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Nature of Initiatives Needed to Strengthen the Social Protection System

South Asia Workers Forum

Covid Pandemic exposed the hollowness of the existing social protection systems, and it was most powerfully exposed in the fact that the majority of working classes were not in a position to survive even for a month in the face of a livelihood crisis, and were thrown in to debt trap. This is also interesting to note that short term livelihood crises have been a routine affair of twenty first century, e.g., frequent natural calamities like droughts, floods, earthquakes, and other disasters like fire accidents, and economic slowdowns and financial crises, all leading to short term, medium term and long term livelihood crisis, for different sections of population; and the Covid pandemic is different only in terms of creating a livelihood crisis for all workers at one point of time. However, existing social protection systems does not have any inbuilt mechanism to automatically deal with such crises in any effective way. The crisis that came with Covid Pandemic creates a compelling need and urgency for a radical transformation of existing social protection system.

There are two aspects of social protection: a) the policies targeted to socio-economic and political empowerment of working people and their families to be able to protect themselves against normal kind of contingencies like short term loss of income and livelihoods, inflationary pressures, short term sickness or minor employment injury and occasional increase in expenses for marriage, maternity, education of children, housing etc.; and b) the policies targeted to protect the working people and their families during abnormal contingencies with long term impacts, like national-global economic crisis, natural calamities, long term sickness, major accidents or occupation diseases leading to disability or death, long term loss of unemployment/ livelihoods etc. These two aspects together give a meaning to the social protection in terms of a ‘Life cycle continuum investment for social justice, poverty reduction and sustainable development’. (See ADB 2003: 1; Garcia and Gurat 2003: 13-14)

The government in any democratic society is primarily not a power over people but an elected body entrusted with responsibility to manage the country’s resources in such a way and devise and implement such policies that enable addressing the above two aspects of social protection in most efficient way, according to the needs of the people and on the basis of available knowledge and summation of experiences. Development of democratic society and maturing of democracies is to be reflected in the decentralization of the whole process of policy making and its implementation, and hence it emerges as an important aspect for social protection systems.

It is in this light we can articulate the nature of initiatives needed to strengthen the social protection systems. The integrated Social Security Code recently proposed by the government fails in all the above aspects. The code amalgamates and thereby repeals nine social security laws including, The Employees' Compensation Act, 1923; The Employees' State Insurance Act, 1948; The Employees' Provident Funds and Miscellaneous Provisions Act, 1952; The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959; The Maternity Benefit Act, 1961; The Payment of Gratuity Act, 1972; The Cine Workers Welfare Fund Act, 1981; The Building and Other Construction Workers Welfare Cess Act, 1996 and The Unorganized Workers' Social Security Act, 2008. Apart from this social security schemes for Bidi workers and mine workers may also end. This is a simple copy paste of existing laws at one place and in no way any advance on the pre-existing laws (Mehrotra 2020). The code neither attempts to formulate a universal approach of social protection, nor sets any universal standards; neither addresses the problematic inconsistencies in definitions, nor addresses the problematic caps/thresholds for various social security provisions. It appears more as many social security systems floating in one document, rather than an integrated social protection system. The objective behind all this exercise apparently emerges to be: a) centralizing the whole system in the hands of Union government and minimizing the role of federal structure and dynamics; b) focusing more on ‘appear to be doing’ rather than ‘actually doing’; and c) minimizing the government expenditure of social protection by attempting to downgrade the social security provisions wherever possible and avoiding enhancing and strengthening social protection measures in any way. It may in-itself be a futile exercise to attempt any detailed analysis of the draft code; the proposed structure (or absence of structure) provides no scope for making it meaningful by adding this or that provision and by changing this and that provision; it needs to be rejected completely.

The Nature of policy initiatives needed towards strengthening the social protection system are required to be based on following aspects, keeping in mind the existing vulnerabilities and past experiences of various experiments in the area of social protection:

1. Basis Social Protection: Meant for Survival with Ability to Face Normal Contingencies

1.1. Minimum Wage and Minimum Income

  1. The minimum wages must form the basis of determining the minimum income to be insured to all families/individuals. As the criteria for determining the minimum wage is based on minimum needs for survival; hence the minimum wage must form the basis for poverty line, and thereby also for determining the financial assistance to be provided to cover the short falls in income of relevant individuals/households.
  2. The existing poverty line cap need to be disbanded as it is not only absurd but also shameful. The poverty line politics of the state has now become a data game to show great declines in poverty rather than actually focusing on decreasing poverty. Tendulkar committee in 2011 defined the poverty line cap on the basis of monthly spending on food, education, health electricity and transport, and amazingly he arrived at such a low figure as INR 27.2 per day per head (INR 2448 per month for a family with 3 consumption units) in rural areas and INR 33.3 per days per head (INR 2997 per month for a family with 3 consumption units) in urban areas. However, during the same period (2011-12) a committee headed by former reserve bank governor C. Rangarajan estimated it to be INR 32 per head per day (INR 2880 per month for a family with 3 consumption units) in rural areas and INR 47 per head per day (INR 4230 per month for a family with 3 consumption units) in urban areas. The lower value was more suited to the government and hence in 2014 Rangarajan committee report was junked and the poverty line was estimated on the basis of Tendulkar Committee formula, primarily because Rangarajan Committee formula was resulting in 100 million more poor than that arrived by Tendulkar Committee formula. Currently a new survey is launched to repeat the futile exercise of arriving current poverty line. (see Hindustan Times, May 06, 2015; Economic Times, February 21, 2020; Patnaik 2016).
  3. The definition of minimum wages has two aspects: a) it must be a living wage, i.e., sufficient to meet the minimum requirements of a family of 3 consumption units; and b) it must be a fair wage, i.e., not less than what workers of same skill categories get in other sectors. The first aspect requires a well defined criteria for determining minimum wage by considering all relevant expenses of family; and second aspect requires that minimum wages are comparable in all sectors; and by implications, the principle of fair wage may also require that the wages in no sector and no state may be less than the national average minimum wage (arrived by taking average of minimum wages in all states) in particular skill categories.
  4. The accepted criteria for arriving minimum wage includes: a) Food: 2700 calories per day per consumption unit for 3 consumption units (2 adult and 2 children); b) 66 meters cloth per year per family or 22 meters per adult and 11 meters per child; c) Housing rent equal to 10 % of total expenses in food and clothing; d) Expenses in Fuel, electricity and other miscellaneous items equal to 20 % of minimum wage; and e) Expenditure for children education, medical requirement, recreation and contingencies equal to 25% of minimum wage (see GOI 2020).
  5. This criteria has four major problems: a) considering two children as one consumption unit is unjustified as the food expenses (including milk at least) on children are not less than the adult; b) housing rent (for at least one room with attached kitchen and washroom) currently costs about 30-40% of minimum wages, and considering it only 10% of expenses on food and cloth results in very low minimum wage, which in turn compels the workers to live in unhealthy conditions, 4-5 workers sharing a small room without kitchen and wash room; c) The criteria does not consider the new necessities, for example, regular expenses on transport and communication, which may not be less than 10% of minimum wage; d) Periodic revision of minimum wages largely takes in to consideration only inflation related aspects, which is not justified as it ignores the new needs and right to share the benefits of economic growth that they bring with their sweat and blood. Hence the periodic wage revision must take three aspects in to consideration: 1) inflation related aspects; 2) new needs; and 3) to GDP growth..
  6. Even when we consider the existing criteria of MW determination, the total value comes around INR 18000 per month, which is also justified by the union government’s own calculations using the same criteria, as reflected in the declaration of minimum wages in central sphere to be INR 18000 per month in 2016. Hence the minimum wages declared (both national floor wages and state wages) do not satisfy the principle of living wage. On the other hand, there are huge variations in minimum wages of various states, and between minimum wage in central sphere and that in the states. The minimum wages for workers in private sector in various states range from less than INR 6000 to less than INR 11000 for unskilled workers and from less than INR 8000 to less than INR 12000 for skilled workers; except in Delhi where minimum wage for unskilled workers is INR 14805, and that of skilled workers is INR 17924 per month. In central sphere it is INR 18000 per month. Hence the minimum wages declared in various states does not satisfy the principle of fair wage. In order to satisfy the principle of living wage and fair wage, the wages anywhere in India may not be less than INR 18000 per month.
  7. The process of declaration of minimum wage has also a major problem in terms that it declares only the total value of minimum wage arrived and not the head wise values arrived and therefore the whole process lacks all transparency. It becomes more important to declare head wise expenses if the minimum wages are to form the basis for determining the minimum income required for survival of a family or an individual, and hence also for determination of the financial assistance that needs to be extended to cover the short fall in income. In cases where people live in their own dwellings the financial assistance for family/individuals may be Minimum wage minus house rent; in case of financial assistance to individuals the per head values of items need to be arrived on the basis of item wise expenses arrived in minimum wage for 3 consumption units.
  8. By implications, in order to enable the people crossing the poverty line and empowering them to be able to avoid falling in poverty, the government needs to: a) include all people up to the income level of double the minimum wages in to the PDS system for getting necessary goods at subsidized rate and number of goods distributed by PDS needs to be increased to cover at least the major necessities; b) exclude all people up to the income level of double the minimum wage from all direct and indirect taxation. It is shameful that even the people struggling for survival bear the burden of huge indirect taxation. The country collects only 6% of GDP as direct taxes and the rest of taxation falls on the indirect taxes which are paid by everyone, including the poor and marginalized working people (Kumar 2020). It is further shameful that the people earning the minimum wage are compelled to pay direct taxes, i.e., income tax, for example, payment of income tax is compulsory with an annual income above 250000, and by this criterion the workers earning minimum wage in Delhi state and those engaged in central sphere are compelled to pay income tax. It is further shameful that the workers are compelled to pay income tax on withdrawal of their social security funds (provident fund and gratuity).
  9. PDS system must be re-conceptualized as a major initiative for boosting the economic growth with double dynamics, helping the poor to move out of poverty and thereby expanding the consumer market and accelerating the industrial growth; and helping the small-medium farmers, relevant small industrial units, own account /self employed workers and workers cooperatives by providing an insured market for their products through procurement on minimum support price for distribution through PDS. Hence PDS may play a great role in accelerating the economic growth, and may also play a great role in helping large section of population moving out of poverty.
  10. Competitiveness based on maintaining low wages is an absurd idea both theoretically and practically, however, in any situations, if there is any absurd need for keeping the wages low for so called competitiveness of industries, it can be done only in three ways: a) covering all workers in PDS system and covering most of the items of daily necessities of workers in subsidized system of PDS; b) Large scale initiative for government industrial housing scheme in all localities to insure decent accommodation to workers on cheaper rent; and c) expanding and strengthening free quality public education for working class children and expanding ESI hospitals or other comparable health systems to cover all workers. The reduced expenses in these items may necessarily lead to lower monetary value of the minimum wage according to the above criteria.
  11. Social protection for workers is greatly hampered due to inefficiency of labour department and labour adjudication machinery. Justice delayed is justice denied. This is mainly because of lack of sufficient staff due to: a) no proportional addition of staff even after huge industrial expansion; b) allotting additional work on the same staff, for example, the work related to construction workers welfare boards; and c) not filling the vacancies for years. In these conditions the workers are not able to avail even the existing provisions of social protection. Urgent initiatives are needed to: a) The government must fill up the vacancies immediately, and recruit additional staff proportional to increase in the number of establishments and the workforce under its coverage; b) The labour department must be focused only on implementation of labour laws, and all other works need to be withdrawn from the labour department; for example, separate institution and staff need to be created for each and every occupation based welfare board of workers and it must not be mixed with labour department c) The functional units of labour department must be set up as block/taluka level for easy access to local workers; d) In order to insure effective social protection, it is necessary to add a legal provision mandating conciliation and adjudication to be completed within a fixed time limit; the time limit for conciliation may not be more than a month and time limit for adjudication may not be more than a year (4 months in labour court, 3 months in high court, 3 months in supreme court and 2 months of grace period). In case of delays, the worker needs to be sufficiently compensated by the government.

1.2. Universal Coverage of Quality Social Protection
All workers earning up to double the minimum wages, irrespective of economic sectors, size of enterprises, and status of employment must be provided all basic social protection benefits. The manner and the level of various social protection benefits may vary but no one must be excluded on the basis of any kinds of caps and thresholds. The Basic social protection benefits may include: a) insuring minimum wages/incomes to all workers and any shortfall in incomes of any section of workers must be covered by the financial assistance; b) financial assistance for short term loss of income due to short term job/livelihood loss, accidents, diseases etc; c) maternity/fraternity benefits and Crech facilities (to all irrespective of wage/income level); d) coverage in PDS system; e) coverage in ESI or equivalent system of subsidized and quality public health services (and not in any private health insurance); f) coverage in EPF and EPS or equivalent system of quality retirement benefits (and not in a downgraded system like NPS); g) coverage in gratuity and bonus; h) access to free quality public education; i) access to accommodation on subsidized rent; j) access to free training for skill enhancement; k) easy access to low interest loans for occupational and personal needs from banks; l) access to subsidized inputs for self employed workers and workers’ cooperatives in various sectors; and m) access to a social protection system with a major role of workers’ representation in policy making and implementation.
1.3. Right to Organize and Collective Bargaining
Right to organize and collective bargaining is the basic foundation of insuring social protection to workers. Hence, the trade union act and the structure of social protection systems must designed in such a way to facilitate, promote and empower the workers to be able to exercise their right to organize and collective bargaining. Following initiatives may be required to strengthen this dynamics:

  1. Bringing back the provision for requirement of only seven members for registration of union
  2. Incorporating a new provision in trade union act to provide that trade union may be deemed to be provisionally registered after successfully filing online application and generating a receipt of the same. Provisional registration must provide protection to the office bearers from any action of retrenchment for at least one year. If no queries/responses are received from registration authority within 7 days of filing the online application, then it is to be deemed that the union has been successfully registered.
  3. A legal provision needs to be added in Trade union act to clearly state that self employed/own account workers can also form their trade union in the same way; as in global value chains self employed/own account workers form a significant proportion of workforce, typically facing exploitation at lower ends of the value chain.
  4. Incorporating a new provision in trade union act to provide that: a) in case there is only one trade union in a company/establishment, then it automatically becomes authorized for collective bargaining and the employer is compelled to sign collective bargaining agreements with Union; b) in case of multiplicity of unions, the majority union must automatically become the main collective bargaining agent and the employer is compelled to sign ollective bargaining agreements with this union; however, it may be made necessary for he majority union to conduct a formal meeting with other unions for getting their inputs o various issues to be addressed in the collective bargaining agreements; the majority ion may also be advised to form collective bargaining council including willing unions, w rever possible and necessary; and c) the same may be true for the process of selecting the collective bargaining agent or the representative union in case of sector/industry uni ns, for collective bargaining with Industry associations, workers welfare boards and the government, and for representation in various relevant platforms/policy bodies.
  5. The system of trade union membership verification for granting Central Union status and to recognize representative trade unions at national and state level to insure representation of trade unions in relevant state, national and international bodies/forums etc, must be extended to district level to transparently recognize and insure representation of trade unions in relevant boards/policy bodies/forums at district level, for example in various welfare boards.
  6. Trade union registration authority must be transformed in to facilitating authority, and in case of any short comings in application, they must be required to help the workers in order to be able to complete application and get the union registered. Maximum period for registration process may not be more than a month.
  7. Registration authority for trade unions must be transferred to the District labour office. Currently it rests with division office, which compels workers to travel for verification requirements, which results in loss of time and money.
  8. Social protection system for informal sectors must be occupation based systems, which may create the environment to promote, facilitate and empower workers in order to be able to exercise their right to organize and collective bargaining.

2. Contingent Social Protection
Normal kind of risks and contingencies needs to be covered by basic social protection systems, and the contingent social protection must deal with long term contingencies, such as: a) unemployed youth; b) long term loss of jobs/livelihoods of workers due to retrenchment/closure of factories, natural calamities etc; c) long term loss of incomes due to temporary disability/long term diseases/major injury; and d) permanent loss of income due to superannuation without retirement benefits, permanent disability, and death of earning member of family.
All youth entering in labour market and all working people, irrespective of economic sectors, size of enterprises, and status of employment must be provided all contingent social protection benefits; the manner and the level of various social protection benefits may vary but no one must be excluded on the basis of any kinds of caps and thresholds. The social protection measures for the unemployed youth and workers facing long term loss of jobs/livelihoods may be in the nature of a combination of three kinds of initiatives-financial assistance, employment generation, and skill development. Social protection measures for those facing permanent loss of income due to old age, death of earning members, permanent disability may be in the form of pensions. Social protection for those facing temporary or permanent disability due to occupational diseases/accidents may also include a compensation for the disability. The financial assistance in all cases must be based on the principle of insuring the minimum income as discussed in earlier sections.

3. The Systems of Social Protection to extend quality social protection to all workers
On the basis of conditions of different sections of workers and the principles of social protection as emerged in above discussions, following four systems of social protection may be needed to extend quality social protection benefits to all working people:

3.1. Social protection System in Profit Sector

  1. The social protection system in profit sector may cover the establishments with 5 and above workers, using any kind of computerized systems in production (including manufacturing, cultivation, plantations, mining etc) and services (including all services-financial, transport, trade, ITes, tourism, recreation, education, health etc); and establishments with 10 and above workers without computerized systems of production and services. For practical problems the establishments solely working in construction and seasonal sectors (running up to six months in a year) may be excluded from this social protection system. It is to be emphasized that power or no power can no longer be justified dividing line between establishments, as there are rarely any establishments left that do not use power driven machines.
  2. The ‘worker’ here includes all categories of workers including regular workers, casual workers, fix term workers, and apprentice workers etc. without any caps/thresholds
  3. The current system of engaging workers through contractors is unjustified and largely illegal. Going by the definition of contract worker under the Contract Labour (Regulation and Abolition) Act 1970, contract workers cannot be engaged in perennial activities, they may at the most can be engaged in loading and unloading work, and then they may not be working only for one company, but for many companies. Any worker regularly working in the company cannot come under the definition of contract labour. Actually for the days and hours they are engaged by the company they can be treated as casual workers. Hence the contract worker category must be abolished.
  4. All the workers must be covered under the Code on Industrial Relations, Code on Wages and Code on Safety and Health and Working Conditions. Just to emphasize, the apprentice workers may also have the right to join the trade union of the company for the apprentice period. Casual workers may be automatically considered as members of the company union, for the days working in the company, without paying membership fee, and the union must be made duty bound to enlist them as its member and help them in availing their rights.
  5. All workers need to be provided formal contract, including the casual workers. If any worker is found working in any company without formal contract, employer (owner/relevant management personal) may be liable to a fine of INR 50000 per worker so identified or 3 months of prison sentence
  6. All workers must be paid minimum wage and premium rate of overtime, and if any employer is found violating these laws, he/she may be liable to a fine of INR 25000 per worker per day so identified to have been engaged
  7. All workers need to be covered under ESI, without any thresholds/caps; and all workers except casual workers need to be covered under PF without any threshold/caps
  8. All workers, except casual workers, may be covered under payment of gratuity, earned leaves (annual leave), paid casual leaves, bonus, and premium rate of wages for overtime.
  9. All workers except casual workers, must be provided maternity/fraternity benefits, and Crech facilities. In case of units with less than 50 workers, there may be a provision of common Crech facilities for adjacent establishments.
  10. Number of casual workers may be limited to a maximum 3% of workforce for maximum 3 days in a month, and they may be paid at 1.5 times of the normal rate of wages; if any employer is found violating these laws, he/she may be liable to a fine of INR 25000 per worker per day so identified to have been engaged
  11. Number of fix terms workers may be limited to a maximum 5% of workforce, and must be specially meant for any temporary need of workforce for any additional task that can not be addressed by the regular workforce. It means that a company/establishment can not make engaging fix term workers a regular practice. If the additional task becomes a regular task, then the fix term workers may have right to be absorbed as regular workers. The wages and working conditions of the fix term contract workers may be same as the regular workers, including applicability of relevant allowances paid to regular workers. Fix term workers may be paid special allowance equal to 5 days wages per month of engagement if their engagement ends after the end of contract period and if their contract is not transformed in to a regular contract. If they are fired before the expiry of contract, the employer must be required to pay additional 15 days wages. In this light, engaging fix term contract workers by government and private bodies in regular kind of employments must be declared illegal and banned, and all fix term workers engaged in health (doctors, nurses, asha worker etc), Education (teachers and other staff in schools and universities), Municipalities (sanitation workers etc), transport, communications and in regular kind of jobs in manufacturing and various other industries, must be regularized with immediate effect.
  12. The system of outsourcing practices need to be regulated: a) A legal provision need to be enacted mandating formal annual contracts, rather than work order based contracts, with all terms and conditions, between the companies, local or foreign, outsourcing their work and the establishments working for these companies. This may apply to all regular kind of works related to manufacturing and services; only in case of occasional nature of jobs the work order based contract (with all terms and conditions) may be allowed. The terms and conditions must transparently show the labour costs. For the establishments working completely or mainly for other companies, the main outsourcing company or companies (foreign or local) may be considered as the principal employer for all practical purposes. Accordingly, the formal contracts issued to the workers must mention the name of the principal employer/s. If the principal employer is a local company, then the workers of the relevant establishment may also have right to join the trade union in the principal employer.
  13. In establishments with 100 or more workers the government permission must remain mandatory and it must be made mandatory for the government to decide on such cases only after organizing a tripartite consultation. In case of establishments with less than 100 workers, it must be made mandatory for employers to cite valid and verifiable reasons with evidence for retrenchment, follow the principle of last come first go, and the workers must be given right to challenge the justifications cited by the company and the process of retrenchment.
  14. Provisions of unemployment allowance under ESI need to be reframed according to new needs in new conditions. Rajiv Gandhi Shramik Kalyan Yojana 2005 and Atal Beemit Vyakti Kalyan Yojana 2018 need to be merged to create unified Unemployment Allowance Scheme with provisions including: a) Workers insured in ESI can avail an unemployment allowance of 80% of wages for a total of 1095 days (3 years) in their life time, and they may claim it for different periods in different years as per their needs; b) the worker becomes eligible to claim the unemployment allowance after 3 months of insured period with minimum 20 days of contribution per month before job loss; c) After completing 3 months of insured period worker can claim unemployment allowance of 80% of wages for maximum 10 days in case of job loss; after completing 6 months for 15 days, after completing one year for one month and after completing 3 or more years worker may be eligible to claim unemployment allowance for a maximum of 2 months at a stretch (unemployment of more than 2 months at a stretch may be considered long term unemployment). The worker may claim this allowance whether the job loss is due to dismissal/retrenchment or resignation, this is precisely because in current conditions, in most of the sectors, the employers force the workers to resign, rather than dismissing or retrenching them in order to avoid all legal procedures and the payment of compensations involved. Moreover, the worker may also be allowed to claim the unemployment allowance of 100% of wages for whole period of temporary closure of establishments for various reasons like covid-pandemic; and as this may be an additional financial burden, the ESI may claim 50% of this cost from government and 50% from employer.
  15. ESI contribution rates must not be reduced, as reducing the economic capacity of ESI may be disastrous for the workers. ESI hospitals/dispensaries are already crowded and overloaded and therefore need to expand their infrastructures. Moreover, in the above discussed framework, the ESI membership may be doubled and hence there may also be a need to expand the ESI facilities. Therefore ESI contribution rate must be maintained at the existing rate of 1.75% of wages from employees and 4.75% from employer, as against the revised rate of 0.75% and 3.25%. The PF contribution rates must also not be reduced, as it may affect the retirement benefits of the workers. It must be maintained at 12% from both employer and employees, as against the revised rate of 10%. In PF law a provision must be introduced to allow the workers to draw 50-75% of their accumulated fund in a crisis like covid-pandemic.

3.2. Social Protection in Survival Sector

  1. The social protection system in survival sector may cover all establishments and workers not covered under the social protection system of profit sector. This may include workers of establishments with less than 5 workers using any kind of computerized systems of production (including manufacturing, cultivation, plantations, mining etc) and services (including all services-financial, transport, trade, ITes, tourism, recreation, education, health etc); and establishments with less than 10 workers without any computerized system of production and services. This may also cover the construction sector and seasonal sectors excluded from the social protection system in profit sector due to practical problems of implementation.
  2. The ‘worker’ here includes all categories of workers with an income level of double the minimum wage, including regular workers, casual workers, fix term workers, apprentice workers, own account workers, self employed producers etc without any caps/thresholds
  3. Provisions related to minimum wages/incomes, payment of wages and overtimes rates may be same as in profit sector
  4. Provisions related to formal contracts and engagement of casual workers and fix term workers may be the same as in profit sector, except that casual workers may be engaged on normal rate of wages (not 1.5 times of wages) and special allowance for fix term workers may be 3 day wages per month if their engagement ends with the end of contract period and if it is not transformed in to a regular contract; and they may be paid additional 5 days wages if they are fired before the expiry of contract.
  5. The social protection system may offer most of social protection benefits offered to the workers in profit sector, but with a different institutional dynamics, by way of creating decentralized occupation based workers welfare boards operating at district levels with functioning units at village Panchayat/urban local body/industrial area levels, and coordinated at state level. The state governments may create state level bodies of workers welfare boards in order to coordinate and provide required support for the functioning of these boards, and most importantly, to align the state policies related to particular sectors with the workers welfare boards. However, there is no need of any centralized body of welfare boards at national level, as this may create more problems than resolve any. The logic of national body of welfare board is getting ground particularly from the problems faced by migrant construction workers. As they are registered in home state but work in many other states, they are not able to claim benefits in the states where they work, hence the logic of ‘one nation one card’; however, this does not add any value, as making the state cards portable and coordination between welfare boards at source and destination states serves the purpose. This problem does not arise in case of any other section of workers, as the local and migrant workers both are covered in the welfare boards of the state where they work.
  6. The management of workers welfare boards may be based on a tripartite system constituted by proportionate representation of employers, workers (with proportionate representation of wage workers, self employed/own-account workers) and the government. All establishments and the workers in the sectors need to be necessarily registered in the welfare boards and no establishments may be permitted to operate without registration in the welfare boards.
  7. The financing of the workers welfare boards may be based on: a) Cess of 1% of the annual turnover from all enterprises in survival sector in particular economic sectors; b) Cess of 0.5% from all enterprises in profit sector in particular economic sectors, as the profit sector enterprises are benefited from survival sector; c) Workers contribution may be fixed at 7.75% of applicable minimum wages for unskilled workers-1.75% for a health scheme equivalent to ESI; and 6% for a scheme equivalent to EPF; and d) Any short falls covered by the state government.
  8. All CSR funds from enterprises may also be provided to the welfare boards of respective sectors.
  9. The state government in collaboration with all workers welfare boards must establish a Workers State Insurance Corporation (WSI), which may be equivalent to ESI, with same system of hospital networks, same responsibilities and extending same benefits to all workers registered in all welfare boards, with an exception that unemployment allowance for construction workers and seasonal workers may be fixed as a standard compensation of 80% of minimum wages for 2 months in a year. The studies need to be conducted to articulate the needs and accordingly fix the eligibility criteria for unemployment allowance to self employed workers in different sectors. The workers welfare boards may contribute to the Workers’ State Insurance at the rate of 6% of minimum wage for unskilled workers for all workers registered in the board; of this 1.75% of minimum wage may be coming from workers contributions and 4.75% of minimum wage may be coming from the Cess fund.
  10. The state government in collaboration with all workers welfare boards must establish a Workers Provident Fund (WPF), which may be equivalent to EPF, with same systems and same benefits to the workers. The workers welfare board may contribute total 24% of applicable unskilled minimum wage to Workers provident fund for all workers; of which 6% of minimum wage may be coming from workers and 18% of minimum wage may be coming from Cess fund.
  11. There may be a provision that workers’ registration in WSI and WPF may not become in-operative if they fail to deposit contributions up to one year; within one year they may be given options to deposit contributions in any time intervals. Their registration may discontinue and so also the benefits after failing one complete year; but they may also be given option to continue it anytime by starting paying their contributions.
  12. The boards may take initiatives to create a system of common facilities in clusters of survival sector units and own account/self employed workers; for example, common facilities of Crech, Canteen, Rest rooms and First aid etc.
  13. In collaboration with state government the boards may also take initiative to develop modern common infrastructure for different clusters of units/self employed workers for compliance of occupational health and safety, and also to reduce costs by facilitating a system of shared costly machinery (that are necessary but not used continuously) and shared power infrastructure etc.
  14. Wherever possible, the board may also take initiative for creating a common system of enrollment for wage workers in particular clusters, particularly in case of manufacturing, so that they may easily get jobs when in need and units may easily get workers when in need. The system of common enrollment of wage workers may also be helpful in providing formality of jobs and related benefits like paid casual leaves and annual leaves, and even the bonus and gratuity (may be at lesser level than in profit sector), and the economic burden for all this may be shared by the cluster of units collectively in proportionate amounts.
  15. There may also be a need to re-articulate the provisions of industrial relations, payment of wages and health and safety according to the structural conditions and needs of survival sector
  16. The registration cards of construction workers must be made portable, and they may be made eligible to claim the relevant benefits from the construction workers welfare board of any state where they may be present at the time of need. The paying welfare board may be duty bound to send the details of benefits availed by the workers to the board where the worker is registered. No other evidence/documents may be asked from workers for availing benefits in any state, other than his/her his registration card issued by the welfare board of relevant state.
  17. Seasonal workers may be allowed to avail the benefits from any other board in their vicinity at the time when they are unemployed or working in some other sectors during Off-seasons.
  18. The welfare Boards may conduct studies to articulate the particular nature of policies and support needed to strengthen particular survival sectors. Welfare board units working at the level of Panchayats/Urban Local Bodies/industrial area must be recognized as the main centers for articulating and proposing the relevant policies according to the local needs; on the basis of these inputs district welfare boards may articulate the needs of particular sectors in particular districts and send recommendations to the state government. The state governments in turn must align its policies for different sectors with the recommendations received from the district welfare boards. There may be certain general needs of all sectors in all regions, for example low interest loans to small units and interest free loans to self employed/own account workers, and subsidized inputs and insured market for their products, however, there may be certain specific needs of particular sectors and particular regions, that can be identified only by bottom up approach in policy making.

3.3. Social Protection for Unemployed Sections
The social protection for unemployed youth and those workers facing long term unemployment beyond that is covered under ESI and WSI, require following initiatives by the state governments:

  1. The employment exchange centers need to be established in every district, with functional units at each Municipality in urban areas and at each Block in rural areas, along with in each industrial area, and in each university. Any unemployed youth (15 years and above) who have stopped formal studies and any worker facing long term employment (more than 2 months at a stretch) may be required to register him/her in any of these employment exchanges. The employment exchange may maintain online sector-skill wise data of workforce in need of employment, and the data of all employment exchanges in the country may be linked and accessible to employers anywhere in the country. It may be made mandatory for all establishments to send their requirements to the district employment exchange, even when they may also be allowed to advertise the vacancies elsewhere; so that employment exchange may be able to help and facilitate the workers in applying for jobs. All applicants to any job may be required to mention their employment exchange registration number, and after they are engaged the employer may be required to duly inform the employment exchange, so that unemployment data is regularly updated.
  2. Employment exchange may organize relevant skill development training for relevant youth/worker facing unemployment.
  3. The financial assistance (equal to minimum income) must be provided to all those registered in Employment exchange, until they get employment. The employment exchange may also make it mandatory to attend skill development trainings in order to get financial assistance.
  4. In order to make the economic burden of financial assistance more fruitful, the state government may also include the unemployed in NREGA, and may also devise an urban employment guarantee scheme and involve the unemployed people in those works at least for certain period. The employment exchange may also facilitate the engagement of educated youth in various government surveys, like NSSO, census etc. This may have triple benefits: a) reduce the burden of financial assistance; b) reducing the burden of non-teaching work by government school teachers who are generally engaged in such works; and c) this may help the educated youth acquiring precious skills.
  5. The financing of this social protection may be solely based on state funding.

3.4. Social protection in Pension Sector
If all working people with wage/incomes up to double the minimum wage are covered in the above system of social protection for profit sector and survival sector, then most of the workers may be retiring with some pensions. However, the pension amounts may not be enough for survival for majority of workers; as the pension (EPS) under EPF (which may also be the same under WPF for survival sector)=(pensionable salary*pensionable service)/70; i.e., if pensionable salary is 10000 and pensionable service is 28 years, then pension may be only 4000 per month. Moreover, huge majority of workforce is not allowed to complete even five years of continuous service due to employers’ strategy of frequent hiring and firing to deny social security benefits associated with longer period of service. Apart from this, even if the workers facing permanent disability or widows of workers who died due to accidents or occupational disease, are provided with some monthly assistance, in most cases it is very low. Moreover, there are significant numbers of people born with disabilities. All these sections of people must be covered under the social protection for pension sector. All the people falling under this category may be provided financial assistance equal to minimum income as discussed in above sections. In case of people getting some pension under the EPS or WPS or financial assistance through ESI, the short fall in income must be covered by the financial assistance. In case of children born with disabilities, the government may extend free education and health services and individual financial assistance according to the minimum income concept discussed in earlier sections, till they are able to get job and start earning; and for whole life to those who may not be in a position to do any work. The financing of this social protection may be completely based on state funding.

Vipul Kumar Pandya, Bandhakam Mazdoor Sangathan, Ahmedabad, Gujarat
Amulya Kumar Nayak, Odisha Chas Parivesh Surakshya Sangathan, Denkanal, Odisha
Surendra Pratap, Center for Workers Education, New Delhi

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Sep 4, 2020

South Asia Workers Forum spsurendrapratap@gmail.com

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