A Primer*

October 2004

* This booklet was initially prepared for a convention on Employment Guarantee and the Right to Work, held at the Constitution Club (New Delhi) on 19 October 2004. It was written by Nikhil Dey and Jean Drèze but draws on discussions with many others including Shiraz Balsara, Subhash Bhatnagar, Kiran Bhatty, C.P. Chandrasekhar, Sehba Farooqi, Jayati Ghosh, Colin Gonsalvez, Smita Gupta, Indira Jaising, Brinda Karat, Madhuri Krishnaswamy, Harsh Mander, Babu Mathew, Santosh Mathew, Prabhat Patnaik, Vikas Rawal, Aruna Roy, Dunu Roy, Abhijit Sen, T.S. Shankaran, Shekhar Singh, Kavita Srivastava, Anuradha Talwar, and S. Vivek, to name a few.

Employment Guarantee Act:
A Primer


Workers' organisations have been demanding a national Employment Guarantee Act (EGA) for many years. This "primer" was prepared to facilitate public discussion of this issue at all levels -- from remote villages to the national capital. The answers are based on a draft National Rural Employment Guarantee Act prepared by concerned citizens, dated 1 September 2004 (hereafter the "reference draft").


1. What is the basic idea of an Employment Guarantee Act?

The proposed Act gives a legal guarantee of employment to anyone who is willing to do casual manual labour at the statutory minimum wage. Any adult who applies for work under the Act is entitled to being employed on public works within 15 days. Thus, the Employment Guarantee Act provides a universal and enforceable legal right to the most basic form of employment.

2. Why is it important to have an Act ñ why not just a scheme?

An Act provides a legal guarantee of employment. This places a judicially enforceable obligation on the state, and gives bargaining power to the labourers. It creates accountability. By contrast, a scheme does not involve any legal entitlements, and leaves labourers at the mercy of government officials. There have been numerous employment schemes in the past -- the Employment Assurance Scheme, National Rural Employment Programme, Jawahar Rozgar Yojana, Sampoorna Grameen Rozgar Yojana, among others. Most of them have failed to bring any security in peopleís lives. Often people are not even aware of them.

There is another important difference between a scheme and an Act. Schemes come and go, but laws are more durable. A scheme can be trimmed or even cancelled by a bureaucrat, whereas changing a law requires an amendment in Parliament. If an Employment Guarantee Act is passed, labourers will have durable legal entitlements. Over time, they are likely to become aware of their rights, and to learn how to claim their due.

3. What are the social benefits of an Employment Guarantee Act?

There are many. To start with, an Employment Guarantee Act would go a long way in protecting rural households from poverty and hunger. In fact, a full-fledged EGA would enable most poor households in rural India to cross the poverty line. Secondly, it would lead to a dramatic reduction of rural-urban migration: if work is available in the village, many families will stay in place instead of heading for the cities. Thirdly, guaranteed employment would be a major source of empowerment for women. Based on past experience, a large proportion of labourers employed under EGA are likely to be women, and guaranteed employment will give them some economic independence. Fourthly, the Employment Guarantee Act is an opportunity to create useful assets in rural areas. Fifthly, guaranteed employment is likely to change power equations in the rural society, and to foster a more equitable social order. Last but not least, the process of mobilising for an Employment Guarantee Act (and for effective implementation of the Act after it is passed) has much value in itself. It could give a new lease a life to the labour movement in large parts of India.

4. Who will be entitled to work under the Employment Guarantee Act?

The right to work under the Employment Guarantee Act is a universal entitlement. Any adult is entitled to apply. The Act is based on the principle of self-selection: anyone who is willing to do casual manual labour at the minimum wage is presumed to be in need of public support, and must be provided employment on demand.

This approach dispenses with the need for any "targeting" system, such as the identification of households "below the poverty line" (BPL). There have been plenty of anomalies in this identification process, and the distinction between BPL and APL households has also been very divisive. The principle of guaranteed employment makes a clean sweep of these anomalies and divisions, and creates a universal entitlement. This is yet another social benefit of the proposed Employment Guarantee Act.

5. Does the proposed Employment Guarantee Act have any precedent?

The State of Maharashtra passed an Employment Guarantee Act in 1976. It is still in force today. Although no other State has passed an Act since then, there have been numerous campaigns for the adoption of an Employment Guarantee Act in other states. There have also been several initiatives for a national EGA, which never reached Parliament. That is why it is important to ensure that the current initiative gains momentum and leads to the adoption of a national Employment Guarantee Act as soon as possible.

6. What is the policy of the present government on the possible adoption of an Employment Guarantee Act?

The Common Minimum Programme clearly states that ìthe UPA Government will immediately enact a National Employment Guarantee Actî. In fact, this is the first item in the list of policy priorities, and it is one of the few items for which there is a commitment to ìimmediateî action.

A draft National Rural Employment Guarantee Act has been prepared by the National Advisory Council, and is being revised by the Ministry of Rural Development. The Prime Minister has announced that the draft would be tabled in Parliament in December 2004, and that the Employment Guarantee Act would come into force in a phased manner starting on 1 April 2005. Whether these promises actually materialise remains to be seen -- much depends on the strength of public demand for the Act.

7. Is there a limit on the number of days of guaranteed employment over the year?

The "reference draft" does not include any restriction on the number of days. This draft provides for a universal and permanent guarantee: anyone who applies for work at any time is entitled to being employed, for as many days as he or she desires. However, in the draft prepared by the National Advisory Council (NAC), the employment guarantee is restricted to "100 days per household per year". This is because the NAC's work is guided by the Common Minimum Programme of the UPA government. The Common Minimum Programme promises to "immediately enact a National Employment Guarantee Act", but with an initial cap of 100 days of employment per household.

The cap of 100 days is obviously a major restriction. Note, however, that it is only an "initial" cap and that the NAC draft includes explicit provisions for the possible extension of work entitlements (a) beyond 100 days per year, (b) to individuals rather than households, and (c) to urban areas. Even if the cap is retained in the final version, the Act can still be used as a stepping stone towards a full-fledged, 365-day work guarantee.

8. Will the Employment Guarantee Act be restricted to particular states or districts?

No. All available drafts specify that the Act will be extended to the whole of India in a time-bound manner (e.g. within two years in the reference draft, five years in the NAC draft).

9. What about urban areas?

The draft EGA is a "Rural Employment Guarantee Act". It applies to all rural areas, including "B" and "C" class municipalities (an important provision). Much thought is required on the extension of employment guarantee in urban areas, including the possibility of a follow-up "Urban Employment Guarantee Act". Some work on this has begun. Meanwhile, the Rural EGA itself is likely to be of great value to urban workers, because (1) some of them will be able to stay in their village and get work there instead of migrating to the cities, and (2) the reduction of rural-urban migration will lead to higher wages for those who stay in the urban areas.


10. What is the relation between the Employment Guarantee Act (EGA) and the Employment Guarantee Programme (EGP)?

The Employment Guarantee Act (EGA) is the foundation, and provides the legal guarantee. The Employment Guarantee Programme (EGP), created under the Act, is the means through which employment is provided, so that the guarantee comes into effect. The Act directs every state government to prepare an Employment Guarantee Programme within six months, and spells out the essential features of the Programme in some detail. Note that the EGP is state-specific, but the EGA is a national legislation.

11. Who will be responsible for implementing the Employment Guarantee Programme?

The Employment Guarantee Programme will be implemented by state governments, with funding from the central government. The Act also gives specific responsibilities to the District Administration, the Block Office, and the Gram Panchayats. The basic unit of implementation is the Block. In each Block, a "Programme Officer" will be in charge. The Programme Officer is supposed to be an officer of the same rank as the BDO, paid by the central government, and with the implementation of EGP as his or her sole responsibility. The Programme Officer will be accountable to the Panchayat Samiti as well as to the District Administration.

12. What is the role of the "Block Officer" in the Employment Guarantee Programme?

The Block Officer is responsible for the entire programme in the relevant Block. One of his/her principal duties is to match the demand for employment with available work opportunities. The Block Officer is expected to sanction works to be executed by particular Departments or Panchayats, so that employment is provided in time to the applicants. He or she will monitor the works, verify that all relevant norms are being followed, ensure that regular social audits are carried out, and report to the Panchayat Samiti and District Administration. The Block Officer is also expected to disburse unemployment allowances (see below), and to act as the first-level redressal authority in the event of public complaints.

13. What is the role of the Gram Panchayat in the Employment Guarantee Programme?

The Gram Panchayat is the main institution responsible for the implementation of the Programme at the local level. To start with, the Gram Panchayat will be responsible for registering all potential workers, issuing job cards to them, receiving their applications for work, forwarding these to the Block Officer, and informing the applicants as and when work is available.

The Gram Panchayat also plays a crucial role in the implementation of projects taken up under the Programme. The draft Act states that at least half of all project funds will be allocated to the Gram Panchayats. In such cases, the Gram Panchayat will be required to plan and execute the works in a transparent manner, with accountability to the Gram Sabha and Block Officer. In the case of works carried out by Departments within the geographical area of a particular panchayat, the Gram Panchayat will provide the labour from amongst its applicants and help to ensure that the works are carried out in a fair and transparent manner.

The Gram Panchayat will also ensure that social audits of all works within its area take place regularly, and that the works sanctioned meet the norms of equity and social justice. It will report to the Gram Sabha on a regular basis, and ensure that records and documents are displayed or available in a convenient form for public scrutiny.

14. What is the role of the Gram Sabha in the Employment Guarantee Programme?

The Gram Sabha is expected to monitor the work of the Gram Panchayat, and also to participate in the planning process. In particular, the Gram Sabha will discuss and prioritise the works to be taken up, conduct regular social audits of all works carried out in the Panchayat, and verify that all the relevant norms are being observed. Resolutions of the Gram Sabha will be given priority in the planning of project works by the Gram Panchayat and the Block Officer.

15. Do private contractors have a role in the Employment Guarantee Programme?

Contractors are banned in the case of works taken up by the Gram Panchayats. In other cases, contractors may be used, but only for specific types of work and with case-by-base permission from the concerned monitoring agencies. Even then, workers will be paid by the Programme authorities in front of the community, as per EGA norms and rules.

16. Works taken up under the Employment Guarantee Programme are supposed to be
ìproductive worksî. What does this mean?

In the draft Act, productive works are defined as works that contribute directly or indirectly "to the increase of production, the creation of durable assets, the preservation of the environment, or the improvement of the quality of life". This definition is quite broad. It encompasses not only traditional labour-intensive works such as building roads or digging ponds, but also a range of other possibilities such as environmental regeneration, waste disposal, public health activities, child-minding, among others. Even home-based activities may be considered in some circumstances, e.g. to provide suitable employment to disabled persons.

17. What kinds of work are likely to be taken up under the Employment Guarantee Programme?

The nature of works is bound to vary from region to region. In many areas, there is a massive potential for labour-intensive works in the field of environmental protection: watershed programmes, rainwater harvesting, land regeneration, prevention of soil erosion, restoration of tanks, protection of forests, wasteland development, and related activities. Over time, with large numbers of jobs to be created, the Employment Guarantee Programme is likely to evolve as a means of rapid all-round infrastructural development in rural India.


18. How are labourers expected to apply for work under the Employment Guarantee Programme?

The first step is to "register" with the Gram Panchayat. It is the duty of the Gram Panchayat to register workers and give them a "job card" with their name, address and photograph. The main purpose of the registration process is to facilitate advance planning of works. The job card will ensure that labourers are in possession of a written record of the number of days they have worked, wages paid, unemployment allowances received, and so on, instead of depending on government officials for this purpose.

Applications for work may be submitted at any time, either through the Gram Panchayat or directly to the Block Officer. Both have a duty to accept valid applications and to issue a dated receipt to the applicant. Applications must be for at least 14 days of continuous work. The Act provides for group applications, advance applications, and multiple applications over time. Applicants are supposed to be told where and when to report for work within 15 days, by means of a letter as well as of a public notice displayed on the Panchayat notice board.

19. How much are labourers going to be paid under the Employment Guarantee Programme?

Workers will be entitled to the statutory minimum wage applicable for agricultural workers in the State. The draft Act clearly states: "In no circumstances shall labourers be paid less than the statutory minimum wage of agricultural labourers applicable in the State".

20. What will be the mode of payment -- daily wages or piece rates?

Both are permitted in the draft Act. In both cases, the statutory minimum wage applies.

21. Will wages be paid in cash or in kind?

Wages may be paid in cash or in kind or both. Payment in kind would usually mean part payment in foodgrain.

22. What about the regularity of wage payments?

Wages are to be paid within seven days of the week during which work has been done. If wage payments are delayed, workers will be entitled to compensation under the Payment of Wages Act. Wages are to be paid on pre-specified dates in front of the community, to reduce the risk of fraud.

23. Are labourers entitled to any specific facilities at the worksite?

Yes. Labourers are entitled to basic worksite facilities such as safe drinking water, shade for periods of rest, first-aid medical treatment, and also crèche arrangements (if needed) when more than twenty women are employed.

24. Where will the work be provided?

Work must ordinarily be provided within 5 km of the applicants' residence, and in any case within the Block. When work is provided beyond a 5 km radius, workers are entitled to transport and living allowances.

25. What happens if someone applies for work but does not report for work when employment is provided?

If an applicant fails to report for work within 15 days of being informed that work is available, he or she stands debarred from applying for work or receiving the unemployment allowance for a period of fifteen days. This is to discourage "frivolous applications".


26. Who is entitled to an unemployment allowance under the Employment Guarantee Act?

Anyone who has not been provided with work within 15 days of applying (or within 15 days of the date for which employment is sought, in the case of "advance applications").

27. What is the role of the unemployment allowance?

The unemployment allowance has several roles. First, it provides a limited form of unemployment assistance to those who are waiting for work. Second, it provides a tangible "signal" that the responsible authorities are failing to provide employment to all applicants. Third, it acts as a penalty on the state government for this failure.

28. How large is the unemployment allowance likely to be?

Various benchmarks have been proposed, ranging from one fourth of the statutory minimum wage to the full minimum wage. In the reference draft, the unemployment allowance is pegged at "not less than one third of the prevailing statutory minimum wage of agricultural labourers in the State". A more recent proposal is that the unemployment allowance should follow a rising scale, e.g. one third of the minimum wage during the first 30 days, one half during the next 30 days, and so on. This would give state governments an added incentive to avoid making people wait for long periods before providing them with work.

29. Who will be paying the unemployment allowance?

The unemployment allowance will be paid by the state government, and disbursed through the Block Officer. If state governments pay the unemployment allowance, while the bulk of employment costs are met by the central government, state governments will have a strong incentive to provide work. However, it has been proposed that in the event where the failure to provide work is due to inadequate devolution of funds on the part of the central government, the cost of unemployment allowances should be reimbursed to the state government by the central government. This provision is yet to be incorporated in the Act.


30. What is the likely cost of providing work under the Employment Guarantee Programme, per person-day of employment?

A useful benchmark is "Rs 100 per day". In many states, the statutory minimum wage for agricultural labourers is around Rs 60 per day. A labour-material ratio of 60:40 is quite standard in labour-intensive public works programmes. Putting the two together, we obtain the benchmark of Rs 100 per day (at 2004-5 prices).

31. How many people are likely to be employed under the Employment Guarantee Act, and how much would it cost?

This is quite difficult to predict. To start with, consider the norm of "100 days per household per year" adopted in the Common Minimum Programme, and suppose that all poor households in rural areas utilise their full quota of 100 days. Remember, the work guarantee is not restricted to poor households, but in practice, those who volunteer to do casual manual labour at the minimum wage are likely to be mainly from poor households. According to official estimates, there are about 4 crore households below the poverty line in rural India. The implication is that about 400 crore person-days of employment would have to be generated each year. To put it another way, a little more than one crore persons would be employed on an average day ñ about one per cent of the total population.

If the cost per day is Rs 100, the total cost becomes Rs 40,000 crores. This is about one per cent of India's anticipated GDP four years from now (at 2004-5 prices). In other words, if the Employment Guarantee Act is gradually extended to the whole of India over a period of four years, the total cost of the programme will gradually rise to 1% of GDP over this period.

All this is based on the norm of "100 days per household". If this cap is removed, the cost would be corresondingly higher. However, based on past experience with relief works during periods of drought (and with Maharashtra's "employment guarantee scheme"), it is unlikely that work participation would exceed 200 days per poor household, even with a permanent and universal guarantee. In short, the total cost is likely to be somewhere between 1 and 2 per cent of GDP, depending on the extent of the guarantee.

32. How are costs going to be shared between the central government and the state governments?

The Employment Guarantee Programme will be overwhelmingly funded by the central government. What is not entirely clear is whether the state governments should also contribute a share of the costs, however small. One view is that the EGP should be fully funded by the central government. The argument is that any financial burden placed on the state governments would jeopardise the whole project, because state governments are bankrupt. It is also argued that the central government cannot pass an Act that unilaterally imposes a financial burden on the state governments. Implementing such an Act would require ìconformity actsî in individual states, and this could lead to long delays. On the other hand, full funding from the central government could lead to a breakdown of accountability: state governments would be free to relax work norms, raise wage rates and hire en masse, without any restraint. This issue is yet to be fully resolved.


33. Isnít there a danger that the Employment Guarantee Programme will create a shortage of labour in the agricultural sector, push up agricultural wages, and make life difficult for farmers?

Applications for work are likely to be concentrated in the slack season. This is all the more likely if there is a cap of "100 days per household per year", as proposed by the UPA government. If employment generation is concentrated in the slack season, it is unlikely to cause any shortage of agricultural labour. In fact, small farmers will gain from the introduction of an Employment Guarantee Programme, in so far as they participate in the Programme during the lean months.

34. Most of the state governments are bankrupt. How can they afford to implement an Employment Guarantee Programme?

The share of the state governments in the cost of the Programme will be very small, if any. As things stand, they already contribute a substantial share of the cost of centrally-sponsored employment programmes (e.g. 25% in the case of Sampoorna Grameen Rozgar Yojana). These programmes are likely to be merged with the Employment Guarantee Programme after EGA comes into effect. The additional cost of EGA for the state governments is likely to be small. In fact, this "cost" will be a good investment, considering the wide-ranging economic and social benefits of an Employment Guarantee Programme.

35. Shouldnít the Employment Guarantee Programme be implemented entirely by the Gram Panchayats?

This may be feasible in some states, and over time, the scope for entrusting the Programme to the Gram Panchayats is likely to expand. However, in many states there is a long way to go in creating the conditions that would enable Panchayats to implement such a demanding Programme in an effective and equitable manner. This is why the draft Act takes the Block as the basic unit of implementation, and places the Programme Officer at the centre of the stage. However, the draft Act also allows for any of the Programme Officer's respnsibilities to be delegated to the Gram Panchayats. Thus, it effectively permits implementation through Gram Panchayats if this is deemed possible and desirable.


36. Have any safeguards against corruption been included in the Employment Guarantee Act?

Yes, there are strong provisions for transparency and accountability at all levels. For instance, job cards are to be issued to all labourers; wages are to be paid in front of the community on pre-specified dates; all relevant documents are to be available in convenient form for public scrutinty; regular social audits of all Programme works are to be conducted; muster rolls are to be displayed at the Gram Panchayat office until the wages are paid; utilisation certificates are to be issued by the Gram Sabhas; and so on. Further, the demand for an Employment Guarantee Act goes hand in hand with the demand for a strong Right to Information Act. The right to information is an important tool for the eradication of corruption and is essential for the success of the Employment Guarantee Act.

37. Are women likely to get a fair share of employment under the Employment Guarantee Programme?

If guaranteed employment is an individual entitlement, a majority of labourers employed under EGA are likely to be women, judging from past experience with labour-intensive public works. On the other hand, if the guarantee is limited to "100 days per household" (as in the NAC draft), it is possible that women will be marginalised. If individual entitlements are replaced with household entitlements, there may be a case for introducing a quota for women, e.g. at least 50 per cent of all labourers employed in every Block.

38. What happens if the responsible officers (e.g. the Block Officer) fail to perform their duty under the Act?

The draft EGA explicitly provides for penalties against responsible officers in the event where they fail to perform their duty under the Act.

39. Does the national EGA leave room for state-specific EGAs also?

Yes. State governments will be allowed to frame their own Employment Guarantee Act if they wish, provided that it is consistent with the national EGA and does not reduce the entitlements of labourers.

40. What can I do to participate in the campaign for an Employment Guarantee Act?

There is much to do at all levels. The first step is to spread awareness and understanding of the Employment Guarantee Act. You can contribute to this, say, by organising a discussion about EGA in your own organisation or neighbourhood. Perhaps you can use this booklet (after translation in local language if necessary) for this purpose. Beyond this, many things can be done to strengthen public demand for an Employment Guarantee Act: rallies, yatras, dharnas, kala jathas, symbolic shramdans, postcard campaigns, public debates, media campaigns, among other possibilities.
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