COVER STORY

Social Security Act: The Great Indian Tamasha on Unorganised Workers


J John is Editor, Labour File. Email: jjohnedoor@mac.com . (J John)

The Unorganised Workers Social Security Bill 2007 was debated and passed by the Rajya Sabha in October 2008 and by the Lok Sabha in December 2008. The President gave her assent on 30 December 2008. The Ministry of Labour has also issued rules based on the Act. The Act has been criticised by many as a useless piece of legislation on various grounds, with the most serious condemnations coming from none other than the Chief Justice of India. The criticisms against the Act include that it does not guarantee any justiceable right to social security for workers, contains no provision for the creation of a social security fund, excludes more than 90 per cent of the workers by delimiting eligible unorganised workers to only those living below the poverty line (BPL) and precludes `unemployment and disruption of livelihood` within the possible social security benefits to workers. This critique, though not exhaustive, addresses some of the main features of the Act.

 

Wouter van Ginneken, an ILO expert on social security, in his article, `Extending Social Security: Policies for Developing Countries` in International Labour Review (Vol. 142, No. 3 (2003): 277-94) has defined social security as the `benefits that society provides to individuals and households — through public and collective measures — to guarantee them a minimum standard of living and to protect them against low or declining standards arising out of a number of basic risks and needs`. Social security is a public measure and it provides protection against low and declining standards, arising out of the contingencies in life; these are available to all individuals and households. van Ginneken further points out that for any social security scheme to be relevant and effective, it should have four constituent parts, namely, coverage, benefits, financing and administration. Does the Unorganised Workers` Social Security Act 2008 satisfy these requirements?

 

The Structure of the Act

The Act has six chapters. Chapter 1 includes the scope of coverage and the definitions of terms; Chapter II names the social security schemes and identifies the sources of funding; Chapter III and IV deal with the constitution of national and state Social Security Boards and their powers; Chapter V deals with the registration of unorganised workers and the eligibility for receiving social security benefits; and Chapter VI deals with miscellaneous provisions, including the powers of the central and the state governments to make directions and lay rules. It has two schedules: Schedule I, with the names of the social security schemes for unorganised workers, and Schedule II, with a list of Acts applicable to unorganised workers.

 

Definitions Not Inclusive

The key definition is that of the unorganised worker. The Act defines unorganised worker as a `home-based worker, self employed worker or wage worker in the unorganised sector and includes a worker in the organised sector who is not covered by any of the Acts mentioned in Schedule II to this Act`. This definition presupposes definitions of a number of terms including `home-based worker`, `self-employed worker`, `wage worker` and `unorganised sector`. A home-based worker is defined as `a person engaged in the production of goods and services for an employer in his or her home or other premises of his or her choice other than the workplace of the employer, for remuneration, irrespective of whether or not the employer provides the equipment, materials or other inputs`. The `self-employed` worker has been defined as `any person, who is not employed by an employer, but engages himself or herself in an occupation in the unorganized sector subject to a monthly earning of an amount notified by the Central or State Government from time to time or holds cultivable land subject to such ceiling as may be notified by the State government`. The definition of a `wage worker` is `a person engaged for remuneration in the unorganized sector, directly by an employer or through any contractor, irrespective or place of work, whether exclusively for one employer or one or more employers, whether in cash or in kind, whether as a homebased worker, or as a temporary or casual worker, or as a migrant worker, or workers employed by households including domestic workers, with a monthly wage of an amount as may be notified by the Central Government and State Government, as the case may be`. Notwithstanding the broadness of these definitions, six major deficiencies are worth examining.

 

(a)      Distinction Between the Organised and Unorganised Sectors Legalised

The Act is premised on a clear distinction between `organised` and `unorganised` sectors, despite contrary arguments that such firm distinctions cannot be drawn and that these form a continuum with clear inter-linkages. Contrary to the usual practice of defining unorganised as a residue of the organised, the Act defines organised as a residue of the unorganised. This has been done by defining the unorganised sector as establishments that employ less than 10 workers. This has major implications. First, it legalises a priori an Act so far considered outside the legal framework. Enterprises in the organised sector were defined as those complying with the statutory and administrative requirements of registration and reporting, and the residue of the unorganised, by implication, as outside the legal and administrative framework. A natural correction would have been to extend the applicability of the existing laws to all establishments. Such a move would have made redundant the enactment of a law exclusively for unorganised workers. Second, there are labour laws in India, which do not use an enterprise-based definition and, therefore, are universally applicable to all workers, irrespective of the number of workers in an enterprise. The applicability of such laws is made void by this Act.

 

(b) Social Security Not Defined

The Act does not give any clarity on what the state means by `social security` or any of the benefits it proposes. Chapter II (3(1)) says that the central government shall `formulate and notify from time to time, suitable welfare schemes for unorganised workers on matters relating to a) life and disability cover; (b) health and maternity benefits; (c) old age pensions and (d) any other benefits as may be determined by the Central Government`. This is followed by the statement (3(2)) that `the schemes included in the schedule I of this Act shall be deemed to the welfare schemes under sub-section (1)`. In spite of the word `shall`, there is perceptible tentativeness in the formulation. Social security cannot be reduced to schemes but should be substantively articulated in terms of concrete entitlements from the perspective of rights derived from constitutional rights and principles.

 

(c)       Workers Dependent on Livelihood Systems Excluded

The definitions exclude workers dependent on livelihood systems such as forest workers and fish workers, who cannot be brought within the ambit of home-based workers, self-employed workers and wage workers. For instance, most of the traditional fish workers in India follow a sharing system, in which the catch is shared among the boat owner and the crew. This excludes them from being considered as `workers` because they do not receive wages.

 

(d) Unpaid Women Workers Excluded

In this Act, the unpaid women workers are not covered because they do not fall within the definitions of home-based workers, self-employed workers or wage workers. In all these definitions, wage or monthly earnings are preconditions for being considered as unorganised workers. The essential concern is that the monetary value of women`s work is not measured; but that should not be a reason for denying social security to women.

 

(e) Workers Deprived of Existing Benefits

As mentioned earlier, there are labour laws in India that do not use an enterprise-based definition and, therefore, are universally applicable to all workers, irrespective of the number of workers in an enterprise. By specifying (Section 2(m)) that the category of the unorganised worker `includes a worker in the organised sector who is not covered by any of the Acts mentioned in Schedule II to the Act`, it effectively limits the applicability of the Acts referred to in the schedule, and consequently takes away certain rights all workers enjoy de jure. The Acts mentioned in Schedule II are The Workmen`s Compensation Act 1923; The Industrial Disputes Act 1947; The Employees` State Insurance Act 1948; The Employees` Provident Fund and Miscellaneous Provisions Act 1952; The Maternity Benefit Act 1961 and The Payment of Gratuity Act 1972. For instance, the benefits under The Workman`s Compensation Act and The Maternity Benefit Act are now denied to those workers in establishments that employ less than 10 workers.

(f) Cross-border and Internal Migrant Workers Excluded

The Act does not cover unorganised cross-border temporary migrant workers, who have gone to other countries to be engaged in dirty, difficult and dangerous jobs such as construction, cleaning, domestic work, paramedical work and such other occupations in manufacture and service sectors. When on work, they contribute to the national income by their remittances. These workers are a vulnerable group exposed to violently offensive situations and require social security protection. The definition of unorganised workers needs to include these cross-border migrant workers, under a sub-clause definition. Consequently, specific social security protection for cross-border migrant workers, covering all adverse situations that they face abroad, and the requirements of their dependent family members in their place of origin have not been addressed.

 

In the same way, the definition does not address the specificity of vulnerable internal migrant workers. The words, `migrant worker`, appear only in the definition of wage workers although migrant workers are engaged in various kinds of occupations, in which they experience vulnerabilities different from that of local workers.

 

No Justiciable Social Security to Unorganised Workers

A justiciable right is one in which the aggrieved individual can seek remedy in a court of law. To make a right justiciable, it should be defined and be available for the individual for a sufficiently long period of time. Although the stated objective of the Act is to provide social security and welfare to the unorganised workers, the Act does not confer any defined right to social security for them. In the Act, social security schemes are not included as part of the body of the Act and are given in a schedule. This essentially means that schemes can be changed at any point of time by a notification, and not after discussion in the Parliament, thereby denying the workers the benefit of consistency and justiciability. It is a well laid out legal principle that the government should not arrogate to itself powers to change provisions of an Act unilaterally. The ten schemes listed in Schedule I of the Act that have been given the status of social security schemes are:

 

1.       Indira Gandhi National Old Age Pension Scheme

2.       National Family Benefit Scheme

3.       Janani Suraksha Yojana

4.       Handloom Weavers` Comprehensive Welfare Scheme

5.       Handicraft Artisans` Comprehensive Welfare Scheme

6.       Pension to Master Crafts Persons

7.       National Scheme for Welfare of Fishermen and Training and Extension

8.       Janshree Bima Yojana

9.       Aam Admi Bima Yojana

10.     Rashtriya Swasthya Bima Yojana

 

All these existing schemes have a history of arbitrary changes by the government through administrative notifications. Many of these schemes have a short lifespan. The content of the schemes should not be changed without the approval of the Parliament. The government should have abided by the advice of the Parliamentary Standing Committee on Labour, which said, “In the garb of overcoming operational difficulties on a day-to-day basis, the government cannot be allowed to make substantial changes, including the addition or deletion of the schemes from the Bill itself.”

 

Privatisation of Insurance Schemes

Social security is public provisioning for contingencies in life and, therefore, should be managed by a public agency. However, many of the schemes are operated by private insurance agencies. Mahatma Gandhi Bunkar Yojana is operated by ICICI Lombard. The Act should have categorically stated that no social security scheme will be private insurance-based. The Employees State Insurance Corporation offers health coverage to workers. The government should consider extending the ESIC schemes to all workers rather than inviting private sector firms to manage health schemes for unorganised workers, in which the contribution by the government will be a transfer of public funds to private agencies. There is evidence that workers are not able to claim insurance from these private providers.

 

Social Security not Universal and, therefore, Constitutionally Invalid

There is an inherent structural contradiction in the Act. Chapter V Section 10 (1) that deals with the registration of workers says, “…every unorganised worker shall be eligible for registration subject to the following conditions, namely, (a) he or she shall have completed fourteen years of age; and (b) a self-declaration by him or her confirming that he or she is an unorganised worker.” However, most of the schemes are available only for BPL workers. A person earning more than Rs 12 per day in a village is not considered BPL as per the current BPL norms. This leaves a large proportion of the deserving poor outside the safety net. The Central Vigilance Commissioner (CVC) has, therefore, recommended enhancing the number of BPL families. By this restrictive clause in the schemes, more than 90 per cent of the unorganised workers, the contingencies of whose lives have pushed them into poverty and increased vulnerabilities, are, in effect, denied the benefits of the schemes mentioned in the schedule of the Act.

 

In the schemes given in the Schedule I of the Act, unorganised workers have been generally excluded from enjoying the benefits of the schemes, and, therefore, from the benefits of the Act. This generalised exclusion is constitutionally invalid. It is in violation of Article 14 of the Constitution, which does not permit generalised discrimination.

 

Livelihood Rights Not Part of Social Security Benefit

A consequence of the exclusion of workers dependent on livelihood systems from the ambit of the definition of unorganised workers is that it is not conspicuous in mentioning livelihood rights as part of the social security rights in Section 3(1). For dalits, adivasis, marginal farmers, fishers and forest workers, whose employment is organically linked to livelihood systems, any natural or manmade disruption could force them into situations of poverty, hunger and indebtedness. Such eventualities have not been considered admissible for social security.

 

Inadequacy of Benefits

The prescribed amount in the pension schemes provided under this Act is ridiculously low. The benefits and protections of healthcare, maternity leave and pension should be need-based and not minimum. Medical care cannot be limited by a monetary ceiling. In cases where the pension is not defined, the criteria for assessing the pension amount should be 50 per cent of the last wage earned by the employee.

 

Policies Not Inclusive

The Act should pay special attention to those individuals and groups, who have traditionally faced difficulties in exercising rights. Additional measures are necessary for adivasis to protect their right to water, land and forest, and for dalit workers to ensure their right to land and against discrimination.

 

No Nodal Ministry or Administrative Mechanism for Implementation

Though the Act has been introduced by the Ministry of Labour, the social security schemes mentioned in the schedule are managed by various ministries (Table 1). Moreover, Chapter IV Section (8) gives the record-keeping functions of the provision of social security for unorganised workers to the district administration, the panchayat and to the local urban bodies. Though the Unorganised Workers` Social Security Act has been introduced by the Ministry of Labour, no role has been given to the labour administration to implement the Act. For effective implementation of any Act, a nodal ministry is essential, to bring coherence and consistency to the delivery of social security rights and a well-defined administrative mechanism. The national and the state Social Security Boards are not vested with enough powers to administer social security schemes. These raise serious questions on the commitment of the government about the delivery of social security benefits to the unorganised workers.

 

Table 1: The Schemes and the Responsible Ministries

 

Sl. No.

Name of the Scheme

Responsible Ministry

1

Indira Gandhi National Old Age Pension Scheme

Ministry of Rural Development

2

National Family Benefit Scheme

Ministry of Rural Development

3

Janani Suraksha Yojana

Ministry of Health and Family Welfare

4

Handloom Weaver’s comprehensive Welfare Scheme

Development Commissioner, Handlooms, Ministry of Textiles

5

Handicraft Artisan’s Comprehensive Welfare Scheme

Development Commissioner, Handlooms, Ministry of Textiles

6

Scheme for pension to Master Crafts persons

Development Commissioner, Handlooms, Ministry of Textiles

7

National Scheme for Welfare of Fishermen and Training and Extension

State Governments

8

Janshree Bima Yojana

Life Insurance Corporation of India

9

Aaam Admi Bima Yojana

Life Insurance Corporation of India

10

Rashtriya Swasthya Bima Yojana

Insurance Company

 

Trade Unions Have No Role

The government seems to presume that the unorganised workers are not organised and they are incapable of being represented by a trade union or any other organisation. The National Social Security Board has provision only to have `seven members representing unorganized sector workers` (Section 5(2)(c)(i)) and the State Social Security Boards have `seven members representing unorganized workers` (Section 6(2)(c)(i). (Note the difference: at the national level, the representatives are from the unorganised sector and for the states, they are from the unorganised workers — a proof of the careless drafting of the Act.) Importantly, there is no role for trade unions or any other organisations of the unorganised workers. To this extent, the Act, deliberately disfavours unionisation of unorganised workers and leaves the room open for the arbitrary selections of unorganised workers to the national and state Social Security Boards.

 

No Social Security Fund

Of great import is the fact that the 2008 Act does not provide for the creation of a Social Security Fund. This is notwithstanding the strong recommendation by the Parliamentary Standing Committee on Labour for the creation of a Social Security Fund. The Parliamentary Standing Committee has made the following observations in this regard:

 

“The Committee feel that social security schemes cannot just work without any statutory backing and assured resource allocation. It would not be proper to tailor the schemes or reduce their number on the consideration of funds. Fund flow system for the schemes has been kept virtually undefined and wide open thereby allowing total flexibility to the Government in the matter of deciding and operationalising the schemes as per its convenience. Thus, the Committee are inclined to infer that an ad hoc approach has been adopted on such an important aspect of the Bill. This will only make the schemes dysfunctional. We should not be oblivious of the fact that the contribution of the workers of unorganised sector in the GDP of the country, according to the Central Statistical Organisation is more than 60%. Hence, it becomes our bounden duty, both morally and legally, to ensure that minimum social security benefits are provided to the unorganised workers. The Committee, therefore, strongly recommend that a proper, transparent and institutional mechanism devising clear and unambiguous methodology for generating resources be laid down paving the way for creation of a National Social Security and Welfare Fund. The Committee are of the opinion that creation of National Social Security and Welfare Fund will ensure permanency, continuity and sustainability of social security benefits. The method to be so adopted for mobilizing resources may vary from earmarking of a definite percentage of GDP to levying of cess on various forms of taxes, grants and loans from the Union and State Governments, monthly collection of contributions from employers and beneficiaries on the lines of ESIC and EPFO, making provisions for cross subsidy of certain percentage of benefits from national, financial and developmental institutions or from any of such companies which have been directly or indirectly benefiting from the unorganised workers, etc. All contributions made to the National Social Security and Welfare Fund should be exempted from the payment of income tax or any other tax under the different tax laws. The fund so collected will be utilized to meet the expenditure on the implementation of various social security schemes for welfare of unorganized workers and on all such matters related to the enhancement of the scope of various schemes meant for such workers.”

 

The absence of a financial memorandum to the 2008 Act as well as the non-allocation of funds for social security for unorganised workers in 2008-09 and 2009-10 budgets casts doubts on the genuineness of government`s intentions in delivering social security rights to the unorganised workers in India. The Act should have provided for the creation of a Social Security Fund, and a financial memorandum for budgetary allocation for the Fund.

 

Absence of Grievance Redressal Machinery

Despite a strong recommendation from the Parliamentary Standing Committee on Labour, the Act does not provide for a grievance redressal mechanism. The fairness and effectiveness of the implementation of the Act greatly depends on the availability of a functional institution of grievance redressal mechanism, through which workers have recourse to a method for voicing their complaints about violations.

 

Conclusion

The Unorganised Workers` Social Security Act 2008 has inherent structural gaps and inadequacies that make the Act totally ineffective in providing social security to the unorganised workers. Worse, it is discriminatory and takes away rights emanating from existing legislation. The government should either repeal the Act or modify it thoroughly to ensure the right to social security of the unorganised workers in India. The single most important provision in the Act is the one for the registration of unorganised workers (Chapter V, Section 10). Every unorganised worker, who has completed 14 years of age, is eligible for registration. He only needs to make a self-declaration that he or she is an unorganised worker. It further mandates the district administration to register all such workers and issue an identity card, which shall be a smart card with a unique identity number and which shall be portable. This opens up a window of opportunity for the unorganised workers. However, the basic question stands of how this identity will translate into defined, justiciable and adequate social security rights for the unorganised workers.

Author Name: J John
Title of the Article: Social Security Act: The Great Indian Tamasha on Unorganised Workers
Name of the Journal: Labour File
Volume & Issue: 6 , 6
Year of Publication: 2008
Month of Publication: November - December
Page numbers in Printed version: Labour File, Vol.6-No.6, Right to Information and Labour (Cover Story - Social Security Act: The Great Indian Tamasha on Unorganised Workers - pp 5 - 11)
Weblink : https://labourfile.com:443/section-detail.php?aid=530

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