Time for a National Urban Employment Guarantee Act? Lessons from Odisha’s Urban Wage Employment Initiative

Employment Initiative

An immediate fall-out from the Covid-19 pandemic was a loss of employment, especially for those in the informal sector. According to the Periodic Labour Force Survey 2020-21, about 72 per cent of India’s non-agricultural workforce is informally employed, and the pattern in Odisha is no different. These workers lack job security, social security benefits, or health insurance.

The Covid-19 pandemic exposed the vulnerability of these workers, especially when the central government declared a sudden nation-wide lockdown on March 25, 2020. Many of them were stranded in cities, away from their home states, without jobs, food or shelter. According to government estimates, about 8 lakh migrant workers returned to Odisha during the first Covid-19 lockdown in 2020.

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) provided a safety net for rural workers in Odisha. However, 20 lakh urban workers had no such option and faced a reduction in working hours, saw a decrease in their wages, and many were subject to abrupt layoffs. This prompted the Odisha government’s Housing and Urban Development Department to launch the Urban Wage Employment Initiative (UWEI) under its UNNATI scheme – aimed at overall development of urban areas – on April 18, 2020. The initiative was launched across all 114 Urban Local Bodies (ULBs) ¹ or municipalities for a period of six months with a budget allocation of INR 100 crores (USD 12 million).

Contours of UWEI

The UWEI was implemented at two levels:

• State level: The Housing and Urban Development Department was responsible for planning, coordination and monitoring.
• Local level: The ULBs, along with Self Help Groups (SHGs) and Slum Dwellers Associations (SDAs), were responsible for implementation and operations, which included identification of projects and payment of wages.

The scheme required workers to undertake labour-intensive projects so that they could be provided with wages immediately. Sanctioned works included storm water drainage, rain-water harvesting, sanitation, building community centres, and increasing green cover. The workers were to be paid according to the Odisha Minimum Wages Notification 2019. 

UWEI was launched to help urban workers tide over their immediate distress, but its success gave way to the Mukhyamantri Karma Tatapara Abhiyan (MUKTA) in February 2021. The MUKTA scheme aimed to provide sustainable livelihood opportunities to all vulnerable groups such as migrants, women, transgender individuals, and persons with disabilities.

Performance of MUKTA Scheme

The Economic Survey of Odisha (2022-23) notes that, to date, 28,000 projects worth INR 506 crore (USD 60 Million) have been implemented across 1,856 Wards in 114 ULBs. It benefitted about 400,000 urban poor and migrant wage seekers, of which about 40 per cent were women. In total, INR 104 crore (USD 12.5 Million) were paid in wages to the beneficiaries. In addition, 22,258 SHGs and SDAs with about 200,000 members were engaged as implementation partners and were paid supervision charges worth about INR 12 crore (USD 1.4 Million).

It is possible that the MUKTA Scheme was one of the factors in ensuring that Odisha’s unemployment rate did not sky rocket during the pandemic.

However, its implementation faced many challenges including weak capacity of ULBs to manage projects, reluctant functionaries, absence of skill mapping of beneficiaries, possibility of community-based organisations getting captured by contractors, and wage delays. There have also been allegations of corruption against some municipalities as well as lack of effort to spread awareness about the scheme.

Time for a National Urban Employment Guarantee Act?

The Covid-19 pandemic revealed the vulnerability of informal sector workers across the country. The success of Odisha’s initiative prompted some states to implement urban employment guarantee schemes. Various committees and leading academics also recommended a national level programme along the lines of MGNREGA.

Although no plans have been announced by the central government, it may be time to enact a law at the national level. However, for the law to benefit the most vulnerable among the urban population, there needs to be adequate budgetary allocations, involvement of community-based organisations in identifying projects and timely payment of wages. Such a programme should also be designed with a gender lens to ensure increased participation by women. This could be reflected in the types of work provided, flexibility in timing, proximity to the workplace and safety measures. While, in intent, the MUKTA scheme aims to benefit marginalized groups such as women and transgender persons, there are no special provisions for ensuring their participation.

Odisha’s experiences are a valuable measure that could inform the design of a national programme to act as a safety net for informal sector workers and revitalize cities and towns.