The Centre has admitted that regular employment opportunities are not available in the country and cited this as one of the reasons for the sharp decline in the contribution made by unorganised sector workers to a pension scheme.

According to data provided in the recently tabled Department Related Parliamentary Standing Committee on Labour on Demand for Grants of Labour Ministry report, the spending by the government to match the contribution made by the workers to the Pradhan Mantri Shram Yogi Maan-dhan Yojana (PMSMY) has halved in the past two years. (See chart).

This means the contribution of workers has also come down by 50 per cent ,as they are required to match the payment made by the government.

Labour economists said the increasing trend of industries hiring contractual workers, paltry income of workers, the unattractive design of the scheme, high inflation and labour sector uncertainties had contributed to the lukewarm response to the pension scheme.

Investing in a contributory pension scheme with a long gestation period is not their priority, the economists said.

The NDA government launched the PMSYM in 2018. Under the scheme, unorganised workers in the age group of 18 to 40 years are to make monthly contributions between ₹55 and ₹200, depending on their age. The government matches the contribution of each beneficiary. Each beneficiary is to receive a monthly pension of ₹3,000 after turning 60.

The scheme targets street vendors, head loaders, cobblers, rag pickers, domestic workers, washermen, rickshaw pullers, agricultural workers and construction labourers. If a beneficiary has made regular contributions but died before the age of 60, their spouse can either join or exit the scheme. However, if both are dead before they attain the age of 60, there is no provision of payment of any lump-sum amount to the next of kin.

A committee headed by BJP leader BasavarajBommai tabled the report on the PMSMY in Parliament on December 16. The government had a target of covering 10 crore workers under the PMSMY between 2018 and 2023. As on March 31, 2024, the scheme had enrolled only 49.98 lakh workers. The committee asked the Centre to explain the reasons for the decline in government expenditure.

The ministry has stated six reasons, including “unavailability of regular employment opportunities”. The other reasons are the adverse impact of Covid on the lives of unorganised workers, requirement of long-term financial commitment by those enrolling for the scheme, need for awareness, persuasion and mobilisation of beneficiaries, lack of a formal employer-employee relationship and the presence of other pension schemes.

Labour economist Prof. Shyam Sundar, an adjunct faculty member at MDI Gurgaon, said regular workers were increasingly being put on contract. According to the Annual Survey of Industries 2022-23, about 41 per cent of workers in industries are engaged on a contractual basis. Job security is uncertain and high inflation has reduced their disposable income.

“Contractualisation is increasing. There is uncertainty in the labour market because of the introduction of technology. The workers usually prefer schemes with short-term and medium-term realisation. This scheme (PMSMY) has a long gestation period. Also, disposable income is going down because of high inflation,” Sundar said.

Labour economist Prof. Amitabh Kundu said the Periodic Labour Force Survey had shown a significant increase in low-paid employment, particularly as unpaid family labour that constitutes 20per cent of the total employed persons.

“Lack of viability is the main reason for them not joining the scheme or discontinuing their contributions. The income of a large section of targeted workers is low. A large segment among them can’t afford to pay even the low monthly instalments under the PMSMY on a regular basis,” Kundu said.