The United Nations Economic and Social Council defines ‘decent work’ as employment that “respects the fundamental rights of the human person as well as the rights of workers in terms of conditions of work safety and remuneration, respect for the physical and mental integrity of the worker in the exercise of their employment”. The Sustainable Development Goals also proclaims decent work for sustainable economic growth. However, in India, informal workers (also known as contract workers), who form a major part of the workforce work in extremely poor health and safety conditions, finds this Workforce Disclosure Initiative (WDI) – Oxfam study.
As part of the WDI, a series of case studies highlights the experience of workers in global supply chains, drawing attention to some of the systemic challenges to achieving decent working conditions, and pointing to examples of good practice. A key finding of the case study is that investors cannot rely on regulation by government to ensure that companies are managing health and safety risks, as this regulation does not apply to workers in the informal sector, so workers lack the protection of an employment contract.
Key Takeaways From WDI-Oxfam Case Study
High toll of workplace health and safety incidents: The most cursory internet search shows the extent of serious accidents that regularly occur in Indian workplaces, resulting in serious injuries or death of workers. The drive to increase productivity whilst reducing costs is one of the main reasons for workplace accidents. Machines are often poorly maintained and operated by workers with little training and/or inadequate experience.
Women informal workers most vulnerable: Women are disproportionately represented in the informal economy, and often at the most marginalised end of the spectrum. A study of the construction industry found that only men were registered as workers, women workers were invisible, so were not included in statistics, policy or social security provisions.
Lack of regulation covering informal sector worker: In India, over 92 percent of the 465 million workforces is employed informally. Only a negligible one percent of informal workers benefit from paid leave. They are at the ‘bottom of the pyramid’ in the Indian economy. They suffer from long and unregulated working hours; precarious work; wages below the legal minimum; lack of paid leaves and lack of access to healthcare and social benefits.
Dearth of safety training and poor company disclosure: More than a thousand workers are hurt in serious accidents every year. Many of them suffer permanent disabilities meaning they can no longer work. Most of these accidents are preventable, as they are due to a lack of safety training. According to the IRBI, only half of the top 100 BSE listed companies provide safety training for informal workers
No reporting mechanism: The third pillar of the United Nation’s Guiding Principles is ‘Access to Remedy’, which emphasises the need for access to redress through effective judicial and non-judicial grievance mechanisms. However, informal workers tend not to report incidences of abuse and exploitation. Most informal workers, especially women, have negligible legal protection, and face an unfavourable – if not hostile and punitive – policy and regulatory environment.
The first step towards ensuring dignity and human rights to all employees starts with a recognition that policies and benefits should extend to all employees, both formal and informal. Companies need a proactive human rights approach as outlined in the UN Guiding principles on Business and Human rights.
What Can Investors Do?
Strengthen the sustainable and responsible investing dialogue in India
Engage with government, regulatory agencies and stock exchanges to ensure disclosure mechanisms that help provide data on informal workers
Engage with companies to promote quality ESG disclosures – including on workforce policies and practices
Ask companies in their portfolio to demonstrate that they have identified the greatest risks to their workforce, as well as to the business and how these are incorporated into strategies
Encourage companies to carry out robust due diligence on issues including health and safety for informal worker
Encourage companies to establish access to remedy for informal workers
Health and safety concerns of contract workers can be one of the avenues that investors prioritize while investing in companies. If the workforce is not happy and safe, and if the rights of all workers (including and especially contract workers in the supply chain) are not respected, the growth of Indian companies will not be sustainable and long-term.