September 13, 2021 / 17:17 IST
The government is said to be looking to make the Pradhan Mantri Shram-Yogi Maandhan (PMSYM), a pension scheme for informal workers, more attractive by reducing the monthly contribution amount and offering accident cover after enrolment dropped to an all-time low this year.
Moneycontrol explains what the scheme is, why informal workers need social security and why PMSYM may have lost its sheen.
What is the Pradhan Mantri Shram-Yogi Maandhan?
The Pradhan Mantri Shram-Yogi Maandhan is a contributory pension scheme that offers old-age social security to the country’s informal workers.
Under the scheme, introduced in the interim budget of February 2019, unorganised workers aged 18 to 40 can contribute between Rs 55 and Rs 200 every month and the Central government will make a matching contribution. Workers have to contribute until the age of 60 when they become eligible for a monthly pension of Rs 3,000.
Eligibility: Workers in the unorganised sector with a monthly income of up to Rs 15,000.
Workers who are not covered by the National Pension System, the Employees’ State Insurance Corporation or the Employees’ Provident Fund Organisation.
Why do informal workers need social security?
The International Labour Organization, in a report published this year, estimated that there are 400 million unorganised workers in India. Informal workers are often deprived of basic minimum wages and social security.
The pandemic exposed and intensified the vulnerabilities of migrant workers who take up low-paid and low-skilled, temporary jobs and have limited access to social protection, making them prone to layoffs.
India was said to be the worst impacted country due to the Covid-19 pandemic. According to the Centre for Monitoring Indian Economy, some 121 million jobs were lost in India in April 2020, the highest ever monthly job loss on record since it started compiling employment data.
Of the 121 million jobs lost, some 91 million were daily wage labourers and workers in the unorganised sector, CMIE estimated.
Why has enrolment under the pension scheme plunged?
Fresh enrolments under the PMSYM have declined to an all-time low in the current financial year.
Only 17,175 informal workers have registered for the scheme so far in FY22, which averages 3,435 workers a month, compared with an average enrolment of 10,843 per month in FY21.
The drop comes as workers in the unorganised sector faced job and income instability following the Covid-19 outbreak. People in the lower rung of the income category who are the targeted beneficiaries of the scheme were the worst affected by the two waves of the pandemic.
Informal workers who earned less than Rs 15,000 did not find the contributory pension scheme attractive in the wake of the pandemic.
The scheme has received a poor response since its inception. A little over 4.5 million workers have registered against a target of 100 million unorganised workers in five years, or an average of 20 million workers a year.
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