal Basic Income) and those tailored specifically to workers (e.g., Employees’ Provident Fund). There is also a need to balance contributory and non-contributory measures of social security. The participants reiterated the need for a universal social safety net for Indians, as recommended by the National Commission for Enterprises in the Unorganised Sector (NCEUS) in 2007. Extending the current provisions to self-employed workers in the informal sector would be an important first step.

[1] The members of the SPI team present at the roundtable were Aarushi Gupta, Aishwarya Narayan (Intern), Anupama Kumar, Apoorva Bantula (Intern), Charan Preet Singh (Intern), Hasna Ashraf and Nishanth K.

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