MSME’s and Few Common Minimum for Ensuring Worker’s Welfare and Rights : May Day 2024

The recent sustainability drive by the Government of India is most welcome and it will push the industries towards conducting more responsible business. Principles of Environment, Social and Governance (ESG) is an important framework which forms the basis of conducting responsible business practices ensuring steps towards sustainability. The below Table provides and overview of the ESG components.

Table I:

Greenhouse gas emissions

Air emissions Waste management

Environment compliance

Water management and conservation  
Health and Safety

Employee & Diversity


Community engagement

Board of Directors


Ownership & Control

Tax Approach

Compliance cases Audit

As we are nearing the May 1st, International Labour Day, it is important to take a closer look into role of businesses in ensuring worker’s rights and welfare. In this article we discuss few frameworks, policies and laws that will guide mainly medium, small and micro enterprises (MSME) sector to make their businesses more people centric putting worker’s rights and welfare in the centre.

Micro, Small and Medium enterprises (MSMEs) provide large employment opportunities at lower capital cost than large industries.

96% of the industrial units belong to small companies in the Indian economy. The small companies account for 40% of the nation’s overall industrial production and 42% of all Indian exports. These offer various opportunities in the rural and urban areas of the country and have helped to increase the employment chances for the people. Over the last six years, there has been a 110% yearly increase in the creation of jobs. As of December 2022, approximately 1.28 crore MSME registered industries employed 9.31 crore people including 2.18 crore women employees, based on the most recent data from the portal of Udyam. The MSME sector generates 360.41 lakh jobs out of the 11.10 crore jobs. The jobs mainly belong to the manufacturing sector, in the rural and urban areas, with 387.18 lakh jobs in trade and 362.82 lakh jobs in other services across the country. The MSMEs that were founded in the year 2022, employed more than 1 crore people.

The first important framework is the ESG and as discussed in the Table I above ensuring a diverse


employee in the organization is key. Adherence to Social principle of ESG framework can be as basic as how to treat their employees, considerations on human rights of workers not only male and female but the diverse group who they are employing and treating them without discrimination, ensuring decent working condition, human rights, safety, community relations, supply chain transparency, and more. ESG Social performance indicators can include aspects like diversity, income equality, workplace injury rates, philanthropy, and labour practices of suppliers.

The above is equally applicable for the MSME sector in India. The sector employs large number and therefore have to be more compliant on worker’s welfare and rights.

While ESG framework is an important one, the 4 major Labour Codes by Government of India will be important legal provisions for businesses to adhere to ensure worker’s rights. The rules of the Labour Codes are ready and need to be implemented soon in various states. The MSMEs need to work in coordination with respective state labour departments to remain compliant as per the laws. The Code on Wages and Code on Social Security will be important to refer to ensure worker’s rights and welfare in the MSME enterprises. The link here provides all the Codes for reference. There is an immediate need to generate awareness and conduct trainings for MSMEs on the Labour Codes, their rules and applicability in the MSME sector. The Department of Labour and Employment need to work in close coordination with MSME Association towards the same across India.

Per the date in above sections, almost 25% of MSME workforce are women. It is extremely important to ensure their safety in the workplace specially for from sexual harassment. The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and its implementation in the MSME sector is very crucial. The Act provides guidance to establish the Internal Committees to address sexual harassment at workplace faced by women workers. The Act is linked here Sexual Harassment at Workplace Prevention, Prohibition and Redressal Act, 2013 . The MSME’s need to create awareness on the issue of sexual harassment at workplace, form the Internal Committee and undertake redressal per the provisions of the Act. Intensive training for their staff on the issue and provisions of the Act will be the first key step.

The ESG framework specially the aspects of the Social pillar and with proper implementation of the Labour Codes in the MSME sector will create a dignified workplace for workers both men and women who are employed in this sector. This May Day, let all the MSME’s take an oath to not only create employment but a dignified work opportunity for all as a part of responsible business practices.

This May Day NRFS urges all MSME’s the following minimum while it will facilitate a convergence between the MSME associations and Labour Departments to streamline the Labour Codes in the MSME sector.

  1. Ensure minimum wages for all workers
  2. Ensure equal wages for male and female workers without discrimination
  3. Ensure safety of all workers in the workplace
  4. Health insurance for all workers
  5. Maternity benefit for women workers
  6. Ensure safety for women workers and implement the SHW Prevention, Prohibition and Redressal Act 2013

Ranjana Das, Co- Founder & Director
Markzin Young Private Limited

About author

Ranjana Das has been working on sustainability and business and human rights for few years now. She has done extensive work in tea and sugar supply chain across states of India. Presently she is focusing more on corporate responsibility in the tea supply chain. She has a growing interest in responsible business and is closely following India’s current movement on National Guidelines for Responsible Business Conduct (NGRBC). She is associated with the Indian development sector for two decades and right now trying to bring the grassroot experience in the business responsibility sector. Her core areas of interest have been gender and livelihoods and she enjoys designing trainings and conducting them for a variety of stakeholders from social to corporate. She holds a master’s in economics from a University of Calcutta and Masters in Development Studies from Institute of Social Studies Netherlands. She has remained a Humphrey Hubert Fulbright Fellow with Cornell university.

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