INDIRA HIRWAY

I

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.

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.

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:

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.

package will cover all those workers, left out from trade specific social security measures.

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.

– 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

Economic and Political Weekly February 4, 2006