Social Security for Unorganised Sector Workers

4 April 2017

The National Commission for Enterprises in the Unorganised Sector was set up by the UPA Government under the Chairmanship of Arjun Sengupta in September 2004. The Commission prepared two draft bills: (1) Unorganised Sector Workers Social Security Bill, 2005, and (2) Unorganised Sector Workers (conditions of work and livelihood promotion) Bill, 2005. According to the draft bill, it will cover all workers in the unorganised sector with a monthly income of Rs. 5,000 and below.

This category includes self-employed workers (including marginal and small farmers), wage workers including agricultural labourers, and home-based workers. It also includes informal workers under the organised sector. It is estimated that around 30 crore workers are eligible under this scheme. The Bill indicates that there will be a national minimum social security for all eligible workers covering four things: (a) health insurance; (b) maternity benefits; (c) life insurance; and (d) old age pension. Every unorganised sector worker is eligible for registration.

The registered worker will get a unique social security card. The existing welfare programmes will continue as before. A National Social Security Fund will be created. The scheme will be financed from the contributions at Re. 1 a day by workers, employers (wherever identified), and the Government (that is, Rs. 3 per worker a day or Rs. 1,095 a year). The Government contribution will be divided between Central Government and State Government in the ratio of 3:1 respectively (75 paise per worker by the Centre and 25 paise per worker by the State Governments).

Similar to the Employment Guarantee Scheme, the National Commission estimated the costs of the minimum social security scheme. If all the 30 crore workers are covered, the contributions would work out to Rs. 32,850 crore. The share of the Central Government will be Rs. 17,548 crore and that of the State Governments Rs. 5,010 crore. This adds up to a total of Rs. 22,558 crore to be spent by Central and State Governments, equal to 0. 8 per cent of the Gross Domestic Product in 2004-05. If we include administrative and other expenses, the government contribution may not exceed one per cent of GDP.

Similar to the national EGS, full coverage is expected to be reached in five years. If six crore workers are covered in the first year the cost will be Rs. 4,512 crore and Rs. 22,558 crore from the fifth year. The Government can contribute to the fund in the form of grants or through tax or cess. The second Bill, which deals with conditions of work and livelihood promotion, addresses the issues relating to providing a basic minimum standard on hours of work, payment of minimum wages, bonded labour, and child labour.

The Bill also recognises some minimum entitlements of the workers such as the right to organise, non-discrimination in the payment of wages and conditions of work, safety at workplace, and absence of sexual harassment. The costs of providing health insurance, maternity benefits, life insurance, and old age pension for the 30 crore workers are not clear from the Bill. The Government contribution in the first year (Rs. 4,512 crore) is not large but in the fifth year it is closer to one per cent of GDP. As the draft says, tax or cess is one option for raising resources for the Government.

The insistence on State Governments’ contributions may create problems for the scheme as their finances are in bad shape. the Bill seems to be following the targeting approach for identifying beneficiaries. For example, the Bill says that it would cover all workers in the unorganised sector with a monthly income of Rs. 5,000 and below. This may again lead to targeting errors and corruption. the implementation machinery still looks bureaucratic although decentralisation is mentioned. It is better to involve panchayati raj institutions more.

Fourthly, legislation alone is not enough. For example, health insurance for all the workers will not help if there are no doctors and health infrastructure, particularly in rural areas. Hence, spending has to increase at the grassroots level for better delivery systems. Fifthly, the working of the present welfare boards for workers must be examined. Kerala’s experience shows that there are problems of sustainability, high costs, meagre benefits, etc. Lessons should be learnt from these experiences. Sixthly, the second Bill on conditions of workers is equally important.

Some regulatory institutions are needed without ending up with inspector raj. Minimum wages have to be fixed keeping in view the increasing needs of the poor. The laws should be effectively implemented. Some estimates show that even if the number of days of employment are increased, the existing wages may not bring many workers above the poverty line. This is the main reason why we have so many “working poor” in the country. The poor are working but at low wages. The main issue is how to improve the wage rates for the unorganised workers.

DOMESTIC WORKERS Live-in workers are often treated as 24-hour slaves. Many employers do not let them even step out of the house. Part-time domestic workers are in a slightly better position. They are not on duty 24 hours a day, have access to their own families and friends, and can quit work when employers become abusive. However, there is a growing demand for live-in workers who can double up as `ayahs’ or nurse-cum-companions for the elderly. To meet this demand, young girls and boys are often trafficked from the poorer districts of many States.

From Bokaro district (Jharkhand) alone, three lakh girls have migrated or were trafficked, 40 per cent of whom were below 14. Their average annual earnings would be Rs. 200 crores, of which they take home only half; the other half goes to the agencies. A separate law is needed to control trafficking, besides regulating working conditions. Domestic workers are especially disadvantaged since they are not covered by laws such as the Industrial Disputes Act, the Equal Remuneration Act, or even the Minimum Wages Act. The Central government has been shying away from enacting any specific legislation for this group.

A Domestic Workers (conditions of service) Bill was drafted as early as 1959 but was never enacted. The House Workers (conditions of service) Bill, 1989, was not enacted either. In 2003, the Human Rights Law Network filed a petition in the Supreme Court on behalf of the NDWM, pointing out that legislation to protect domestic workers had been stalled time and again. According to lawyer Vipin Mathew Benjamin, the government had told the court that domestic workers would be covered by the forthcoming Unorganised Sector Workers’ Bill, 2004. The Supreme Court passed an order saying that all suggestions and demands could be put before a tripartite committee to deliberate on the draft of the Bill. Consultations with all stakeholders were to be held at the Central and State levels. We don’t have a problem if this bill is comprehensive,” he said. According to Bhatnagar, who is also coordinating the National Campaign Committee for Unorganised Sector Workers, there are no fewer than five versions of the draft Bill. The one put up by the Union Labour Ministry has come in for heavy criticism. In a letter to the Prime Minister, Justice V. R.

Krishna Iyer, former Judge of the Supreme Court, called it a `a half-baked law’ and said that rushing it through Parliament would be `a gross betrayal’. Meanwhile, domestic workers are organising themselves. As a result, the Domestic Workers (Protection of Rights) Bill, 2003, has been tabled in the Maharashtra Assembly, while Karnataka has been persuaded to extend the Minimum Wages Act to domestic work. It is high time the government amended the Child Labour (Prohibition and Regulation) Act, 1986, which is applicable only to 64 professions (13 occupations and 51 processes) that are deemed hazardous.

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