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Moving in reverse gear? Informalizing the construction sector in the ‘Smart City’ of Pune

[By Shweta Mahendra Chandrashekhar]

With the nationwide lockdown being lifted in different parts of India, life for most of us seems to be limping back to normalcy. However, on my way to work, via one of the busiest roads of Pune, I find that life continues to be at a standstill. Women and men who had been working full steam to transform Pune into a “Smart City” are nowhere seen, indicating the glaring impact of the nationwide lockdown on the migrant construction workers due to the COVID pandemic. Many aspects of the situation and distress of the migrant construction workers have been intensively discussed: their long journeys on foot, starvation, the accidental deaths on their way back home, or their loss of benefits or bailout money.

Pune’s metro project which was in full swing before the lockdown, has been considerably delayed now with almost 50% of the construction labourers employed not returning back to the project sites.

To gain a deeper understanding of the precarious conditions of the migrant workers in the sector, I interviewed the President and the General Secretary of the Construction Workers Federation of India (CWFI) and and the Project Director (Bengaluru) of the NGO SAMPARK that works for the migrant construction workers in India. We spoke about the CWFI’s and SAMPARK’s vision of reforming and formalizing the construction sector, the reasons for the migrants’ low registrations with the Welfare Boards, and whether digital technologies and platforms play an assistive role in their lives.

The President of the CWFI, Sukhbir Singh, when asked about his vision of reforming the construction sector as a move towards formalizing it said, “Since the year 1991, we have witnessed a trajectory in India that has largely resulted in the ‘formal’ sector turning into ‘informal’.” Giving the example of the construction sector, he explains:

“In the construction sector, most of the ‘big’ projects which were earlier executed by the government themselves, are now allotted to a few private construction companies; the problem starts here  – these ‘big’ construction companies further subcontract the work to small contractors or ‘dalals’ [middlemen], who in turn employ the labourers in dire need of employment – eventually making them victims of exploitation.”

He added that the situation becomes grim when the workers are not registered or rather not made to register themselves with the State Welfare Boards, eventually leaving them with no entitlements and benefits. The CWFI-President  explained that even though these “dalals” (middlemen) play an important role in employing the migrant workers, it comes at the expense of the worker’s security given that they are not employed by these big companies directly or by the government, eventually landing them in contractual and informal employment. According to him, “The current laws of our country [India] promote these practices, which hinder formalization.” The issue can be resolved to a certain extent he says, “if rather than allotting the contracts to private construction companies (who in turn employ middlemen), the major construction works are carried out by the government themselves!”

The General Secretary of the Construction Workers Federation of India, V. Sashikumar however spoke of the positive transformational potential of digital technologies that might work in favour of workers:

“Digitalization can be a pathway to formalization of the construction sector in India, provided the workers are imparted with basic digital knowledge and most importantly an awareness is generated amongst them about the benefits of gaining digital literacy in itself.”

He pointed to the fact that the workers employed in the construction sector mostly come to the city from rural areas in search for better prospects, and they generally lack digital literacy, which becomes a barrier to registration. As he explains, this leads to a situation in which “there are lakhs of Jan Dhan bank accounts whose holders are almost unaware of an amount credited to their account by the government”. Pradhan Mantri Jan Dhan Yojana is a financial inclusion programme started by the Government of India in the year 2014 to cover all unbanked households in India, aiming to provide affordable financial services to rural as well as urban households.

A survey by INDUS ACTION between April 6 and May 30, 2020, covering 5,242 families across 11 states of India, found that only 59% of the 2,233 women eligible for Jan Dhan reported that they had received the benefit, 34% said they did not receive the transfer and 7% said they did not know if they received the benefit. The survey assessed the beneficiaries’ access to rations, employment status, healthcare and government schemes and pointed out that almost 40% of Jan Dhan account holders could not access the government’s COVID-19 relief. Interviewing V. Prameela who heads the migrant workers’ project in Bengaluru for the NGO SAPARK about thelow worker registration ratesunder the Building and Other Construction Workers Act, 1996 (BOCW Act), she says, “Unawareness regarding the benefits of welfare funds is the main reason for low registration.” And adds: 

“When we started our work in the year 2013, even the developers or builders were unaware of the motive behind the 1% cess [tax/levy] under the BOCW Welfare Cess Act, 1996  that was required to be paid to government. If this is the developer’s plight, the plight of the workers is unimaginable.”

Ms Prameela spoke of the an estimated amount of staggering  8,000 crore rupees (1.081 billion  USD) unutilized in the Karnataka’s welfare board itself. 

Section 3 of the Building and Other Construction Workers’ Welfare Cess Act, 1996  provides for collection of cess (tax or a levy) from every employer at the rates prescribed, on the cost of construction incurred by an employer to fund construction labourer’s social security. It had been argued under the National Campaign Committee for Central Legislation on Construction Labour v. Union of India & Others that many of the State Governments have collected the cess as contemplated under the Cess Act, but these amounts have not been passed on to the Welfare Boards to extend the benefits to the workers as contemplated by the Act.

Explaining the efforts of their NGO’s in conducting campaigns for the workers, V. Prameela spoke of her experiences of how tough it was to identify eligible workers and getting them registered with the government. In this regard she said, “the certificates approving that a worker has worked for 90 days are many a times obtained illegally. To avoid this, online registration was put in motion.”

President of The Construction Workers Federation of India addressing the workers at a rally in Haryana, India. Image credit: Mohindar Sapra

The President of the CWFI, however, expressed his dissatisfaction on the way the entire digitization process of the worker’s online registration is carried out in the country. He says, “Undoubtedly, digital technology and platforms can play a significant role in formalizing this sector, conditional to the process remaining corruption-free.” In this regard, he pointed to many North Indian states, including Haryana, Punjab, Delhi, and Rajasthan where online registration of the Building and Other Construction Workers has sown seeds of corruption. He says:

The government approved Common Service Centers that aim to provide assistance to the workers regarding their online registrations and educating the digitally illiterate, are run by private companies-who have started charging unfair prices to the workers under the pretext of faulty paperwork”.

A pertinent question then arises: Why would the workers choose to pay for the same process which earlier involved no charges at all with a mere submission of form in the BOCW headquarters? Moreover, the rejection of online forms further creates reluctance among workers, discouraging them from registering again.

With the Central government planning to introduce the three new Labour Codes,

a few concerns are raised whether under the pretext of universalization and simplification, these codes would make the workers even more vulnerable. In this regard, V. Sashikumar expressed his heightened concerns as the existing BOCW Act, 1996 will be repealed under the Social Security Bill, 2020. He says:

It is sad and rather unfortunate that the reforms of the government are regressive, with a precarious standing for the future. Central government’s new agenda involves centralization of power; opposite of what we need now ‘Decentralization’ is the need of the hour as it empowers the state boards and other organizations like the unions and NGOs to work at grassroots level and address local developmental needs.”

In response to the new labour code, the General Secretary hinted about their efforts to organise themselves to conduct a national level protest.

Repealing the  BOCW Act, 1996 would impact construction workers as registrations of almost 4 crore (40 million) such workers would  lapse. This would also mean closure of 36 state BOCW boards wherein all the construction workers would have to newly register themselves with the proposed state welfare boards. Moreover, the closure would lead to cancellation of  tens of thousands of pensions which are being paid to older workers and disabled workers and cancellation of millions of scholarships which are being paid as education assistance to the children of construction workers besides cancellation of several other benefits, including maternity benefits for the women workers.

Since the formation of the BOCW Act, around Rs 40,000 crore (5.408 billion USD) of cess or  levy has been collected and roughly Rs 11,000 crore (1.487 billion USD) has been utilised to benefit construction workers. It is seen that this new labour code bill would cease these benefits, as the cess collected for the construction labour would go into a Common Service Assistance Fund. Studies by Subhash Bhatnagar, co-ordinator of the National Campaign Committee for Central Legislation on Construction Labour (NCL-CL) and Ravi Srivastava, member of National Commission for Enterprises in the Unorganised Sector (NCEUS) on the construction sector reveal that a construction worker is employed for around 15-20 days on an average for a month and receives 50% of the existing minimum wage in that sector. The problem starts here- after receiving only 25% of wages that the construction worker is intended to receive, they would need to contribute 12.5% of it towards the social assistance fund to avail benefits. Experts point out that this is an unrealistic contribution from a construction labourer who lives on daily wages.

Are the workers ready for the new change given their current economic standing in the COVID times? The pandemic has opened the pandora’s box and has surfaced their deep-seated problems. What possible mechanisms could strategically pull them irreversibly out of poverty and distress? Digital platforms do hold a promising future for them, if leveraged ethically and efficiently with full awareness of their plight. Recent mobile apps such as MyRojgaar and Majdoor showcase the potential of digital technologies to assist the workers in these testing times. Strong symbiotic efforts from the NGOs, Labour Unions and the government think tanks and policy makers is needed to resolve the problems and concerns of the workers before they get institutionalised. With India embarking on its journey to attain the Sustainable Development Goal 8 “Decent Work and Economic Growth for all”, it needs to be seen how far it has achieved the provision of “productive dignified employment to its citizens”. Economic growth propelled by decent work is the only way to unlock true human potential and raise the quality of life for all.