Dignity in Labour Platform

Intervention

Social or environmental challenge

Over 85% of India's non-agricultural workforce consists of informal workers, and the grey economy accounts for about 50% of India's GDP. Following the COVID-19 pandemic, employment in the informal economy saw a significant increase. In 2021, 76% of workers in rural areas and 65% in urban areas were employed in informal non-agricultural sectors.

Informal workers are confined in a low-skill low-productivity trap, with limited opportunities to train or upskill themselves. They are highly susceptible to exploitative practices, abuse, and conditions akin to forced labor, and lack adequate social protection.

Since these individuals lack any formal documentation of gainful employment, formal credit avenues are inaccessible for them. As a result, many within the informal sector resort to acquiring loans from unregulated entities, which typically charge exorbitant interest rates. Such engagements with the informal credit market can inadvertently ensnare workers in crippling debt traps, at times leading to bonded labor situations.

Description of the intervention

Dignity in Labour platform is a multi-stakeholder blended finance facility that will connect vulnerable, new-to-credit customer groups to suitable lending partners and enable access to relevant government social security programs for all workers that interact with the facility. The platform aims to assist ~10K workers across five user groups: artists, aspirational youth, self-employed individuals, migrant workers, and e-rickshaw drivers. Platform offers fit-for purpose loan products to these groups and provides technical assistance to help them access social security schemes. It also assists them in acquiring requisite KYC compliance documentation.

This project started with a pilot "Labor Dignity Bond" in 2021. The pilot was a working capital facility that pooled concessional debt from private investors, aiming to promote the ethical treatment of construction workers by micro-contractors, culminating in a loan book of around $265K.

The Dignity in Labor Platform is a scaled-up version of the pilot and will utilize both concessional and grant capital to support its interventions. It is projected that the facility will support ~10K users with a loan book of $2 Mn over a three-year period, with 9.1 times leverage. The structuring of the Platform has been completed, supported by a grant from the Catalytic Capital Consortium.

Last data update

Data for this pipeline project was last updated in August 2023