Bridging the Gap: How Social Compact is Ensuring Dignity for Blue-Collar Workers

Q&A interview with Sonvi Khanna, Lead, Social Compact:

Could you provide an overview of Social Compact’s mission and the inspiration behind its inception?

Social Compact is a multi-stakeholder platform that brings together corporates, worker organizations, and experts into a co-solutioning relationship to ensure greater equity and dignity for industry-engaged blue-collar workers, who are not on payrolls in India. It brings the voice and experience of unheard workers to weigh upon industry leaders and helps them reimagine business systems that are meant to ensure the wellbeing of these workers but often fall short as the pandemic revealed.

Since inception, Social Compact has worked with over 60 companies, largely principal employers, some supply chain partners and manpower contractors. While the platform is sector-agnostic, it has primarily worked with companies in machinery and equipment manufacturing, automobile, HVAC, pharma, food production, fashion, construction and most recently gig- as these segments employ a large number of contractual workers (industry-engaged non-payroll blue-collar workers).

What motivated the focus on improving the welfare of informal workers, and why is this a critical area of intervention?

Impermanent, contractual & supply chain workers in Indian industry, constitute more than 50% of principal companies’ ‘own’ workforce.  They toil 12 hours, 6-7 days/week, only to continue with poverty wages often below USD 5-7/day. These workers work with health & safety covers that depend on whose worker they are rather than on the risks posed by the job. Often seen as a replaceable herd rather than a 200 million people force, whose potential is waiting to be built & harnessed, these workers are also easily considered a case for alms through industry’s social responsibility funds rather than workers deserving dignified dues through core business.

Informality aggravates the vulnerability of these 200 million industry-engaged workers as the Covid-19 crisis brought to the fore. With millions 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 realised that they knew little about how many from their supply chains were part of this unfair exodus.

This limited visibility and ability of current business systems to uphold accountability for the wellbeing of those contributing to industry’s ecosystem, became the reason for inception of the Social Compact, by a few industry leaders such as Farhad and Rati Forbes, Meher Pudumjee & Anu Aga, Pradeep Bhargava and worker organisations such as Aajeevika Bureau, Centre for Social Justice, in partnership with Dasra.

The key objective of Social Compact is to improve the trackability and worker well-being parameters for the informal workers working in the formal sector and to ensure greater dignity and equity for them within industries in India. Social Compact also aims to mainstream a collective aspiration that responsible business is a successful business.

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 Social Compact 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 2-3 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. It 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.

Informality in work arrangements has increased significantly in both public and private sectors. How does Social Compact aim to address these trends?

Informality in work arrangements is a critical challenge of employment relationships in India today. Between 1999 and 2011, in India, the share of “regular informal” workers increased from 13 per cent to 18 per cent in the public sector and from 39 per cent to 50 per cent in the private sector.  This trend is likely to grow with the augment of the gig economy and the simultaneous increase of young people in the workforce, who appreciate flex and control of their own time.

Thus, Social Compact does focus on conversion of informal workforce to more formal. Instead, it works with industry to ensure dignity and wellbeing of informal workers themselves, demonstrating the dependence of business operations and reputation on the workers who constitute 50-80% of the workforce in a business ecosystem. Social Compact’s specialisation has been in working with principal employers to strengthen business systems that manage their non-payroll workforce to become more transparent, intentional, inclusive of the voice of these workers, and report all the way to the top leadership, such that the company’s leadership  does not report wellbeing of its workforce only basis the condition of pay roll workers but the other half or more as well.

Below is the 6-part framework Social Compact leverages to help industry improve working conditions and wellbeing of informal workers in their ecosystem.

Social Compact has collaborated with over 60 organizations. Could you share insights into the kinds of changes you’ve observed in these companies after implementing your recommendations?

Social Compact has seen a change in leadership mindset, systems and practices for informal workers, in response to its intervention. These changes range from off-roll blue collar workers becoming a part of top leadership KPI and data on them becoming part of board room agenda; to companies instituting listening loops to hear back from workers across sites and receiving 100-200 calls in half a year of initiating the effort, transforming the knowledge base and need for vigilance with which the company functions. It has ranged from companies mandating and offering standardised formats for appointment letters to contractors, to ensure contractual workers have a more clear and legit proof of employment, to them offering vendors in their supply chain for supporting ESIC compliance. It has pushed the conversation in a few companies  from undertaking viability checks for moving to living wages, to imagining growth frameworks for the support workforce in industry, that largely sees one promotion in their lifetime.

What challenges do you face while convincing companies to adopt worker-friendly practices, and how do you overcome them?

Industry’s move to an over 50% contractual workforce was meant to address the challenge of permanency. However, it devolved into a worse off situation where industry today runs with visibility on less than 50% of its workforce and their plight; risking massive reputational, attrition, compliance and human rights risks. Social Compact helps companies realise this precarity in response to the initial sense of resistance and confidence that all is well.

Through an 80-point tool that spans its 6-part framework, Social Compact helps companies understand the maturity of their business systems for informal workers and where there are gaps in design, implementation, monitoring or awareness generation. This combined without findings from site visits, where we speak with a representative sample of all functions performed by non-pay roll blue collar workers, often helps ground the company in lived experience-based facts rather than the picture painted through paper- based compliance. It is thus that so many of our companies create a listening mechanism, to ensure this systemic over-reliance on paper trails is corrected through ground-up facts.

Even once companies understand the challenge, they often struggle with finding the right expertise and partners to help them move ahead. Social Compact partners with them on this front as well and is thus designed as an enablement partner rather than a certification.

Could you elaborate on the industries or sectors that have been more proactive in adopting Social Compact’s recommendations? 

Social Compact has documented a 70% acceptance of its recommendations. Social Compact has worked across family businesses, corporates and gig, and been able to enter in the first place because there were at least 1-2 champions with whom the problem and solution resonated. They would have liked greater visibility and confidence that their business is upholding the rights of those not on their payrolls but contributing to business. Having said that, family businesses tend to move faster given their size and often a legacy of going beyond the law as part of the culture of the organisation. What has to be strategically navigated is over reliance on culture and a necessary shift to systems that back the intent and see it through.

Social Compact strongly feels that there are champions in almost every business who feel what is happening is not right but lack like-minded people to question the status quo with and the solution partners to work with towards changing it. Social Compact has really enjoyed offering this comradery to such champions and making a journey out of it.

Social Compact’s recommendations have a less than 20% rejection rate- recommendations that are neither accepted nor will be considered. As mentioned above; by accepting Social Compact’s recommendations, companies have brought greater vigilance, standardisation and inclusion of worker voice in the systems that govern their wellbeing. This is not very different from the changes that took place  regarding the wellbeing of the non-executive white-collar workforce 20-30 years back, creating a mechanism to involve their review and ideas to rethink systems that are meant for them. This inclusion and agency completely altered India’s white-collar engagement in companies, transforming them from erstwhile clerks to entrepreneurial ideators and go-getters within companies.

The lack of proper contracts is a fundamental challenge in addressing informality. How do you support companies in ensuring proper contracts for their workers?

Social Compact worked with a legal firm, Aarna Law, to develop an ideal job contract that gives workers clarity on their engagement and entitlements and would be able to support in case of a bank loan. While these contracts have to be issued through contractors, Social Compact helps companies take on the responsibility to mandate a standardised format for all to deploy. Social Compact also encourages companies to conduct spot checks and seek the contract from workers themselves, and not just the contractors, to see if the ideal format is in fact reaching the workers.

Social Compact’s initiatives have the potential to impact over 300,000 informal workers. Could you provide specific success stories or examples to illustrate the difference made on the ground?

Social Compact’s engagement with Zomato marked the company’s first foray into the gig-work and platform economy sector. Built through the lived experience of Zomato workers, the framework helps the platform understand and address the wellbeing of these workers in a holistic manner. It spans across 9 elements (shown below) that together impact the physical, financial, social, mental and professional wellbeing of this workforce. The frame further details 80+ actionable areas through which the practical challenges faced by gig workers can be highlighted for action by the company.

This holistic framework has not only been approved by gig and civil society experts but has also been made publicly available for the benefit of the larger gig economy to leverage and build of on.

On the Zomato front, the framework is being converted into a continuous wellbeing tracking tool for gig workers, to see which areas need the company’s immediate action and which are spaces for long term transformation and thought leadership.

What is Social Compact’s long-term vision for informal workers in India, and how do you plan to scale your efforts?

Social Compact aims to enable industry to build more inclusive business systems where the informal workforce is more visible and heard than it was 5 years back. This is not a one-time change that will solve it all. Industry systems will need to listen in from these workers periodically, to be able to adapt systems, practices, provisions, to their ongoing need. Social Compact will not only work to impact systems impacting 1 million workers directly but has targeted to establish at least 15 worker facilitation centres, 7 of which are already running strong, to help workers and communities in industry hubs link with their government entitlements, with greater ease.

While Social Compact’s work to strengthen existing business systems for workers is a corrective role, it is trying to create more pre-emptive change, by sensitising and building capacity of those who have or plan to take on white collar roles within industry, to become vigilant custodians of the informal blue-collar workforce. Social Compact just trained 20 cross-function members of Tata Autocomp, to assess worker wellbeing and business systems the Social Compact way. The platform is also all set to make a debut in teaching a course on the same at a leading academic institution in India.

Finally, mainstreaming this issue is critical for its transformation. In our initial days, we found it hard to break into the complexity and grave condition of this demographic, and how it plays out to keep 200 million poor. As one can imagine, it was a heavy conversation to just begin having with strangers. So Social Compact developed gamified immersions to help complete strangers experience what informal workers within industry go through, and how those breakpoints could be easily fixed. Social Compact aims to grow this arm to mainstream the conversation with more young minds and make them aware of what they can do to build or run industry systems that add value to all.

How do you measure and track the qualitative impact of your interventions on worker well-being and business viability?

Social Compact tracks the qualitative impact of its work as impact on mind and impact on systems for workers. While the latter is obvious and easier to track and check, the former is something we ventured into for the first time this year, through a third party. Our partner 4^th wheel conducted has been conducting conversations with business leaders to see what the Social Compact engagement shifted in their perception, thinking or approach towards this topic and how their business systems should respond to it. This is one of the most powerful and pivotal changes the platform can trigger, and leads to positive improvements, beyond the knowledge and documentation capacity of Social Compact.

Can you share examples of companies from Pune who have partnered Social Compact and adopted and excelled in their engagement with contract workers?

Thermax, Forbes Marshall, KK Nag, TACO are all examples of companies that are staying the course and working towards ensuring intent converts to action on the ground, when it comes to their informal workforce. Thermax particularly stands out for having successfully instituted a listening loop, that is seeing significant traffic already, to hear back from the workers and take accountability for resolving reported concerns.

Are there specific cities or regions you’re focusing on to expand your work in the near future?

Social Compact’s work spans across India.

How can other companies, organizations, or individuals collaborate with Social Compact to support informal worker welfare?

More companies need to ground their sense of ‘all is well’ in actual data collected from the informal workforce in their ecosystem. Social Compact often begins its journey with companies here, bringing them the lived experience of their informal workforce, and helping them solution on gap areas. Companies can also engage with us if they need support sensitising and building the capacity of their leadership and teams on the issue and why this is a critical area of business and human rights, given today’s global landscape.  Social Compact also helps companies enter their supply chain with the mission but strongly advocates for the company to undertake and improve on the journey itself first.

Individuals and organisations are also welcome to partner through our worker facilitation centres and by helping us with platforms to mainstream the conversation.

What message would you like to convey to industry leaders, HR Heads and policymakers about the importance of formalizing the informal workforce?

Social Compact wants industry to reimagine its equation with this vulnerable blue-collar workforce to have more inclusive growth of this segment in the formal sector and recognize them as key enablers to achieve the goal of Viksit Bharat. If a full day’s work, 6 days a week, cannot bring one out of poverty, what can? If work in the formal sector cannot offer one with safeguards against health episodes, accidents and exigencies, where can one expect this? If 200 million people are likely to see growth of INR 10-15k in their work life.

Another important area is the government’s decision to transition from the minimum wage to the livable wage in 2025 which should be implemented as it will provide the way forward to ensure fair pay, equity and dignity of non-payroll full-time blue-collar workers.