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Unorganised Sector Workers' Social Security Bill, 2005

The National Commission for Enterprises in the Unorganised Sector has recently drafted the Unorganised Sector Workers' Social Security Bill, 2005 proposing a universal coverage for the unorganised workers, which is a welcome step. There are, however, two problems with the bill. Firstly, it has not paid attention to the heterogeneous character of the unorganised sector. Secondly, by clubbing all sub-sectors of the unorganised sector together, the bill has discouraged the present struggle for social security carried out by trade unions and other organisations of unorganised workers, frequently supported by state governme

Commentary

Unorganised Sector Workers’Social Security Bill, 2005

Let Us Not Go Backwards!

The National Commission for Enterprises in the Unorganised Sector has recently drafted the Unorganised Sector Workers’ Social Security Bill, 2005 proposing a universal coverage for the unorganised workers, which is a welcome step. There are, however, two problems with the bill. Firstly, it has not paid attention to the heterogeneous character of the unorganised sector. Secondly, by clubbing all sub-sectors of the unorganised sector together, the bill has discouraged the present struggle for social security carried out by trade unions and other organisations of unorganised workers, frequently supported by state governments.

INDIRA HIRWAY

I
n order to fulfil its firm commitment to the “welfare and well-being of workers, particularly those in the unorganised sector” as laid down in the common minimum programme, the government in India has taken several radical steps in recent years. The passing of the National Rural Employment Guarantee Act and the Right to Information Act are important among them. The government is in the process of taking a third radical step, i e, passing a social security bill that has been drafted for the unorganised workers. However, this third step may not be as radical as it looks. This brief paper argues that though the objectives of this bill are valid, it may turn out to be slightly backward looking in terms of providing social security to unorganised workers.

The draft of the bill has come from the National Commission for Enterprises in the Unorganised Sector, set up in September 2004 “to examine the problems of the unorganised sector/informal sector and suggest measures to overcome them”. As one of the terms of reference of the commission is to review the social security system available for labour in the informal sector and to make recommendations for expanding its coverage, the commission has recently drafted the Unorganised Sector Workers’ Social Security Bill, 2005 and the Unorganised Sector Workers’ (Conditions of Work and Livelihood Promotion) Bill, 2005. These bills have been formulated after examining the Unorganised Sector Workers’ Bill, 2004, prepared by the ministry of labour and employment, government of India and the Draft of Unorganised Sector Workers’ Social Security Bill prepared by the National Advisory Council. Both the bills are now widely disseminated and discussed in the country. As pointed out above, the Unorganised Sector Workers’ Social Security Bill is likely to have an adverse impact on the social security movement in the country.

Main Features of the Bill

The bill covers the entire country and all workers in the unorganised sector with the monthly income of Rs 5,000 and below. It covers self-employed workers, including small and marginal farmers, wage workers and home-based workers, as well as informal workers in the organised sectors without any social security cover. The number of workers eligible for the benefits is estimated around 300 million [Press Note, National Commission 2005].

The social security package for the workers will comprise of a national minimum social security cover comprising of (a) old age pension for workers above the age of 60 years, (b) health insurance for self, spouse and children below the age of 18 years, (c) maternity benefits for women workers or spouse of men workers and (d) insurance to cover death and disability arising out of accidents. The act will require workers to register themselves to attain the benefits.

The bill does not seek to replace the social security schemes, which have been introduced for selected groups in a number of states. These schemes will continue as before. The bill also states that the central government or any state government may frame additional social security schemes for unorganised workers in the areas of provident fund, housing, skill upgradation, education, funeral assistance, etc, if the required funds are available.

The central government will create a National Social Security Fund, from the contribution of grants and loans, contribution from workers, employers and the state government, any tax or cess that the central government may decide to impose, contributions from national financial/ development institutions and from voluntary contributions of individuals and institutions. The contributions from the worker will be Re 1 per day (central government will make this payment for those below the poverty line), from the employer it will be Re 1 per worker per day (this contribution will be made by the central government if the employer is not identifiable) and from the government it will Re 1 per worker per day (Re 0.75 from the central government and Re 0.25 from the concerned state government).

The bill has suggested an elaborate institutional set up for the purpose of the its implementation. At the central level, there will be national social security board, supported by a general council and an executive council. There will be a secretariat with adequate professional and other staff to help the national board. At the state level there will be a state social security board, which will be supported by a state level general council and a state level executive council. There will also be a secretariat to help the state board. There will be a district committee for the registration of works and implementation, supported by workers facilitation centres responsible for disseminating information

Economic and Political Weekly February 4, 2006 and implementation of the act. The delivery of social security to workers will be done either through workers’ organisations or directly through any other organisations (like panchayat bodies, selfhelp groups, trade unions, etc) that the concerned state boards decide. The workers facilitation centres will provide all the required support to the state boards in the implementation of the act, when passed by the Parliament.

Every unorganised sector worker above 18 years of age will be eligible for registration through self-declaration for registration. Each worker will get a unique social security number and an identity card which can be used any where in the country. In other words, the migrant workers will be entitled to the social security benefits even when they migrate to distant places.

In short, the bill has worked out the details of the benefits as well as the mechanism for the purpose of the implementation of the bill (act).

There are, however, two problems with the bill: First, it has not paid attention to the heterogeneous character of the unorganised sector, and second, by clubbing all sub-sectors of the unorganised sector together, the bill has discouraged the present struggle for social security carried out by trade unions and other organisations of unorganised workers, frequently supported by state governments.

Heterogeneous Social SecurityNeeds

The unorganised workers are a highly heterogeneous group of workers. They include workers employed in a wide range of economic activities, from street vendors and casual workers in a tea-shop to bidi workers, brick kiln workers, salt pan workers and sub-contracted and temporary workers of factories. The different economic activities in this sector are at different levels in terms of technology, productivity, wages and profits. The affordability and the paying capacity of employers as well as the needs of workers for social security will therefore be different in different activities. A uniform package will not be valid for the different categories of workers.

Again, the specific needs for social security of these workers will differ widely. For example, social security needs of construction workers living on the pavements of a large city will be different from the needs of home-based factory workers or of temporary workers of the organised sector. A critical security need of (migrant) construction workers or of migrant salt pan workers living in open fields will be shelter, while the first priority of home-based workers will be health insurance and life insurance. Also, children’s education will be a high priority of migrant parents, while it may not be so for non-migrant workers. The specific minimum social security package needed by each of the sub-sectors is likely to be different, as their priorities are likely to be different. Though a minimum package of social security will be desirable for the workers at the bottom layer of income and wages, it will help if attention is paid to the specific needs of the workers of different categories.

It needs to be noted that over the years, the unorganised workers in some of the sub-sectors have made considerable achievements in terms of providing social security to their workers, thanks to the trade unions of these workers, NGO initiatives and the initiatives taken by some progressive state governments. Several state governments have set up welfare boards, welfare funds or tripartite boards, which have designed much higher levels of social security than the package mentioned in the bill. Several groups of workers like mathadi workers, bidi workers, dock workers, construction workers, agriculture workers, dolomite workers, etc, in some states are entitled to the benefits of these social security packages. Again, a few state governments have passed acts that intend to ensure larger social security packages than the one designed in the bill by the National Commission.

There is a growing perception in the country at present to extend social protection to excluded groups through various strategies and various micro social insurance schemes. Several civil society organisations, NGOs, micro-finance institutions, trade unions as well as state governments have taken initiatives in this area. Some of the major state level initiatives are social security scheme for rickshaw pullers in Andra Pradesh, head load workers’ insurance scheme in Karnataka, agricultural workers’ life insurance scheme in Gujarat, mathadi, (head load) workers’ social security scheme in Maharashtra, etc. In addition, there are welfare boards set up for some sectors in Gujarat, Kerala (more than 20), Maharashtra, Madhya Pradesh, etc. Several NGO initiatives like insurance schemes by SEWA (Gujarat), MUSS (Satara district of Maharashtra), Al-Khair Cooperatives (Bihar), SSA (Bangalore) and many others. All these schemes address specific needs of the workers located in different sectors in different states. Their social security packages differ from each other, as they try to meet the specific needs and priorities of different categories of unorganised workers.

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Economic and Political Weekly February 4, 2006

The draft bill has clearly laid down that the existing institutions like welfare boards and tripartite boards as well as the existing social security schemes will continue even after the bill is passed. However, the provisions of the bill will certainly prevent new sectors and new industries from going for a better or suitable social security package. On the one hand, employers will avoid joining new social security schemes, while on the other hand the state government will be encouraged to put a stop to the present trend of designing better social security schemes for the new sectors. The minimum package of social security will encourage employers to push their workers to the minimum package. The bill will also discourage state governments from designing specific schemes for different categories of unorganised workers. The trade unions, other organisations of workers and NGOs will find it increasingly difficult to demand specific social security packages for new sectors after the bill is enacted. In short, the bill, if passed, may result in a setback to the movement of workers for better social security in the country.

The bill covers non-permanent workers and subcontracted workers of organised factories and production units under the purview of the minimum package of social security. This is indeed very dangerous as subcontracted workers need to be treated as a part of the workers of the respective factories or production units. For example, sugar cane cutters who produce raw material and feed it to factories need to be considered as a part of the factory workers, as they work exclusively for their factories and participate in the production process of manufacturing sugar. Legal fights are going on right now in several cases in Gujarat for a reasonably comparable level of benefits for such workers. Similarly, temporary workers of organised sector also deserve social security that is comparable to the package received by permanent workers. However, the bill will include them in its purview if the workers earn less than Rs 5,000 per month! In short, these workers will not be entitled to fair social security benefits, comparable to their counterparts in the organised sector. Such non-permanent or contract workers need not be covered under the proposed act.

In short, a minimum level of social security package for all the categories of unorganised workers is likely to discourage employers and state governments from expanding the coverage of suitable social security measures for the different categories of unorganised workers. Though we fully agree with the need for at least a minimum package of social security for unorganised workers, we believe that there is a need to distinguish between the unorganised workers at the bottom and above the bottom.

An Alternative Approach

We therefore suggest an alternative approach to the formulation of an all India social security bill. The basic premises of such a bill would be as follows:

  • Looking at the heterogeneity of the unorganised sector, there is a need to formulate specific social security packages for each of the major categories of unorganised workers, preferably at the state level.
  • Looking at the fact that most state governments have made miserable progress in terms of providing even a minimum social security cover to their unorganised workers, it is necessary to formulate an all India act that makes it mandatory for all state governments to provide social security to all the categories of unorganised workers.
  • In other words, there is a need to develop an approach that will take care of the heterogeneity of the workers (their different priorities and needs for social security as well as their different levels of productivity and earnings) and the different capacities of their employers to pay, located in different trades and states on the one hand, and ensure comprehensive coverage of all the unorganised workers on the other hand.

    Such an act can have the following additional features. The other provisions of the present bill may remain the same. It will of course be an all India act, whose main objective will be universal social security coverage for the unorganised workers in the country.

  • Under such an act, each state government will formulate its rules, and within a specified time, design social security packages for its unorganised workers.
  • It will be mandatory under the act for each state government to design a suitable social security package for each category of unorganised workers, located in the state, looking to the needs/priorities of workers, their productivity and earnings and paying capacity of their employers.
  • The poorest categories, including the scattered tiny categories, will be covered under a minimum package of social security designed to take care of the minimum social security needs. In fact, the minimum
  • package will cover all those workers, left out from trade specific social security measures.

  • The social security package for each major category of unorganised workers will be designed and implemented under the supervision of a tripartite board/welfare board or a committee set up for the purpose.
  • The temporary workers employed in the organised sector and subcontracted workers from factories or organised units will receive social security that is commensurate with the labour productivity and paying capacity of their respective employers.
  • There will be a provision for migrant workers to access social security even when they migrate within or outside the state.
  • To an extent, this bill will be like the present Minimum Wages Act, under which minimum wages are fixed for each category of workers. The only major difference will be that unlike the minimum wages act, this act will have a universal coverage.

    There are several advantages of the above approach: First, it will improve the social security entitlements of a large number of categories of unorganised workers, as they are likely to receive higher social security than what is provided for in the minimum package designed under the bill. Second, the level of contribution of workers and employers in several categories of unorganised workers will be higher than the amounts laid down in the act. The need for subsidising the package by the government therefore will be much less. This will reduce the financial burden on the state exchequer. Third, the decentralised approach of designing trade-wise and state-wise social security will make its administration relatively easy. As against this, the all India act, which is expected to cover the entire country, will have too large a coverage under one authority. Also, designing as well as implementation of social security schemes is likely to be more participatory. And last, the approach proposed by us will provide ample space for flexibility and innovativation in the field of social security.

    Effective Enforcement of the Act

    It needs to be noted that we have a long history of enactment of labour laws, which intend to promote well-being of the unorganised workers. Some of the major laws are the Minimum Wages Act, the Contract Workers Act, the Payment of Wages Act, the Equal Remuneration Act, the Bonded Labour Act, the Interstate Migrant Workers Act, etc. In the field of social security, however, we have depended mainly onsocial security schemes rather than on an act. We

    Economic and Political Weekly February 4, 2006 definitely need a social security act that has universal coverage of unorganised workers. The proposed act of the National Commission therefore is most welcome. However, the past experiences with respect to the implementation of the labour laws have been far from satisfactory. The laws are known more for their non-enforcement rather than for their enforcement.

    In order to ensure successful enforcement, the bill has laid down an elaborate machinery and simple procedures. The provision for self-registration and portability of the identity card all over the country are important features of the act. However, there are certain provisions, which are likely to create hiccups at the implementation stage.

    – The provision that the contribution of below poverty line (BPL) households will be paid by the central government is questionable. There are large number of field studies, which show that the identification of BPL households is not correct and there are errors of exclusion (of the poor) and errors of inclusion (of the non-poor) in the identification. To use this list for identification of the poor under the proposed bill will not be correct. Also, targeting such households, even when they are identified correctly, may be problematic. There is definitely a need to use other ways of targeting.

  • The provisions of the bill, as it is drafted, is likely to bureaucratise the implementation. There is a need to debureaucratise administration by providing space in planning and implementation to people and people’s organisations, NGOs, experts, professionals, etc. There is also a need to involve panchayat bodies closely.
  • There is a need to create supportive infrastructure for the purpose of delivering social security. For example, maternity benefits, health insurance need to be supported by reliable medical services.
  • There is also a need to incorporate special measures to include women into the purview of social security measures. A major constraint for women in many areas is the drudgery of household work, including collection of fuel wood, fodder and water. Also, their priority needs include sanitation, health services/insurance and shelter. These needs have to be reflected as per their priorities in the different regions of the country.
  • – And lastly, there is a need to take care of the needs of children of migrant workers, whose number seems to be increasing rapidly in the post-economic reforms period. The almost first security that these migrant parents want is education of these children.

    While concluding it may be observed that this Unorganised Sector Workers’ Social Security Bill, 2005 needs to be modified to support the progress (though slow) of social security movement in India. There is also a need to pay attention to the enforcement aspect of the bill. In the final analysis, its success will largely depend on whether it addresses the needs and priorities of different categories of workers, the commitment and efficiency of administration, effective monitoring and workers’ involvement in the implementation of the act.

    EPW

    Email: indira.hirway@cfda.ac.in

    Reference

    National Commission for Enterprises in the Unorganised Sector (2005): Unorganised Sector Workers’ Social Security Bill, 2005, New Delhi.

    Economic and Political Weekly February 4, 2006

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