By Priyanka Venkat
Social security for all. This phrase, among all the phrases that the government uses to popularise its reforms, is perhaps one of the more enticing ones. The call for universal social security is essential, and a policy of this nature is long overdue in India.
In October, the government drafted a Rs. 1.2 lakh crore proposal that aims to provide the poorest 20 percent of the country with access to social security. This plan is meant to be a part of a broader strategy to provide social security to all.
The need for universal social security in India
An important tenet of progress in a society is the pursuit of social justice. This demands fair and equal treatment of all workers and begs a closer look at the flaws in the current social security system. Let us look at some numbers to gain perspective. As per data released by the Labour and Employment Ministry, out of the 475 million-strong workforce, 83 percent belong to the unorganised sector and are not covered under any social security scheme.
The dire state of finances of workers in the agricultural sector necessitates the provision of such relief. However, according to a study submitted to the International Labour Organisation (ILO) in 2016, only one percent of the workers have access to social security. The social security system at present caters more to the formal sector. However, even within the organised sector, only over ten percent avail social security in some form or the other. Existing schemes have failed to be inclusive because of various conditions and thresholds imposed to qualify for the plan. For example, the Employees Provident Fund Organisation (EPFO) ensures the provision of family and superannuation pensions to those workers who die during service. At present, however, such distribution of premium by the EPFO is compulsory only for those factories that employ a minimum of 20 workers.
This paints a morbid picture, as the provision of social security to all citizens (all being the operative word here) is a non-negotiable right and should be treated as such. To address this issue, the government introduced a draft code relating to social security and welfare in March earlier this year. It seeks to regulate and streamline different forms of protection pertaining to disability, retirement, health, unemployment and so on for all workers.
The social security and welfare code
The Ministry of Labour and Employment proposed to simplify and amalgamate the 44 labour laws in the country into four distinct codes. These codes are related to the fields of wages, safety health and working conditions, industrial relations, and social security and welfare. The draft code on social security amalgamates the existing 15 laws in the fields such as the Maternity Benefit Act, Employees Compensation Act and so on. Additionally, a National Social Security Council has been proposed to streamline and regulate the schemes and monitor their implementation.
While all workers are required to contribute towards the social security fund created by the state governments, the poorest 20 percent in the country will have the government paying on their behalf. This is estimated to cost the government close to Rs. 1.2 lakh crore. Another 20 percent constitutes predominantly self-employed individuals who are expected to pay a lump sum amount, and the formal sector employees will continue with the current system in place with a minor change. Presently, the employers are required to contribute 31.5 percent of the employees income towards the Employees State Insurance and the Employees Provident Fund Scheme. However, under the proposal, the contribution will be reduced to 30 percent of the employees income.
The primary benefit of the proposal lies in its inclusiveness. It does not stop at covering only the formal sector, but also actively includes the unorganised sector within its ambit. It covers any factory, shop, plantation or mine regardless of the number of workers employed. Domestic workers, migrants, agricultural workers and farm owners, to name a few, will also have access to social security under the code. In addition to the benefits to the people, a scheme of this magnitude could also win brownie points for the government in the next election.
Formalisation of the economy through linkage with Aadhaar
A key implementation issue is to ensure that the benefits from such a social security system actually reaches the formerly secluded unorganised sector. To address this concern, the labour ministry has proposed assigning of unique identity numbers to workers in the unorganised sector that will be seeded with Aadhaar. This proposal has been approved by the Standing Finance Committee and will be implemented in April 2018.
Seeding the unique identity numbers with Aadhaar will provide data on the entire workforce to the government. This could help to quicken the process of formalisation and minimise the wastage of resources through the duplication of benefits. Ms. M. Sathiyavathy, the secretary of the Ministry of Labour and Employment said, The initiative, for the first time, will have complete data on the Indian workforce, tell us about the job creation picture more reliably and offer retirement benefits to a large number of workers so far out of the social security net.
The way forward
While the code appears to be a good policy in concept, there are still various concerns that need to be addressed. For instance, while it goes into detail about benefits relating to health and maternity, it only lightly touches upon the subject of unemployment. The bill only talks about the formation of an ‘Unemployment Benefit Scheme Fund’ that would be included as a part of an existing unemployment benefit scheme. This scheme has hardly been put into action in the past.
To encourage competition and efficiency, companies need to be given the freedom to make employment decisions. This, in some cases, may require them to lay off workers, which makes unemployment benefits all the more crucial. Workers need to be protected during the interim period of unemployment. It is therefore essential that the government takes this up as an important mandate while implementing the bill and gives it the attention it deserves. Experts also argue that it will be difficult to get employers on board with the system. For instance, households that employ domestic help are likely to show a lot of resistance because of the increase in cost that such a proposal imposes on them. Even small industries may face a similar issue with having to provide social security to all their workers.
In addition to ensuring that workers get a fair wage, the provision of social security also entails actions such as investing in the skill and training of workers to improve their marketability. A move of this nature and magnitude is therefore necessary. Gone are the days when unsustainable livelihoods were considered normal and fair treatment of all was an unreasonable demand. With the right amount of government support and careful implementation, the dream of social security for all may indeed become a reality.
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