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Need to Universalise Social Security

Those who can afford it get their own social security through a public mandate and those who cannot afford it have to buy or arrange their own social security. This malaise can only be overcome by universalising social security. The NCEUS' fragmented approach to social security is no solution.

Need to Universalise Social Security

Those who can afford it get their own social security through a public mandate and those who cannot afford it have to buy or arrange their own social security. This malaise can only be overcome by universalising social security. The NCEUS’ fragmented approach to social security is no solution.

RAVI DUGGAL

T
he National Commission for Enterprises in the Unorganised Sector (NCEUS) makes a case for national minimum social security to all unorganised/ informal workers who constitute 91 per cent of the workforce.1 After an extensive review, the commission has proposed a draft bill, “The Unorganised Workers’ Social Security Bill, 2006” which will provide basic social security cover including benefits like hospitalisation cover up to Rs 10,000 per illness, maternity benefit up to Rs 1,000, personal accident cover of Rs 25,000, sickness benefit of Rs 50 per day during hospitalisation, life insurance cover of Rs 15,000 and provident fund for those above poverty line and old age pension for those below poverty line.

The commission and the bill make flawed arguments. They violate the principles of non-discrimination and equity. The bill is part of a historical trajectory of a segmented approach to social security that has resulted in gross pluralism. Apart from the provisions for the social security of the organised sector like the Factories Act, Workmen’s Compensation Act, Employees State Insurance Scheme, etc, there have been a plethora of schemes for the socalled unorganised or informal sector workforce. The commission’s report painstakingly lists over 100 schemes (many of them being dysfunctional) of the central and state governments, as well as over 50 schemes by NGOs. While these schemes may be well meaning and may have also served a limited purpose they have in no way helped in assuring social security to their membership. On the contrary they have fragmented not only the workforce but also the approach to their social security. The new bill will only add to the fragmentation because it clearly says that those covered by existing schemes will be excluded from the coverage of this bill. Further, by keeping the distinction between the organised and unorganised sector, instead of consolidating it, the commission continues the trajectory of the segmented approach to employment and social security. This clearly violates the principles of non-discrimination and equity that our Constitution upholds and that international covenants ratified by India such as the International Covenant on Economic, Social and Cultural Rights (ICESCR) mandates.

Articles 41, 42 and 47 of the Directive Principles enshrined in Part IV of the Indian Constitution2 provides the basis for right to health and social security:

41 Right to work, to education and to public assistance in certain cases: The state shall, within the limits of its economic capacity and development, make effective provision for securing the right to work, to education and to public assistance in cases of unemployment, old age, sickness and disablement, and in other cases of undeserved want. 42 Provision for just and humane conditions of work and maternity relief: The state shall make provision for securing just and humane conditions of work and for maternity relief. 47 Duty of the state to raise the level of nutrition and the standard of living and to improve public health:The state shall regard the raising of the level of nutrition and the

Economic and Political Weekly August 12, 2006

standard of living of its people and the improvement of public health as among its primary duties and, in particular, the state shall endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and of drugs which are injurious to health.

Similarly at the global level ICESCR mandates right to social security and health through Article 9 and Article 12 of the covenant:

Article 9 The states parties to the present covenant recognise the right of everyone to social security, including social insurance. Article 12 1 The states parties to the present covenant recognise the right of everyone to the enjoyment of the highest attainable standard of physical and mental health. 2 The steps to be taken by the states parties to the present covenant to achieve the full realisation of this right shall include those necessary for:

  • (a) The provision for the reduction of the stillbirth-rate and of infant mortality and for the healthy development of the child;
  • (b) The improvement of all aspects of environmental and industrial hygiene;
  • (c) The prevention, treatment and control of epidemic, endemic, occupational and other diseases;
  • (d) The creation of conditions, which would assure to all medical service and medical attention in the event of sickness.
  • Also Articles 7 and 11 include health provisions:

    The states parties...recognise the right of everyone to...just and favourable conditions of work which ensure...safe and healthy working conditions;...the right to...an adequate standard of living.

    India ratified the ICESCR on April 10, 1979 making it obligatory to honour the provisions of the covenant. The social security legislations in India are thus not in line with the above provisions.

    Social Health Insurance3

    The total employment in India today is estimated at nearly 400 million but of this only 28 million is in what is called the organised or formal sector,4 which is covered by comprehensive social security legislation, including social health insurance. The largest of this is the ESIS which covers 8 million employees, and including family members provides health security to 33 million persons. In 2002-03 the ESIS Corporation spent Rs 12 billion on healthcare for its member beneficiaries averaging Rs 365 per beneficiary. This effectively covers a mere 3.2 per cent of the population. Another about half per cent of the population is covered by the CGHS. In the same year the CGHS spent Rs 2 billion averaging Rs 450 per beneficiary. While these social health insurance plans have been around for a long time, their credibility is at stake and large scale outsourcing to the private sector is taking place. ESIS has private panel doctors in large cities who provide ambulatory care to those covered under ESIS whereas their own doctors in dispensaries and hospitals run by ESIS are increasingly idling. Similarly under CGHS, those covered are being given “choice” to access private healthcare by being given reimbursements which for instance for a by-pass surgery could go upto Rs 1,50,000 for a senior bureaucrat.

    Further, other government employees like the railways, defence services and the P and T department have healthcare services and/or reimbursements for their employees which amounts to a significant Rs 1,600 crore per annum and this averaged a large Rs 1,150 per beneficiary. Also, welfare funds have been created by acts of Parliament and state assemblies for specific occupational groups, including those in selected unorganised sector groups, like beedi workers, plantation workers, mine workers, building/construction workers, head load workers to meet social security benefits like healthcare, education, recreation, water supply, housing, etc. In 2002-03 these funds expended Rs 35 on healthcare, which was about half the expenditure of the welfare funds.

    From the rest of the organised sector, largely the middle and upper middle classes, about 30 million persons are provided healthcare protection from employers through reimbursements and/or employer provision. This is estimated at about Rs 2,400 crore per year, averaging Rs 3,000 per employee per annum. Thus about 10 per cent of the country’s population has some form of social insurance cover for health through their employment.

    From time to time, the government has also introduced social security schemes, including health cover for various groups of population, especially the poor or below poverty line groups, in the unorganised sector, like the Krishi Shramik Samajik Sanstha Yojana, National Social Assistance Programme, National Family Benefit Scheme, National Maternity Benefit Scheme, handloom workers thrift, health and group insurance, agricultural workers central schemes, Janashree Bima Yojana, state government welfare funds, national illness assistance fund and state illness funds, etc. But these schemes are not run on a regular basis, that is if a person gets a benefit once there is no guarantee that she will continue to have access to that scheme on a regular basis. No firm figures of their coverage are available because most such schemes, like the latest universal health insurance scheme in the 2004-05 budget, are populist announcements to lend social credibility to the budget and when the next budget comes the scheme gets quietly archived.

    The above brief analysis of social health insurance is a clear pointer towards the failure of a segmented approach to social security and hence it is futile to pursue the same trajectory as the commission does.

    Way Forward

    The commission is aware of the segmentation it is further contributing to but it uses the logic of “lets start with something”. This mindset of being well meaning adds to the existing distortions within the social security framework. Instead of endeavouring to bring the unorganised sector into the organised sector realm the commission takes it further away. Why does it not venture into the territory of the organised sector and demand the inclusion of the entire unorganised sector within the folds of the mainstream legislations covering the organised sector?

    Today even the organised sector is threatened with a curtailment of rights under the neoliberal economic framework and it therefore makes perfect sense to seek refuge in large numbers to subvert plans of reducing access to social security. Thus, the commission should have seized the opportunity and dovetailed the unorganised sector into the existing social security mechanisms governing the organised sector by demanding extension of these laws to the entire workforce of the country on a compulsory basis. This is the only route for universalising social security.

    The history of social security in India provides clear evidence that social security mechanisms designed for the organised sector workforce have worked well and provided reasonable security to them but all other schemes designed for occupational groups under the numerous welfare funds have failed miserably.

    If we believe in the principles of nondiscrimination and equity then not only

    Economic and Political Weekly August 12, 2006

    should social security be common to the entire workforce but it should also cover the non-working population. To do this existing mainstream laws like the Factories Act, ESIS Act, etc, would need to be restructured to accommodate the entire workforce and this would imply removing all restrictions for coverage under the act like wage limits, numbers employed, etc. Further, a separate legislation incorporating benefits like healthcare, unemployment benefits, old age pensions, etc, for the nonworkers would be needed to universalise social security. Brazil is a good example to emulate for comprehensive social security which has got transformed under Lula5 and more recently Mexico for national health reforms.6 Also where health security is concerned there is a lot to learn from Sri Lanka which assures universal coverage for basic healthcare for its entire population.

    Taking the case of social health insurance, it would make sense to take hold of the collapsing ESIS, which is actually flush with funds, and universalise it to cover all workers in the country – making membership of ESIS compulsory for all workers, though employee contributions can be restricted to those earning above a minimum threshold of wages. Further the ESIS facilities should be merged with the general health services so that the latter benefits from its large unutilsed capacities and the former benefits with the extended canvas. The non-working population should be covered by contributions from the state. The bottom line is that all would have access to common health benefits.

    To conclude, it is important to reiterate that a fragmented approach to social security will not work and hence the commission must do a rethink and pursue the option of unifying the workforce under a common social security umbrella and also extend selected benefits to the nonworking population to achieve a comprehensive universal system of social security. This will create a universal organised sector where occupational status will not be a barrier to social security and the notion of an unorganised.

    EPW

    Email: rduggal57@gmail.com

    Notes

    1 NCEUS: ‘Social Security for Unorganised

    Workers’, GoI, May 2006. 2 http://alfa.nic.in/const/schedule.html.

    3 The data in this section has been derived from Labour Bureau (2002): Labour YearBook, Simla, GoI; MoHFW (2002): Health Information India, Ministry of Health and Family Welfare, New Delhi, GoI.

    4 S Sakthivel and Pinaki Joddar ‘Unorganised Sector Workforce in India: Trends, Patterns and Social Security Coverage’, Economic and Political Weekly, May 27, 2006.

    5 Souza A P et al (2004): ‘Fiscal Impacts of Social Security Reform in Brazil’, USP.

    6 Moreno P et al (2005): ‘Social Security in Mexico’, Universidad Autónoma Metropolitana-Xochimilco.

    Economic and Political Weekly August 12, 2006

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