Universal Social Security Payments

Labour ministry’s proposal for universal social security payments is facing resistance from other government sections because such a programme would raise overall wage costs, a senior government official said.

What’s the concern?

Central ministries and the states have increasingly been hiring contract workers to save on costs as minimum wages are not mandatory in such cases. However, a social security programme would require the employers of contract workers to help pay for it.
India’s total workforce stands at 450 million, out of which a little over 10% is in the organised sector, enjoying social security of some sort.

Contract workers in the country:

The government appoints contract workers in three categories. First, for work of a routine nature such as housekeeping, maintenance and data entry that’s bundled and entrusted to staffing agencies. Second, contractual appointments for select posts, particularly those that need high professional skills. The third category comprises retired government employees whose skills and expertise acquired during their tenure in government are found useful.

According to Seventh Pay Commission data, the union government is one of the biggest users of temporary staff or contract employees, including scheme workers, and spends around Rs 300 crore a year on their wages. The scheme workers refer to the six million who are employed in flagship social sector programmes.

‘Draft code on Social Security and Welfare’:

The Centre, in March 2017, proposed a labour code on social security which will provide social security cover to the entire workforce in the country, including self-employed and agricultural workers.
According to the code, even households employing domestic help will also have contribute towards schemes including provident fund and gratuity for the worker. Factories employing even a single worker will have to contribute towards social security benefits, as per the proposal.

Every working person in the country will be covered under the social security code whether she belongs to the organised sector or the unorganised sector. For the first time, cover to agricultural workers is being provided along with self-employed people. The target is to provide social security benefits to 45 crore workers.

The proposed code seeks to cover “any factory, any mine, any plantation, any shop, charitable organisations” and all establishments or households employing casual, part-time, fixed-term, informal, apprentice, domestic and home-based workers. All such establishments or factories will be liable to pay compensation if they fail to contribute towards the social security schemes of the workers.

The total contribution to be made by employers towards Employees’ Provident Fund and Employees’ State Insurance Scheme is proposed to be capped at 30% of the workers’ income. At present, employers contribute 31.5% of the workers’ income towards these schemes.

According to the proposed code, self-employed workers will contribute 20% of their monthly income towards provident fund, pension and other related schemes. Self-employed workers will also include “a person who takes land on share cropping or any other form of rent, and tills the same using his own or family members’ labour.”

All the entities – whether factories or households – will have to register their workers through an Aadhaar-based registration system, according to another proposal, and self-employer workers will be required to register themselves.

A National Social Security Council, chaired by the Prime Minister, has been proposed to streamline and make policy on social security schemes related to all the Ministries. Other members would include: Finance Minister, Labour Minister, Health and Family Welfare Minister along with employer and employees’ representatives.

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