Should Cities Have a Job Guarantee?

Whether India should extend an MGNREGA-style employment guarantee to cities, what states like Rajasthan and Kerala have tried, and the costs and design challenges.

MGNREGA guarantees up to 100 days of paid work a year to rural households. There is no national equivalent for urban workers. The COVID-19 lockdown, when millions of urban workers lost jobs overnight, revived calls for an urban employment guarantee.

State experiments

Kerala launched the Ayyankali Urban Employment Guarantee Scheme in 2010, offering work in urban local bodies.
Rajasthan launched the Indira Gandhi Shahari Rozgar Guarantee Yojana in 2022, offering up to 100 days of work a year to urban households.
Odisha and Himachal Pradesh also started urban work programmes during the pandemic.

The case for

Safety net: urban informal workers face job loss with no insurance.
Public works: cities need cleaning, greening, repairs and water conservation.
Wage floor: a guaranteed job at a set wage can push up private wages for the lowest-paid.
Women’s work: nearby public work could help women enter the workforce.

The case against

Fiscal cost: urban wages and project costs are higher than rural ones.
Capacity: urban local bodies often lack staff and funds to plan and supervise projects.
Useful work: finding productive projects at scale is challenging.
Labour markets: could draw workers away from private jobs or discourage migration to better opportunities.
Leakage: risks of fake job cards and corruption.

Design ideas

Economist Jean Drèze proposed a “decentralised urban employment and training” model, in which the government issues job stamps to public institutions like schools and hospitals, which then hire workers for local tasks.

The evidence gap

State urban schemes have been relatively small and are not yet well evaluated, so their effects remain uncertain.

The lockdown lesson

When the 2020 lockdown began, a construction worker in Jaipur lost all his income. Rural workers could at least seek MGNREGA work in their villages. Urban workers like him had no equivalent safety net, fuelling calls for an urban guarantee.

Thinking a job guarantee means permanent government jobs

Job guarantee schemes offer limited days of paid public work, usually at modest wages, as a safety net.

Key takeaways

MGNREGA covers rural areas; there is no national urban job guarantee.
Kerala (2010) and Rajasthan (2022) launched urban employment schemes.
Supporters cite safety nets, public works and wage floors.
Critics worry about costs, local capacity and finding productive work.