The central government is readying the blueprint for a social security scheme that is specifically aimed as a safety net for workers in the informal labour sector. The draft social security code, drafted by the Ministry of Labour & Employment, aims for universal coverage that includes those who are outside the ambit of the EPFO and the ESIC. The scheme envisages mandatory pension, insurance against disability and death, and maternity coverage, alongside optional medical and unemployment coverage.
Consultations are on with states to bring them on board for part-financing the scheme, which could be launched later this year around the time of key state elections and ahead of the upcoming 2019 general polls.
“At the present moment, in both EPFO and ESIC, the employer contributes and equal amount is contributed by the employee also. If you are covering the entire population, there will be one segment which will not be able to contribute at all. Now, for the segment below the poverty line, the government plans to foot the entire bill, in which case it has to be shared between the states and the Centre. So we need to bring the states on board,” a senior labour ministry official said.
The proposal is being circulated among various ministries and the states. On the funding for the scheme, the official indicated that while work is underway to peg an upfront cost for the scheme, the funding for the rollout of the scheme could subsume the allocation for a number of existing schemes.
“We are working on the funding. Parallely, a lot of schemes are also being implemented now. These are funds for social security which are being deployed not only by the Centre but by the states also. Like if the central government is giving Rs 300 as old age pension, states are adding to it and giving a lot of money. Some states have Rs 1000 as minimum old age pension. Lot of other schemes are being implemented such as insurance schemes, disability benefits, maternity benefits,” said the official.
“So many things are being implemented by different ministries, by different states. A pool of money is available already but we need to work out how much extra is required. Whether it is too big, in which case whether the government will be able to foot that bill, whether it can be managed within the available resources. So these are things which require lot of work,” said the official.
The social security code “will take more time” as it’s a “pathbreaking initiative” and consensus among stakeholders is key, the official said. After coming to power in 2014, the NDA government had announced consolidation of 44 labour laws into four codes — industrial relations, wages, social security, and occupational safety, health and working conditions.
Amid opposition from trade unions, the government so far has only been able to introduce the Code on Wages Bill in Lok Sabha last August. The Code on Wages, which proposes a national minimum wage, amalgamates provisions of the four labour laws of The Minimum Wages Act, 1948; The Payment of Wages Act, 1936; The Payment of Bonus Act, 1965, and The Equal Remuneration Act, 1976.
The draft code on social security has been placed on the ministry’s website for public comments. The government is in the process of finalisation of Code on Industrial Relations Bill, which combines The Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946, and the Industrial Disputes Act, 1947. Labour unions have, however, objected the proposed amendment in the bill to allow units with up to 300 workers to retrench, lay off or close down without the permission of the government as against the present limit of 100 workers.
According to the survey conducted by the National Sample Survey Organization (NSSO) in 2011-12, about 83 per cent or 39.14 crore persons out of total 47.41 crore employed persons were employed in unorganised sector. The organised sector is already covered through social security legislations like the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and the Employees State Insurance Act, 1948, while the labour law coverage for unorganised sector is lacking in the country.