Two years ago, just when the world was riding high on digital transformation, several industries were struck hard by Covid-19. One of the hardest hit sectors was manufacturing. Many businesses came to a standstill as the deadly Covid-19 waves claimed lives and people were restricted to staying at home. While digitally-enabled organisations managed to cope by allowing WFH (work from home) and hybrid work models, manufacturing companies could not immediately do so since the nature of work is largely manual workforce-oriented.
As a result, employee safety became a matter of grave concern. Manufacturing output plummeted and many small and medium-sized enterprises were left in shambles, leading to even more disastrous effects. The pandemic not only halted their sustainable and inclusive growth but also put the spotlight on the need for group health insurance for employees.
Steps to pull companies out of crisis
Amid growing concerns of employee health, the Government of India has addressed the issue by mandating businesses to provide medical insurance coverage to its employees. Following through, the Insurance Regulatory and Development Authority of India (IRDAI) published a circular in April 2020 seeking all industrial and commercial establishments, workplaces and offices. To arrange to implement a Standard Operating Procedure (SOP), including social distancing and mandatory medical insurance.
Taking a cue from this mandate, manufacturing companies started looking for comprehensive and effective group health insurance offerings from new-age insurtech companies once the pandemic started subsiding. According to Deloitte’s 2022 Global Health Care Outlook, a marginal population of only 9% is covered under voluntary private insurance, which exposes a majority of the population to great financial risks. Providing insurance and employee health support ensures security for MSME (Micro, Small & Medium Enterprises) employees in case of any personal or professional emergency.
Generally, employees covered under the Employee State Insurance Act through the ESIC are not eligible under an employer’s group health insurance policy. Employers offer group health insurance policies to only those who earn a salary of more than Rs 21,000 and are not covered by the ESIC.
Why the manufacturing industry is in such dire needÂ
A joint report by IIM Ahmedabad, Monster India and WageIndicator Foundation from 2017 noted that manufacturing jobs in sectors like automobiles, pharmaceuticals, chemicals, metals, cement, rubber and electrical machinery are among the lowest paid jobs in India. India’s median gross hourly wage in the manufacturing sector was Rs 254.04, a poor figure indeed. In the next few years, studies predict a slight increase in the gross median wage to an average of Rs 354, but it is still not enough to cover many daily needs, let alone private insurance.
MSMEs realize that in view of the current state of healthcare, it is important to provide an affordable and valuable healthcare package to their employees which cover both mental and physical health. According to CII data, the manufacturing sector currently contributes 16-17 per cent to GDP and gives employment to around 12 per cent of the country’s workforce. The data also points out that India is emerging as a lucrative and credible investment destination for manufacturers due to its robust domestic demand, growing middle class, young population and high return on investment.
How to get back on track
It is critical for manufacturing businesses to bounce back from the heavy losses incurred due to the lockdowns. It is imperative that they ensure business continuity with increased production levels. In order to achieve this, companies are looking at group health insurance coverage to provide the necessary safety net should there be a massive health concern like Covid-19. Also, they must emphasise providing support and enabling more women to return to the workforce.
Employers must ensure employees’ physical and mental well-being to become the projected $5 trillion economy. Moreover, employee productivity and workforce health should be prioritised, especially in the manufacturing sector, where work hours are long and pay scales are low. Companies must offer comprehensive medical cover that includes both parental and spousal benefits for employees. Moreover, industry forums should join hands with the Government to come forward and address issues across the manufacturing spectrum to facilitate growth, enhance efficacy and competitiveness to achieve higher output levels by keeping employees safe.
With Covid-19 still in our midst, it makes sense for manufacturing companies to invest in group health insurance, providing easier access to health infrastructure and protecting employees both in the workplace and outside.