As COVID-19 destroys lives and livelihoods, an unprepared government has rendered low-paid, informal workers, who constitute 91% of the workforce, totally hapless, pushing them further into poverty.
Imagine if these same informal workers had social security (including free basic curative care in public clinics and hospitals, the elderly had old age pensions, the dying had death/disability insurance or life insurance).
Imagine also that they had at least a minimum income guarantee, which prevented them from falling into debt; debt is currently exploding among the poor as their incomes collapsed.
The Periodic Labour Force Survey observes that 71% of regular wage/salaried workers in the non-agriculture sector did not have a written contract, and 50% were without social security cover.
The new laws, by simplifying compliance, should create an incentive for workforce formalisation.
About Code on Social Security 2020:
- The code universalizes social security coverage to those working in the unorganised sector, such as migrant workers, gig workers and platform workers.
- For the first time, provisions of social security will also be extended to agricultural workers
- The code also reduces the time limit for receiving gratuity payment from the continuous service of five years to one year for all kinds of employees, including fixed-term employees, contract labour, daily and monthly wage workers.
However, Gaps in the Social Security code:
- India’s Parliament in September 2020 passed a Social Security Code (SS Code 2020).
- Fair enough, but has the Government of India ensured that at least in a year of a nation-wide pandemic, the health Budget for FY 2021-22 is higher than the pathetic just over 1% of GDP that it has been for decades.
- If we leave out the allocation for the COVID-19 vaccine (still mostly unused), then the FY22 health Budget is actually lower.
- The SS Code 2020 merges existing social security laws and attempts to include informal workers within the ambit of social security administration.
- However, an examination of the code reveals that universalisation of social security remains an unfulfilled aspiration.
- The SS Code 2020 amalgamates and rationalises the provisions of eight existing central labour laws.
- Of these acts, employees provident fund, employees state insurance (ESI), maternity benefit, gratuity is entirely for organised sector workers. This has remained so even in the new scheme of things.
- For employees’ state insurance, the existing employee threshold has been withdrawn and now the central government can extend ESI benefits to any organisation irrespective of the number of workers employed therein. However, there are areas of ambiguity and overlapping too.
Hurdles for informal workers:
Registration is a prerequisite for universal coverage.
To avail social security, an informal worker must register herself on the specified online portal to be developed by the central government.
However, is the Code going to provide universal social security to the 91% workers in the informal sector?
- It proposes that both the central and State governments will formulate schemes for unorganised workers.
- The legal framework as proposed in the Code and Rules, implies that the basic onus lies on informal workers registering as beneficiaries.
- Similar provisions are already there in existing social security schemes run by State governments under the Unorganized Workers’ Social Security Act, 2008.
- Still, a large number of informal workers are outside the ambit of any social security even after 13 years.
- The absence of definite and unambiguous provisions in the present code would further complicate achievement of universal registration.
- Also, experience shows that there is an awful lack of awareness among informal workers regarding social security schemes.
- Online registration places a further challenge as most informal workers lack digital literacy and connectivity (already demonstrated by a similar registration requirement for COVID-19 vaccines under CoWIN, the government app).
- Informal workers also find it difficult to furnish all documentary papers required as part of the registration process.
- Most informal workers are footloose casual workers (26% of all workers) and self-employed (46% of all). They move from one place to another in search of livelihoods.
- Furnishing proof of livelihood and income details in the absence of tangible employer-employee relations is very difficult.
- Such requirements deter informal workers from completing the registration and they continue to remain outside the social security ambit.
Inter-State cooperation must to address the unorganised sector:
- Further, as unorganised workers are spread across the length and breadth of India, inter-State arrangement and cooperation becomes imperative.
- The code does not provide for such eventualities. Ideally, the central government should conceptualise a basic structure, which if successful, should be adopted by States after necessary customisation.
- Without such a basic structure, implications of this code would be too varied across States to be administered.
- Providing holistic social security cover for the unorganised workforce in a simple and effective manner is something lost in the Centre-State labyrinth and jurisdictional or institutional overlap.
- The unorganised workforce is all encompassing, minus the minuscule regular workers of organised sectors.
- This identity should be primal and all unorganised workers should have basic social security coverage, irrespective of labour market classifications.
- The code fails to undertake such inclusion in a meaningful way.
Key benefits that needs to be applicable to various sections:
Under the SS Code, the provision of maternity benefit has not been made universal.
Maternity benefit is presently applicable for establishments employing 10 workers or more.
The definition of ‘Establishment’ in the proposed code did not include the unorganised sector.
Hence, women engaged in the unorganised sector would remain outside the purview of maternity benefit.
For informal sector workers, access to employees’ provident fund remains unfulfilled too in the new code.
- The provision of social security could be used to formalise the workforce to a certain extent.
- Employers could have been made to own up to the responsibility of providing social security to their workers.
- The state has a responsibility but the primary responsibility still lies with employers since they are taking advantage of workers’ productivity.
- Financial constraints are there for the state too; but all the code does is to state that it will design schemes for informal workers as and when it deems fit.
- In the end, this code remains a collage of existing pieces of legislation without that interweaving thread of integration. It has promise but cannot meet those expectations.
Revamping labour regulations has been an area of focus for the government.
The objective is to consolidate and simplify the multitude of labour regulations into four labour Codes – the Code on Wages, Social Security, Industrial Relations and Occupational Safety and Health, subsuming 29 existing regulations.
This is a dreadful failure on the part of the state in a time of dire crisis for the nation.
At a time when India chairs a BRICS meeting in Delhi (preparatory to a Summit) that is focused on issues of labour, especially informality, it fails to even recognise that India is ageing without social security, and the demographic dividend of the young workforce that could support the ageing ends in 15 years.