2 out of 3 informal employees expect life insurance from their employer

Findings from the report indicate that informal employees are prioritising factors such as prestige and career potential over wages today.

For Generation Z,  born between the mid 1990s and the early 2010, a formal, contracted job with social security and healthcare benefits is more attractive than a high salary. 93% of the informal employees claim that if an employer offered them a job with health benefits and a formal agreement as opposed to a higher salary without a contract, they would take it . This  inclination towards a formal, contracted job is the highest for Gen Z (95%) compared to all the other generations, revealed a survey by Quess.

The benefits of the ‘formal’ economy – both in terms of finance and work – are broadly indisputable; greater transparency provides improved access to services, protects parties on both sides of the transaction (employers/suppliers and employees/consumers), and renders the exercise of rights and benefits more efficient. 

"Due to the chaos and confusion resulting from the Covid-19 virus and resulting confinement, health benefits and life insurance have become paramount. To reiterate - four in every five informal employees (80%) expect ESI, and two in every three informal employees (69%) expect life insurance from their employee," said the  ‘New-Collar Generation’ report.

 

The top priority for more than half of the younger generations (54% - 18 to 25 and 53% - 26 to 35) is not to earn money and make a living, but other factors such as prestige and career potential.

" One in every five informal employees between 18 to 25 (19%) associate a job with building a career compared to only 10% of those over 45 nd another 17% of those between 18 to 25 (26 to 25 – 18%) associate a job with learning new skills compared to only 12% of those over 45," said the survey.

As younger employees join the workforce, their expectations from their employers to provide social security and health benefits have risen. 83% between the age group of 26 to 35 expect their employers to provide them with the security of ESI and other medical benefits. 

Furthermore, 79% of respondents claim they would compromise on 20% or more of their salary if it provided security and benefits equivalent to their formal counterparts (78%), indicating that the New-Collar Generation’s priorities and aspirations are converging with those of formal employees and that they value security and benefits over their daily wages.

The report found that 63% of women claim that they would be ‘very likely’ to compromise on a higher salary in lieu of health benefits and a formal agreement, compared to only 28% of men. 

Furthermore, 38% of women (and 29% of men) believe that the Covid-19 pandemic has highlighted the importance of job security. The study also found that men are more focused on career building, prestige, and are more cognizant of the value of professional networking, while women believe education holds the key to securing a formal job.

The report is based on interviews with 4,179 respondents of all ages. It covers respondents from seven metros--Delhi, Mumbai, Bengaluru, Chennai, Hyderabad, Kolkata and Pune--and seven non-metros, Ahmedabad, Baroda, Coimbatore, Indore, Lucknow, Ludhiana and Nashik. It was conducted between September 2022 and January 2023.

The Provident Fund and Employee State Insurance Scheme are two social security covers that provide facilities of socio-economic and medical benefits to employees. Both

employees and employers contribute their share of the amount, but the employers deposit the complete amount. 

As per regulations, employees contribute 12% of their basic salary, while the employer contributes 3.67%6 + 8.33% towards the pension scheme (the total for the employer is also 12% + admin fees extra). Until 2019, the rate of contribution under the ESI Act was 4.75% for employers and 1.75% for employees.7 As a result, an employee’s total contribution amounting to approximately 14%. 

In 2019, the rate of contribution under the ESI Act was reduced to 3.25% for employers and 0.75% for employees. 

" With high aspirations regarding skilling, social security, and healthcare benefits, India’s informal economy is as aspirational to benefit from EPFO, ESIC, and other social security benefits as their formal counterparts. Our current laws enable coverage of such social security benefits only for organizations that have above 10 or 20 employees. This leaves behind a huge class of citizens that are not benefitted by the current laws," said Lohit Bhatia, President of Workforce Management, Quess Corp