Critics Take Aim at India’s Unemployment Benefit for 4 Million Workers

Critics Take Aim at India’s Unemployment Benefit for 4 Million Workers

MUGHALSARAI, India—Some 4 million workers stand to benefit from a recent move by the government of Prime Minister Narendra Modi that recently relaxed eligibility criteria and enhanced payments for those who have lost jobs during the coronavirus pandemic.

But the scheme is not without its critics.

The Ministry of Labour and Employment announced on Aug. 20 that workers covered under the Employees’ State Insurance Corporation  scheme will get 50 percent of 90 days’ wages if they have lost or will lose their jobs between March 24 and Dec. 31 this year. This could benefit 4.1 million industrial workers, the government claims. Previously, the wage benefit was marked at 25 percent.

The country went into lockdown on March 25 to prevent the spread of the novel coronavirus.

As per labor laws, businesses with 10 or more employees must register with the ESIC. This allows their employees to get INR 21,000 ($281) a month, or $335 if they are disabled, to avail them of primary or tertiary healthcare benefits.

“We have updated the ESIC database with the latest employee records,” said P. K. Singh, assistant director (general), subregional ESIC office in Pandeypur, Varanasi. “Once we receive a formal notice, we will start releasing funds to the eligible people.

 

“This will help provide relief to the huge number of workers who have been rendered jobless by the pandemic,” he said.

Since Modi’s Bharatiya Janata Party was elected in May 2019, the opposition has been attacking it on rising unemployment in the country.

India follows an April-March financial year, and in 2017-18 the country’s unemployment rate soared to a 45-year high of 6.1 percent from 2.2 percent in 2011-12. In April 2019, unemployment rose to 7 percent, increasing to 7.76 percent in February 2020.

The two main reasons cited for this are the government’s decision to demonetize high-value currency notes (INR 500 and INR 1,000) in November 2016 and the introduction of a new indirect tax (the goods and services) in July 2017.

The currency measure severely hit demand in the cash-dependent country, resulting in the withdrawal of 86 percent of the money in circulation. The introduction of the goods and services tax was marred by many teething troubles and affected the small and medium-size enterprises in that are the major employers. When the Covid-19 crisis hit, the economy has not recovered from these twin shocks. The lockdown has resulted in businesses closing and more people losing their jobs.

A migrant family travels inside a tempo stopped by Mumbai Police on the Eastern Express Highway in Mumbai, India on May 21, 2020. They were later provided a state transport bus. (Courtesy: Emmanual Yogini)

The unemployment rate dropped dramatically from 23.5 percent in April to 7.43 percent in July, but there is still a lot of distress.

“Had the Modi-led government taken enough measures to address India’s unemployment problem in time, the country could have avoided the failure of its economic machinery,” said Ashok Singh, president of the Indian National Trade Union Congress in Uttar Pradesh.

“Despite the unemployment rate shooting up in December 2019, the lawmakers didn’t deem it necessary to include a section on unemployment insurance and assistance in the Social Security Code Bill submitted to the parliament the same month,” said K R Shyam Sundar, professor of human resource management at the XLRI -Xavier School of Managementin Jamshedpur.

“The government is always trying to avoid the financial burden of providing unemployment assistance,” said Sundar, an industrial relations expert and columnist.   “And this fiscal mathematics is preventing policymakers from designing, even after the pandemic, a comprehensive unemployment insurance and assistance scheme. Such is the poverty of labor legislation in a neoliberal India.”

In the early 1990s, India moved away from a Soviet-inspired planned economy to a more free-market economy, with mixed results. Despite rapid economic growth, economic inequality is stark.

The top 10 percent of the Indian population holds 77 percent of national wealth, according to an Oxfam report. Many Indians are unable to access health care and 63 million are pushed into poverty because of this every year, the report states.

The government’s unemployment policies have been criticized as political gestures. The relaxation in the ESIC scheme is also being viewed with skepticism.

“The law neglects a large sector of the work force — those employed in organizations with less than 10 people,” said Devesh Tripathi a lawyer from Chandauli in Uttar Pradesh who specializes in the ESIC.

“There is a lack of clarity on how this new ESIC modification will define unemployment,” he said. “Claims of employment will also be difficult to authenticate.”

The scheme allows a worker to declare himself as unemployed. To receive unemployment relief, the insured person should have been employed for at least two years and have contributed to the scheme a minimum of 78 days prior to losing their job.

Critics say that more people could have been brought into the scheme and a greater allowance would have been possible if the government in July 2019 had note allowed the contribution to the scheme to be cut. Employers now contribute 3.25 percent, down from the earlier 4.75 percent, and employees contribute 1.75 percent, down from 0.75 percent, of monthly salaries.

Migrants from Uttar Pradesh rest along the Mumbai Nashik Highway in Mumbai, India on May 21, 2020. (Courtesy: Emmanual Yogini)

Liberalization of the economy has meant a large influx of foreign funds and privatization of major government-owned companies. The United States invested $45.88 billion in India in 2019. The government has also set itself a disinvestment target of INR 21 trillion ($284 billion) in financial year 2020-21.

But this has come at a cost to laborers.

“The public sector is the backbone of a country,” said Ashok Singh. “But the government wants to privatize it. It could have helped solve the unemployment crisis to a great extent.”

Sundar believes the country will face a bigger unemployment problem before long.

“The manufacturing and services sector will introduce technology-related unemployment in a few years,” he said. “The government must prepare a strong social security system.”

(Edited by Siddharthya Roy and Judy Isacoff.)



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Wheel See You in Court: Uber and Lyft Appeal California Judge

Wheel See You in Court: Uber and Lyft Appeal California Judge

Uber and Lyft said Friday that they will keep operating in California while courts decide if their army of freelance drivers qualify for employee status.

The two popular rideshare companies had threatened to pull their drivers off roads statewide after a San Francisco County Superior Court judge ordered them on August 10 to reclassify their drivers as employees. A state appeals court temporarily halted that ruling on Thursday.

Turning independent drivers into employees would require the companies to provide them with benefits such as paid leave and employer-provided health insurance. Such ‘gig economy’ drivers are contractors with no employee status.

Uber and Lyft claimed it was impossible for them to comply with the San Francisco judge’s orderm which required them to make the change within 10 days.

The two San Francisco-based companies cheered Thursday’s temporary reprieve. “Rideshare is ON,” Lyft said late Thursday on its website. Uber also welcomed the ruling.

The appeals court ruled that the companies can keep operating with drivers classified as independent contractors while the case winds its way through the judicial system. Oral arguments will be presented October 13, and Lyft and Uber could lose, prompting another round of brinksmanship.

Voters could rescue them in the end: A measure on California’s election ballots in November would exempt them from the gig-worker law. Proposition 22 would also overrule any pending litigation.

An Uber self driving car prototype is tested in San Francisco, California on October 7, 2016. (Dllu/Wikimedia on CC 4.0 License)

California Attorney General Xavier Becerra and the city attorneys of Los Angeles, San Diego, and San Francisco favor forcing the companies to guarantee benefits to their contractors. A law requiring that shift took effect on January 1.

San Diego Democratic Assemblywoman Lorena Gonzales, who wrote the new law, tweeted: “Uber & Lyft can quit crying now…Shame on them with their scare tactics!” Gonzalez’s main source of support for the law came from labor unions, which see it as a launching pad to organize freelance drivers.

The mayors of San Diego and San Jose, two of the three largest cities in California, had said Wednesday that forcing Uber and Lyft to pull the plug in America’s most populous state would cause “irreparable harm upon hundreds of thousands of residents.”

“[W]e have serious concerns that this Friday, most of California’s nearly one million gig workers will lose their rideshare income when Uber and Lyft shut down their operations in the Golden State,” San Diego Mayor Kevin Faulconer and San Jose Mayor Sam Liccardo said in a statement. “This sudden disappearance of jobs and transportation options will only deepen the economic pain felt in our communities during this historic pandemic and recession.”

Faulconer is a Republican. Liccardo is a Democrat.

Uber and Lyft insist they are technology platforms, not transportation companies, placing them outside the reach of Gonzalez’s law. They have warned the alternative to shutting down if they lose in the California Cout of Appeal would be drastically cutting back services and dramatically hiking prices.

(Edited by Matthew Cooper and David Martosko.)



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Wheel See You in Court: Uber and Lyft Appeal California Judge

Wheel See You in Court: Uber and Lyft Appeal California Judge

Uber and Lyft said Friday that they will keep operating in California while courts decide if their army of freelance drivers qualify for employee status.

The two popular rideshare companies had threatened to pull their drivers off roads statewide after a San Francisco County Superior Court judge ordered them on August 10 to reclassify their drivers as employees. A state appeals court temporarily halted that ruling on Thursday.

Turning independent drivers into employees would require the companies to provide them with benefits such as paid leave and employer-provided health insurance. Such ‘gig economy’ drivers are contractors with no employee status.

Uber and Lyft claimed it was impossible for them to comply with the San Francisco judge’s orderm which required them to make the change within 10 days.

The two San Francisco-based companies cheered Thursday’s temporary reprieve. “Rideshare is ON,” Lyft said late Thursday on its website. Uber also welcomed the ruling.

The appeals court ruled that the companies can keep operating with drivers classified as independent contractors while the case winds its way through the judicial system. Oral arguments will be presented October 13, and Lyft and Uber could lose, prompting another round of brinksmanship.

Voters could rescue them in the end: A measure on California’s election ballots in November would exempt them from the gig-worker law. Proposition 22 would also overrule any pending litigation.

An Uber self driving car prototype is tested in San Francisco, California on October 7, 2016. (Dllu/Wikimedia on CC 4.0 License)

California Attorney General Xavier Becerra and the city attorneys of Los Angeles, San Diego, and San Francisco favor forcing the companies to guarantee benefits to their contractors. A law requiring that shift took effect on January 1.

San Diego Democratic Assemblywoman Lorena Gonzales, who wrote the new law, tweeted: “Uber & Lyft can quit crying now…Shame on them with their scare tactics!” Gonzalez’s main source of support for the law came from labor unions, which see it as a launching pad to organize freelance drivers.

The mayors of San Diego and San Jose, two of the three largest cities in California, had said Wednesday that forcing Uber and Lyft to pull the plug in America’s most populous state would cause “irreparable harm upon hundreds of thousands of residents.”

“[W]e have serious concerns that this Friday, most of California’s nearly one million gig workers will lose their rideshare income when Uber and Lyft shut down their operations in the Golden State,” San Diego Mayor Kevin Faulconer and San Jose Mayor Sam Liccardo said in a statement. “This sudden disappearance of jobs and transportation options will only deepen the economic pain felt in our communities during this historic pandemic and recession.”

Faulconer is a Republican. Liccardo is a Democrat.

Uber and Lyft insist they are technology platforms, not transportation companies, placing them outside the reach of Gonzalez’s law. They have warned the alternative to shutting down if they lose in the California Cout of Appeal would be drastically cutting back services and dramatically hiking prices.

(Edited by Matthew Cooper and David Martosko.)



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Lyft and Uber Get Reprieve in Court Fight that Could Drive them out of California

Lyft and Uber Get Reprieve in Court Fight that Could Drive them out of California

Uber and Lyft said Friday that they will keep operating in California while courts decide if their army of freelance drivers qualify for employee status.

The two popular rideshare companies had threatened to pull their drivers off roads statewide after a San Francisco County Superior Court judge ordered them on August 10 to reclassify their drivers as employees. A state appeals court temporarily halted that ruling on Thursday.

Turning independent drivers into employees would require the companies to provide them with benefits such as paid leave and employer-provided health insurance. Such ‘gig economy’ drivers are contractors with no employee status.

Uber and Lyft claimed it was impossible for them to comply with the San Francisco judge’s orderm which required them to make the change within 10 days.

The two San Francisco-based companies cheered Thursday’s temporary reprieve. “Rideshare is ON,” Lyft said late Thursday on its website. Uber also welcomed the ruling.

The appeals court ruled that the companies can keep operating with drivers classified as independent contractors while the case winds its way through the judicial system. Oral arguments will be presented October 13, and Lyft and Uber could lose, prompting another round of brinksmanship.

Voters could rescue them in the end: A measure on California’s election ballots in November would exempt them from the gig-worker law. Proposition 22 would also overrule any pending litigation.

An Uber self driving car prototype is tested in San Francisco, California on October 7, 2016. (Dllu/Wikimedia on CC 4.0 License)

California Attorney General Xavier Becerra and the city attorneys of Los Angeles, San Diego, and San Francisco favor forcing the companies to guarantee benefits to their contractors. A law requiring that shift took effect on January 1.

San Diego Democratic Assemblywoman Lorena Gonzales, who wrote the new law, tweeted: “Uber & Lyft can quit crying now…Shame on them with their scare tactics!” Gonzalez’s main source of support for the law came from labor unions, which see it as a launching pad to organize freelance drivers.

The mayors of San Diego and San Jose, two of the three largest cities in California, had said Wednesday that forcing Uber and Lyft to pull the plug in America’s most populous state would cause “irreparable harm upon hundreds of thousands of residents.”

“[W]e have serious concerns that this Friday, most of California’s nearly one million gig workers will lose their rideshare income when Uber and Lyft shut down their operations in the Golden State,” San Diego Mayor Kevin Faulconer and San Jose Mayor Sam Liccardo said in a statement. “This sudden disappearance of jobs and transportation options will only deepen the economic pain felt in our communities during this historic pandemic and recession.”

Faulconer is a Republican. Liccardo is a Democrat.

Uber and Lyft insist they are technology platforms, not transportation companies, placing them outside the reach of Gonzalez’s law. They have warned the alternative to shutting down if they lose in the California Cout of Appeal would be drastically cutting back services and dramatically hiking prices.

(Edited by Matthew Cooper and David Martosko.)



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Jobs Boost: Unemployment Claims Plunge 20%

Jobs Boost: Unemployment Claims Plunge 20%

New unemployment claims fell below one million for the first time since March last week, a sign of a national revival after months of COVID-19 related joblessness for tens of millions of Americans.

During the week ending August 8, about 963,000 people filed first-time claims for benefits with state unemployment programs, the U.S. Department of Labor said Thursday. It’s a significant drop from March’s high of nearly seven millions claims, even though numbers are still at historically high levels.

President Donald Trump signed an executive order Saturday allowing states to extend benefits of $300 in federal funds and $100 in state funds to unemployed workers. His action was aimed at partially extending the $600 weekly supplemental benefit after Congress failed to reach a deal on pandemic relief.

Workers likely won’t see the new supplemental benefits for weeks or even months, because states have to apply for the federal funds and some governors have said their states’ budget deficits are too deep to pay the last hundred dollars for each unemployed resident.

Trump said he expects lawsuits to follow. Democrats so far have not rushed to court to challenge him, sensing the political consequences of trying to block cash benefits to voters just months before Election Day. If lawsuits do come, a judge could halt the aid as the two sides battle over whether Trump had the authority to sidestep Congress.

The exterior of the Capitol in Washington, D.C. is pictured on January 20, 2020. (Zach D Roberts/Zenger)

“A judicial freeze would probably not make a difference between someone receiving additional benefits next week or even potentially next month,” said Michael Farren, an economist at the Mercatus Center at George Mason University.

Even a temporary loss of supplemental benefits would increase the number of people trying to go back to work, Farren said, “but the question is whether the jobs will be there for them to actually be going back to work.”

“Much of the unemployed people in the economy right now are unemployed because they’re on temporary furlough,” Farren said. “So much of the dining and entertainment industries, in particular, have gotten rid of jobs because demand for their services is down, as well as mandates against bars and restaurants reopening, or they limit their amount of on-site customers.”

The loss of supplemental benefits could not only have a detrimental effect on unemployed workers but also people who are still employed, some economists said.

“It would act as a major constraint on consumer spending and lead to reduced business activity thereby weighing on employment. This would therefore lead to renewed upward pressure on the unemployment rate,” said Lydia Boussour, a senior economist at Oxford Economics.

Chris Edwards, the director of tax policy studies at the Cato Institute, pushed back on the argument that the end of supplemental benefits would have harmful effects on the economy. The benefits are “clearly an incentive” for people to stay unemployed, he said.

“It’s not about consumer spending. It’s more about whether businesses feel comfortable operating. When they do, I think the economy will come zooming back to where it was,” Edwards said.

If workers who are receiving supplemental benefits are offered their jobs back and decline to return, the benefits would end, said Michele Evermore, a senior policy analyst at the National Unemployment Law Project.

“You can not receive an offer of suitable work and continue to collect unemployment benefits,” she said.

(Edited by David Martosko.)



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Jobless claims plummet 19% as Donald Trump dares Congress to block new unemployment benefits

Jobless claims plummet 19% as Donald Trump dares Congress to block new unemployment benefits

New unemployment claims fell below one million for the first time since March last week, a sign of a national revival after months of COVID-19 related joblessness for tens of millions of Americans.

During the week ending August 8, about 963,000 people filed first-time claims for benefits with state unemployment programs, the U.S. Department of Labor said Thursday. It’s a significant drop from March’s high of nearly seven millions claims, even though numbers are still at historically high levels.

President Donald Trump signed an executive order Saturday allowing states to extend benefits of $300 in federal funds and $100 in state funds to unemployed workers. His action was aimed at partially extending the $600 weekly supplemental benefit after Congress failed to reach a deal on pandemic relief.

Workers likely won’t see the new supplemental benefits for weeks or even months, because states have to apply for the federal funds and some governors have said their states’ budget deficits are too deep to pay the last hundred dollars for each unemployed resident.

Trump said he expects lawsuits to follow. Democrats so far have not rushed to court to challenge him, sensing the political consequences of trying to block cash benefits to voters just months before Election Day. If lawsuits do come, a judge could halt the aid as the two sides battle over whether Trump had the authority to sidestep Congress.

The exterior of the Capitol in Washington, D.C. is pictured on January 20, 2020. (Zach D Roberts/Zenger)

“A judicial freeze would probably not make a difference between someone receiving additional benefits next week or even potentially next month,” said Michael Farren, an economist at the Mercatus Center at George Mason University.

Even a temporary loss of supplemental benefits would increase the number of people trying to go back to work, Farren said, “but the question is whether the jobs will be there for them to actually be going back to work.”

“Much of the unemployed people in the economy right now are unemployed because they’re on temporary furlough,” Farren said. “So much of the dining and entertainment industries, in particular, have gotten rid of jobs because demand for their services is down, as well as mandates against bars and restaurants reopening, or they limit their amount of on-site customers.”

The loss of supplemental benefits could not only have a detrimental effect on unemployed workers but also people who are still employed, some economists said.

“It would act as a major constraint on consumer spending and lead to reduced business activity thereby weighing on employment. This would therefore lead to renewed upward pressure on the unemployment rate,” said Lydia Boussour, a senior economist at Oxford Economics.

Chris Edwards, the director of tax policy studies at the Cato Institute, pushed back on the argument that the end of supplemental benefits would have harmful effects on the economy. The benefits are “clearly an incentive” for people to stay unemployed, he said.

“It’s not about consumer spending. It’s more about whether businesses feel comfortable operating. When they do, I think the economy will come zooming back to where it was,” Edwards said.

If workers who are receiving supplemental benefits are offered their jobs back and decline to return, the benefits would end, said Michele Evermore, a senior policy analyst at the National Unemployment Law Project.

“You can not receive an offer of suitable work and continue to collect unemployment benefits,” she said.

(Edited by David Martosko.)



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