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Important Editorial Summary for UPSC Exam

24Aug
2023

Needed, a well-crafted social security net for all (GS Paper 3, Economy)

Needed, a well-crafted social security net for all (GS Paper 3, Economy)

Context:

  • Around 53% of all of the salaried workforce does not have any social security benefits in India, according to the Periodic Labour Force Survey Annual Report 2021-22.
  • In effect, this means that such employees have no access to a provident fund, pension, and health care and disability insurance.

 

Concerns:

  • Just 1.9% of the poorest 20% quintile of India’s workforce has access to any benefits.
  • Meanwhile, gig workers, or approximately 1.3% of India’s active labour force, rarely have access to any social security benefit.
  • India’s social security system is also ranked poorly; Mercer CFS ranked it at 40 out of 43 countries in 2021.

 

Gap in policymaking & budgetary constraint:

  • India’s policymakers have largely ignored social security. While policies are often announced, budgetary allocation has always been limited and utilisation even less so.
  • In FY11, the National Social Security Fund was set up for unorganised sector workers, with an initial allocation of just ₹1,000 crore to support schemes for weavers, rickshaw pullers and bidi workers to name a few.
  • The amount was a pittance when compared to a requirement of over ₹22,841 crore, as estimated by the Centre for Budget and Governance Accountability.
  • A Comptroller and Auditor General of India (CAG) audit on the scheme in FY17 identified ₹1,927 crore had just not been utilised. Consequently, select social security schemes have been left moribund.

 

Loopholes in implementation:

  • The National Social Assistance Programme was set up in the 1990s, with a focus on old-age poor individuals with no able-bodied earners in their household, were eligible to earn a monthly pension of ₹75.
  • Contribution by the Centre to old-age pension schemes has stagnated at ₹200 a month since 2006, i.e., below the minimum wage per day.
  • Similarly, in July 2022, the CAG identified that the cess collected for the provision of social security to construction workers in Delhi was poorly utilized, approximately 94% of the money was not utilised.
  • In Haryana, the CAG noted that the direct benefit scheme of the State’s Social Justice and Empowerment Department had seen the transfer of ₹ 98.96 crore to the accounts of deceased beneficiaries.
  • Meanwhile, budgetary cuts to the Mahatma Gandhi National Rural Employment Guarantee Act continue.

 

Brazil’s Social Security Scheme:

  • Brazil’s General Social Security Scheme is contribution-based, substituting income loss for a worker (and his family), whether in partial or full.
  • This covers any situation due to an accident at work, a disability that prevents the worker from working, death, an illness/medical treatment that leads to time away from work, family burdens, or the prospect of unemployment.
  • Even income loss that occurs due to a worker being imprisoned is covered by the low-income insured. Unemployment insurance is paid from worker support funds, and health care is covered through the Unified Health System.
  • The Constitution itself has established that if there is a lack of funds, the National Treasury will step in.
  • Social security benefits can be availed of with a simple phone call or a visit to a bank, with no requirement to submit endless documents, as highlighted in Brazilian Good Practices in Social Security.

 

India’s workforce in the informal sector:

  • Approximately 91% (or around 475 million) of India’s workforce works in the informal sector. It lacks access to social security. In two decades, India will be an aging society,  for such workers with limited savings, there will be no significant social protection.
  • While the Code on Social Security (2020) merged existing social security legislation, it dealt fundamentally with formal enterprises and did not cover informal ones.

 

What needs to be done?

  • India should aspire to provide social security to all of its workforce, in a manner that is fiscally and administratively feasible.

 

Three broad principles include:

  • Need to expand employer and employee contribution under the Employees’ Provident Fund Organisation (EPFO) system for formal workers.
  • For informal workers with meaningful income (whether self-employed or in an informal enterprise), partial contributions can be elicited, along with persuading informal enterprises to formalise and expand their total contribution.
  • And for those who are unemployed or have stopped looking for work, or do not earn enough, the government should step in.
  • It is estimated that the cost of providing social protection to the poorest 20% of the workforce would be ₹1.37 trillion (including those who are elderly, pregnant or disabled); a cost of approximately 0.69% of GDP in FY20.

 

Code on Social Security in 2020:

  • It was heartening to see the government push for a Code on Social Security in 2020, which sought to provide a statutory framework to enable social security for the urban and rural poor, construction workers, those in the gig industry and informal sector workers.
  • It proposed the provision of life insurance, disability insurance, accident insurance, as well as maternity and health-care benefits along with old-age protection and crèche facilities for gig workers.

 

e-Shram platform:

  • A push for greater digitisation under the e-Shram platform has enabled the enrolment of approximately 300 million workers while expanding coverage of accident insurance (of ₹2 lakh cover) and disability (of ₹1 lakh cover).
  • However, much more needs to be done; e-Shram puts the burden of registration on informal workers, who are required to furnish a self-declaration and share their Aadhaar card; there is no responsibility/incentive given to their employer (even temporary) to foster registration.
  • Bringing employers into the process would have enabled the formalisation of employee-employer relationships.

 

Other steps:

  • Greater support is required for financing social security for the majority of India’s labour force, moving beyond construction and gig workers.
  • There must be a push for a pan-India labour force card and an expansion of existing successful schemes such as the Building and Other Construction Workers Schemes to other categories of workers.
  • Such expansion requires a loosening of existing restrictions on benefit portability, having a 90-day mandatory cooling period, as well as a more straightforward registration process.
  • Special attention is required for domestic workers (usually female), who are never sure when their employment may be terminated.
  • Migrant workers often face discrimination and suspicion from authorities in their working area so coverage of social services such as child care can be expanded. Domestic workers must also organise themselves across India’s cities.

 

On existing schemes:

  • There is need to strengthen existing schemes, for example the Employees’ Provident Fund (EPF), the Employees’ State Insurance Scheme (ESI), and the National Social Assistance Programme (NSAP), with budgetary support and expansion of coverage.

 

Way Forward:

  • Organisations such as the Self-Employed Women’s Association which run Shakti Kendras (worker facilitation centres), may be funded to run campaigns (especially for women) to provide greater information on social security rights, along with services and schemes that the government offers.
  • The time has come for India to consolidate its existing social security schemes/ad hoc measures and provide universal social security to its entire labour workforce.
  • With jobs becoming increasingly on-demand and hire/fire policies proliferating, India’s workers are increasingly insecure on the job front.
  • To have the fruits of growth trickle down while offering a sense of social security, policymakers must discard supply-side shibboleths to embrace policies that enable equitable growth.