Constituent policy

Bad policy fails older people in India’s unorganized sector

“India has the world largest young workforce‘ is an oft-repeated adage attached to the country’s demographic dividend. The overwhelming enthusiasm for the potential of India’s youth has apparently overshadowed the fact that, given the lower death rate, its population is aging rapidly. The recent Youth in India 2022 report from the Ministry of Statistics and Program Implementation recognized this changing demographic phenomenon. According to the report, the population of young people (aged 15 to 29) is expected to increase initially before declining in the second half of the period from 2011 to 2036. The proportion of young people in the total population has increased from 26 .6% in 1991 to 27.9%. percent in 2016. Their share of the population is then expected to decline to 22.7 percent by 2036. On the contrary, the proportion of elderly people in the total population has fallen from 6.8 percent in 1991 to 9.2 percent in 2016 and is expected to rise to 14.9 percent in 2036. According to another forecast, by 2061, one in four people in India will be over 60.

As India’s population ages, we need to start thinking about the most vulnerable seniors. This includes older workers in the unorganized sector, which employs more than 90 percent of the national workforce.

Older workers in the informal sector are very vulnerable

The signs of unease are already showing in the data. A total of 138.54 lakh those aged 61 and over received work benefits under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) program in 2020-2021. This number is increasing every year – it was 100.08 lakh in 2019-2020 and 93.85 lakh in 2018-19. Elderly people fall back on safety nets such as MGNREGA, and this is a telltale sign of the lack of elderly care they suffer from.

Lack of financial security also appears to pose a significant threat to older people, who lack options and opportunities to earn money. Currently, approximately 25,000,000 individuals are covered by the national pension system in the informal sector category. This number represents only about 0.6% of the estimated total size of the informal sector in India. These statistics are concerning because the demographic size of the elderly will only increase.

People who participate in the informal sector do not have an age limit similar to the retirement age in the formal sector. Low wages and income insecurity in the informal sector bring people to a point where they have to work daily to earn a living. Swaniti visited a naka (labour market) in the city of Pune as part of a study on the social protection of non-unionized workers in Maharashtra. During the visit, we observed that young people seem to dominate the naka for work and older people find it more difficult to get hired. Aging leads to a decrease in physical strength and it is easier for the contractor to hire a younger person who can do more physical work. An elderly person at naka in Pune remarked, “We don’t have anyone to look after us, so we have to come and get work here, and the contractors don’t want to hire us because we’re old – they assume we won’t be able to do heavy lifting work.

As there is no specific retirement age in the informal sector, individuals work as long as they physically can. Salaries are low and depend on actually getting a job on a given day. This economic reality leaves many individuals in constant need of daily work. As an individual ages, their “market value” seems to decline. Older workers want to work every day to support themselves, but they find it harder to compete with whole swathes of younger people (who are themselves faced with an unemployment crisis and have to resort to the informal sector) presenting themselves in establishments such as the nakas.

Older people who engage in informal labor due to distress can end up with a lifetime of aches and pains. | Photo courtesy: Sujay Pan

Public and private sector policies must intensify

Created in 1999, the National Policy on Older Persons (NPOP) was one of the first major policies aimed at the country’s elderly population. Currently, the umbrella policy that targets the elderly population of the country is the Atal Vayo Abhyuday Yojana (formerly known as the National Action Plan for Senior Citizens or NAPSrC). This plan addresses several aspects of seniors’ lives, including, but not limited to, their basic needs. The policy also advocates intergenerational connections between young and old and aims to ensure active and productive aging through regional resource and training centers across the country.

There are also two targeted pension schemes geared towards the informal sector in India: the Pradhan Mantri Shram Yogi Maandhan (PMSYM) and the Atal Pension Yojana (APY). The PMSYM focuses on workers in the unorganized sector who are in the age bracket of 18 to 40 years and have a monthly income of INR 15,000 or less. After the age of 60, they are guaranteed a pension of INR 3,000 per month. The APY focuses on the poor and non-unionized workers in the sector in the age bracket of 18-40 years and presents post-retirement pension levels ranging from INR 1,000-5,000 per month. Both schemes are voluntary and contributory in nature. However, the idea of ​​locking up sums of your hard-earned money with the government and only being able to redeem some of it years later is hard to digest for people who struggle to find work on a daily basis.

Bridging the gapa 2022 study by HelpAge India on the Needs of the Elderly, displays information on how far we have to go to provide a life of care and dignity for the elderly in India. Of the sample of seniors surveyed, 47% are forced to ask their family for money and 21% are forced to work to earn a living. Additionally, 57% face immediate financial insecurity. About 45 percent cited insufficient pensions and 38 percent cited lack of job opportunities as reasons for their financial insecurity. These data points highlight the lack of options that could provide older adults with independence and control over their own lives.

Policy recommendations

A useful addition to the national plan may be to place particular emphasis on health care benefits for former workers in the informal sector. Older people who engage in informal labor due to distress can end up with a lifetime of aches and pains. The HelpAge India report highlights the fact that 67% of elderly people do not have health insurance and only 52% of them can access their healthcare options.

The main reason why older people work in distress in the informal sector is the lack of money and savings to lead a retired life.

Elderly people are discouraged from engaging in physically demanding work. The informal economy poorly regulated security environment poses an additional threat to them. The national plan can focus on ensuring that these people are integrated into a protective net of hospice and care.

The main reason why older people work in distress in the informal sector is the lack of money and savings to lead a retired life. This signals the need to provide a fair and inclusive retirement and pension scheme for older people in the informal sector. State-provided pension plans may have a component that allows free exit from the plan at different times, rather than a single exit point at age 60.

The private sector should also be involved in this space as it relies on the work done by the informal sector. Individuals who work in outsourced units should be placed under the umbrella of the formal companies for which they work indirectly and can benefit from retirement options and health care options. Workers who spend some time in outsourced units in the informal sector working for large organized private sector companies should have the option of benefiting from a pension scheme. It will be a way to reward loyalty at work. Pension plans largely end up inflating company expenses over the years, so other options such as hospice care and senior housing can be considered. CSR funding can also have a targeted and challenging component of caring for the older population in the region where the companies are active. Ultimately, the issue of an aging workforce needs to be addressed by both the state and the market so as not to overburden one or the other to care for the elderly.

It is crucial to focus on older workers in the informal sector, as they may be the ones who fall most quickly into vulnerability. India is aging and it needs to be able to age with dignity.

Know more

  • Lily This article to learn how India’s unorganized sector is further marginalized.
  • Learn on informal workers demanding better working conditions.
  • Read the results of a study on the health, economic and social well-being of India’s elderly population.