The recent news reports in the media reveal that ahead of the upcoming general elections in April-May, the Union government is contemplating rolling out social security benefits such as minimum wage, pension, health insurance, maternity benefits, and provident funds for millions of domestic workers. Such a move appears to signify a potential step towards the realisation of universal social security benefits to all employees and workers in every occupation (including gig workers and platform workers) whether they are working in the organised (formal) sector or unorganised (informal) sector, as outlined in the Social Security (SS) Code, 2020. However, India has to go a long way to accomplish this laudable objective of fulfilling universal social security, compared to many of its counterparts.
Very recently in December last year, the government announced that with the enrollment of over 7.58 million (75.8 lakh) employees across the country, the Aatmanirbhar Bharat Rozgar Yojana (ABRY), the Union government’s flagship employment incentive scheme, has exceeded its initial target to benefit 7.18 million (71.8 lakh) employees showcasing its success in fostering job creation and recovery during the Covid pandemic. This scheme being implemented through the Employees Provident Fund Organisation (EPFO), reduces the financial burden of the employers of various industries and encourages them to hire more workers. Under ABRY, the Government of India is crediting for a period of two years both the employee’s share (12 per cent of wages) and employer’s share (12 per cent of wages) of contribution payable or only the employee’s share depending on employment strength of the EPFO registered establishments.
Under ABRY, benefits are provided to every establishment registered with EPFO and their new employees (earning wage less than Rs.15,000 per month) in case the establishments take new employees on or after October 1, 2020 and up to June 30, 2021 or those who lost jobs between March and September 2020. Now, the scope of the scheme has been extended to March 31, 2022. The beneficiaries registered up to March 31, 2022 will continue to receive the benefits for two years from the date of registration. Under ABRY, the Union government disbursed over Rs.10,000 crore to more than 60 lakh beneficiaries through 1.52 lakh establishments. Notably, the scheme provided benefits in 194 different sectors such as agriculture farms, automobile services, canteens, general insurance, marble mines, and hospitals among others. However, a matter of fact is that even the much-publicised schemes such as ABRY could not reach out to even 2 per cent of India’s workforce.
India’s Neglect of Informal Workers Lingers
The exclusion of a large majority of the Indian workforce composed of India’s vast informal sector poses a serious question mark not only on the productivity of the entire Indian economy, but also in terms of mitigation of poverty in the country. The International Labour Organisation (ILO) defines the informal worker as one who has no access to social security. In India, a whopping 91 per cent of the workforce of 475 million (47.5 crore) is in informal employment. Globally, 58 per cent of those employed were in informal employment in 2022. Countries in many parts of the world have achieved universal coverage, such as Bolivia, Mongolia, Namibia and South Africa. Developing countries spend only 7 per cent of Gross Domestic Product (GDP) on social protection whereas OECD (Organization for Economic Cooperation and Development) countries spend almost three times that.
Broadly, social security consists of two categories of support to workers: Social assistance (in kind or cash) to those who are unable to work or unable to earn a basic income such as the old, disabled, and poor widows; and secondly, Social insurance to those able to work but who have little access to safety net that is normally available in the organised sector such as old age pension, maternity benefit, death and disability benefit including health coverage.
Social Security Code 2020, an Eye-wash
The SS Code 2020 which amalgamated eight existing social security legislations disappointed the informal workers as the government policy continues to show its bias towards formal enterprises or neglect of informal ones! The SS Code 2020 has been severely criticised by the welfare economists on the following grounds:
The current Code is silent about those informal workers who shift from one occupation to another in search of their livelihood. Construction workers always move from site to site and even move from one State to another. Wherefrom is he a beneficiary of the Construction Workers Fund? The Code depends on the size of the enterprise in terms of the number of workers. India should have a vision to ensure universal coverage of social insurance, regardless of which sector they work in, agriculture or non-agriculture, manufacturing or services. Also, the Code is silent about the contract workers
supplied by labour contractors that form a significant chunk of the informal workforce. The Code needs to capture such invisible, undocumented workers. The sad part is both the Unorganised Workers Social Security Act 2008 and the National Pension System, 2004 failed to provide any social security for unorganised workers. In the current Code too, India has missed out a golden opportunity to shield the massive sections of the underprivileged population from social insecurity!
Another lacuna of the Code is that it is applicable only to social insurance, but not to social assistance. Primary and basic curative health services are a public good and fundamental right of citizens, and should be provided by the state mainly from general tax revenues. This is in tune with the goals of the National Health Policy 2017. The registration of all the establishments (estimated to be over 65 million (6.5 crore) out of which two-thirds are in the unorganised sector) preferably be with a single organisation with the least transaction cost is another challenge.
The Design and Financing
Social security for all 466 million (46.6 crore) workers in India should become mandatory ultimately. This is an achievable objective fiscally and administratively. Globally, the countries follow one of three methods to fund a national social insurance system: contributions by employer and employee; non-contributory by either, where premium amounts are to be paid by the government from tax revenues; and a combination of the two methods. Given the wide disparities among different types of workers (both under formal and informal categories), it is possible broadly to design a social insurance system for three categories of worker-beneficiaries: One, non-contributory for the poorest who fall below the poverty line; two, partial contribution by the non-poor workers and also non-poor self-employed (employers); and for the formal workers, contributions by the employer and the employee under the EPFO.
Economists (e.g. Santosh Mehrotra and Jajati Keshari Parida) estimated that the total cost of covering the poorest 20 per cent of the population comes to Rs. 1,37,737 billion (or Rs. 1.37 trillion) in 2019-20. This would only be a small fraction amounting to just 0.69 per cent of GDP. As this will be equally borne by the State governments, the cost to all the State governments together will be barely 0.35 per cent of GDP. Though the State governments in India spend about Rs. 1.50 lakh crore every year together, as per an estimate, on social security and welfare, such expenditures are all on citizen-centric schemes. Therefore, this is
high time for India to formulate comprehensive legislation intended to provide universal social security to the workforce in the informal sector, in particular.
India’s Elderly Population will double by 2050
According to the United Nations Population Fund, India’s elderly population will double and overtake the number of children by 2050. The number of people aged 60 and above will increase from 149 million (14.9 crore) in 2022 to 347 million (34.7 crore) in 2050. That means India will become an aging nation in the next 25 years, when its phase of demographic dividend, characterised by a lesser proportion of economically dependent population, will be over. Over 90 per cent of the present-day workforce in India does not have any social security today. When such a vast population will become the aged without any support of social security to take care of their economic and health requirements, it would imply risking the larger part of India’s population skidding into further poverty. Unless the governments and the political leadership of the country recognise such an important responsibility of establishment of architecture of social security needs of the country, India emerging as a ‘Viksit Bharat’ (developed nation) without economic inequalities by 2047 during the so-called Amrit Kal will remain a mere day-dream! We need to invest in social security for development to occur and not wait for development to put it in place.
