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Published on: June 9, 2024, 3:17 p.m.
How Social Compact bridges the gaps
  • Social Compact improves the trackability and worker well-being parameters

By Arbind Gupta. Assistant Editor, Business India

The Covid-19 crisis brought to the fore the real challenges faced by the informal worker community – social security. With the grim Covid-19 scene of migrant workers, mostly informal or contract workers, heading home in larger numbers due to the absence of jobs and salary assurances from their employers, the formal sector suddenly realised it cannot function without an informal labour community. 

Social Compact, a multi-stakeholder platform, brings together corporates, worker organisations and experts into a co-solutioning relationship to ensure greater equity and dignity for industry-employed informal workers in India. It is part of Dasra, a philanthropy organisation and NGO for NGOs. The main objective of setting up Social Compact was to improve the trackability and worker well-being parameters for the informal workers working in the formal sector. It aims to ensure greater dignity and equity for informal workers within industries in India, and mainstream a collective aspiration that responsible business is a successful business.

Since inception two-and-a-half years ago, Social Compact has worked with over 60 companies, largely principal employers themselves but also some supply chain partners, as also some others along the value chain, who are manpower contractors. While the platform is sector-agnostic, it has primarily worked with companies in machinery and equipment manufacturing, automobile, realty and construction sectors, as these segments employ a large number of contractual workers.

“The pandemic highlighted the existing lack of transparency and respect for informal workers,” says Pradeep Bhargava, chairperson, Social Compact & former managing director, Cummins. “Individual company efforts weren’t enough to address the widespread issues. Social Compact goes beyond awareness campaigns to ensure informal workers are treated with dignity and have access to basic necessities.” 

Social Compact has a six-point framework that talks about wages, occupational health and safety, gender parity, grievances redressal, access to entitlement and skilling and growth. It enables a customised process for each company and its supply chain – from reflection to remedial action and monitoring in three broad steps: 

Self-reflection: Companies can rapidly identify the maturity of its worker practices for temporary, contractual and supply chain workers, through Social Compact’s lean and expertise-led enablement support.

Integration into business as usual: For sustained improvement to business, the companies will be advised to integrate Social Compact recommendations into business through at two level streams – systematic integration and direct site-level integration.

Supply chain engagement: Social Compact engages with companies to replicate this exercise along their supply chain to ensure worker wellbeing in the ecosystem.

As part of its outreach with companies, Social Compact first asks companies to self-assess their maturity in supporting worker wellbeing using a questionnaire with simple Yes/No answers. This helps the NGO understand the companies’ perception of the level of their business systems and highlights areas for improvement.

After this, Social Compact goes to the ground and chooses two-three sites in the company and talks to all representatives of all the informal groups (whether they are operators, gardeners, fitters or welders) and talk to them to understand their experiences. The NGO also speaks with the site management as well as the intermediaries such as contractors on site to gauge their involvement, responsiveness and commitment to improve worker wellbeing practices. 

  • Bhargava: going beyond  awareness campaigns

    Bhargava: going beyond awareness campaigns

Grievance redressal mechanism

This was a game changer, as it can check whether the company is following up all the set processes, when it comes to informal workers. After this, Social Compact shares its findings with recommendations like creating proper grievance redressal mechanisms (often a neglected area) and implementing existing policies to ensure all workers are aware of their rights. In fact, the grievance redressal mechanism has become the hottest adoption recommendation of Social Compact. 

As per its baseline, only 14 per cent companies have grievance redressal systems in place that maintains a formal record of all issues raised by the workers. After site visits and talking to informal workers, Social Compact shares system-wide recommendations (whether there is a gap in a company’s policy or there is a gap in implementation, monitoring or there is an awareness gap). After recommendation, the NGO handholds the company and prioritises things.

“The high-cost savings from using informal labour isn’t the main issue,” says Sonvi Khanna, lead, Social Compact. “The main problem is a conditioned mindset that undervalues informal workers. To address this, we have developed a three-step process for 60-odd companies we work with and converted the framework into 40 broad simple indicators, like ‘do the informal workers have an appointment letter’ and, if yes, ‘whether it is in a language they understand’, safety measures, etc”.

Apart from its direct work with companies, Social Compact also has five Worker Facilitation Centres (WFCs) across Maharashtra and Gujarat. The goal of WFCs is to empower labour communities by building systemic partnership to unlock government entitlements. WFCs are a key strategy of Social Compact to build on-ground awareness and agency amongst workers on their entitlements through industry employers while also providing access to remedial support.

According to United Nations, addressing the informal economy is a priority to achieve the 2030 Agenda’s 17 Sustainable Development Goals and truly Leave No One Behind. More than half of the global workforce is estimated to work in the informal economy, which is often associated with low productivity, poverty, low wages, and under-employment. Informality is correlated with vulnerability through the denial of rights at work, the absence of sufficient opportunities for quality employment and the lack of effective social protection. Women, youth, persons with disabilities and indigenous people are overrepresented among workers in the informal economy. 

  • The NGO aims to ensure greater dignity and equity for informal workers

    The NGO aims to ensure greater dignity and equity for informal workers

The Covid-19 pandemic has exposed the global urgency of addressing the informal economy. It exposed the vulnerability that so many face across the globe and how informality acts as a barrier to a just transition and accelerated progress on sustainable development. As a result, key policy blind spots emerged, especially among workers and entrepreneurs in the informal economy who could not rely on emergency response measures and social protection.

The pandemic also exacerbated the scale of informality, as many joined the informal economy to cushion the impact of lockdowns and the economic downturn. The informal economy has traditionally functioned as a buffer, absorbing shocks in the formal economy and limiting increases in overall unemployment.

The rural-urban divide is significant for the informal economy. Globally, employment in rural areas is twice as likely to be informal than in urban areas – 82 per cent versus 43 per cent. Workers in agricultural informal employment represent more than a third of rural employment globally and more than two thirds in low-income countries. Informality varies significantly across economic industries. 

Six industries have informal employment rates that exceed the global average: agriculture (nine of 10 workers); domestic work (more than eight of 10 workers); construction (close to three of four workers); and accommodation and food service activities, as well as vehicle repair among other services activities (about three of five workers for those three last industries). The United Nations development system has thus recognised the values of economic activity-based approaches to address informality.

  • The pandemic highlighted the existing lack of transparency and respect for informal workers

    Pradeep Bhargava, chairperson, Social Compact & former managing director, Cummins

Some key numbers:

• In 24+ months, Social Compact has shared insight-driven systemic recommendations with companies engaging over 3,00,000 workers, triggering systemic impact for 55,000+ vulnerable workers in India.

• It has 60+ Principal and supply chain member companies.

• There are three Apex Industry bodies & chambers of commerce too.

• Five Catalytic on-ground WFCs are located in Chakan and PCMC in Pune and Ahmedabad, Savli and Vatva in Gujarat.

• Since inception in September 2021, WFCs have had the following impact:

• Over 11,700 people supported;

• Over Rs80 lakh monetary benefits converted; and

• Over Rs32 lakh worth of dues recovered through legal case resolution

• Two upcoming WFCs are New Delhi and Coimbatore.

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