June 25, 2022
Good morning. Every Saturday, we write about one specific right that you possess as a citizen in our country. In today’s edition of “Know Your Rights”, we look at the rights of the unemployed in India.
KNOW YOUR RIGHTS – EDITION 45
Rights of the Unemployed in India
The unemployment rate. That’s all anybody can talk about right now, and for good reason too. As of the data collected in December 2021, 1 in 5 college graduates in India are unemployed. More highly qualified individuals are either unemployed or in incredibly low-paying jobs.
Our worsening quality of employment is getting so bad that, at this point, it’s even making international headlines. So, as the world tries to figure out what’s causing these plummeting numbers, let us focus on one thing, i.e. your rights. Here are the rights of an unemployed person in India:
- There aren’t any.
No, we didn’t just put that in there for effect, and we aren’t trying to make this a downer of an article. Unfortunately, for a country with “socialist” written in its Preamble, we really do have an abysmal track record with unemployment rights. But there are certain things that you can do to get around this – at least, to buy some time before securing a job.
You see, both the Constitution of India of 1950 and the four new Labour Codes of 2019 fail to bring up a person’s rights in case of unemployment. But Article 41 of our constitution does provide for the right to work and public assistance when unemployed. Because of this, the government has a couple of schemes that provide unemployment benefits.
In 1948, the Employment State Insurance (ESI) Act was passed to provide benefits to those employed in factories and establishments like shops, hotels, theatres, restaurants or any other place of entertainment. It currently offers two schemes, i.e. the Rajiv Gandhi Shramik Kalyan Yojna (RGSKY) and the Atal Beemit Vyakti Kalyan Yojna (ABVKY). Obviously, one can only reap the benefits of these schemes if insured and earn less than ₹21,000.
To be an “insured person”, the individual needs to contribute to the ESI scheme for five years to the loss of employment. The unemployment insurance will be paid for 24 months and will provide 50% of the person’s wages as an allowance. It is important to note that the insurance cannot be coupled with other benefits like maternity, disability, sickness, etc. All of this only applies to the RGSKY.
The ABVKY, on the other hand, offers unemployment payments or relief for up to 2 years but only once in a person’s lifetime. This will only apply if the person was under insurable employment for at least 2 years. They also needed to have contributed to the scheme for at least 78 days immediately before losing their job. These were changed during the pandemic to provide substantial relief to people, but we’re back to this now.
If none of these schemes applies to you, we have private insurance. But even then, traditional insurance that covers unemployment is mostly non-existent. They usually are additional benefits tacked on to an already existing product. Here are a few examples:
- ICICI Lombard’s Secure Mind offers job loss insurance but only if the customer buys a SIP from ICICI Direct with a minimum monthly payment of ₹1,000.
- HDFC Ergo’s Home Suraksha Plan gives you a 3 month-long EMI in case of job loss, providing 50% of your net salary. This also only applies to you if your home loan is for 20 years.
Other forms of “job loss” insurances in India are usually more expensive than the cover for the job loss itself. While researchers, economists and most well-wishers keep batting for better unemployment rights in India, the government seems to regularly dodge questions on social security. Back in 2020, the government spoke about an upcoming unemployment allowance scheme but we haven’t heard anything about that since.
Fortunately, certain states have specific laws that cover certain groups of people from the pangs of unemployment. But this only covers a very small portion of society, even when we look at a state’s population individually. You can find them here – fingers crossed that you never have to worry about them.