Social Security for Unorganised Sector Workers

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Social Security for Unorganised Workers
The National Commission for Enterprises in the Unorganised Sector was set up by the UPA Government under the Chairmanship of Arjun Sengupta in September 2004. The Commission prepared two draft bills: (1) Unorganised Sector Workers Social Security Bill, 2005, and (2) Unorganised Sector Workers (conditions of work and livelihood promotion) Bill, 2005. According to the draft bill, it will cover all workers in the unorganised sector with a monthly income of Rs.5,000 and below. This category includes self-employed workers (including marginal and small farmers), wage workers including agricultural labourers, and home-based workers. It also includes informal workers under the organised sector. It is estimated that around 30 crore workers are eligible under this scheme. The Bill indicates that there will be a national minimum social security for all eligible workers covering four things: (a) health insurance; (b) maternity benefits; (c) life insurance; and (d) old age pension. Every unorganised sector worker is eligible for registration. The registered worker will get a unique social security card. The existing welfare programmes will continue as before. A National Social Security Fund will be created. The scheme will be financed from the contributions at Re.1 a day by workers, employers (wherever identified), and the Government (that is, Rs.3 per worker a day or Rs.1,095 a year). The Government contribution will be divided between Central Government and State Government in the ratio of 3:1 respectively (75 paise per worker by the Centre and 25 paise per worker by the State Governments). Similar to the Employment Guarantee Scheme, the National Commission estimated the costs of the minimum social security scheme. If all the 30 crore workers are covered, the contributions would work out to Rs.32,850 crore. The share of the Central Government will be Rs.17,548 crore and that of the State Governments Rs.5,010 crore. This adds up to a total of Rs.22,558 crore to be spent by Central and State Governments, equal to 0.8 per cent of the Gross Domestic Product in 2004-05. If we include administrative and other expenses, the government contribution may not exceed one per cent of GDP. Similar to the national EGS, full coverage is expected to be reached in five years. If six crore workers are covered in the first year the cost will be Rs.4,512 crore and Rs.22,558 crore from the fifth year. The Government can contribute to the fund in the form of grants or through tax or cess. The second Bill, which deals with conditions of work and livelihood promotion, addresses the issues relating to providing a basic minimum standard on hours of work, payment of minimum wages, bonded labour, and child labour. The Bill also recognises some minimum entitlements of the workers such as the right to organise, non-discrimination in the payment of wages and conditions of work, safety at workplace, and absence of sexual harassment. The costs of providing health insurance, maternity benefits, life insurance, and old age pension for the 30 crore workers are not clear from the Bill. The Government contribution in the first year (Rs.4,512 crore) is not large but in the fifth year it is closer to one per cent of GDP. As the draft says, tax or cess is one option for raising resources for the Government. The insistence on State Governments' contributions may create problems for the scheme as their finances are in bad shape. the Bill seems to be following the targeting approach for identifying beneficiaries. For example, the Bill says that it would cover all workers in the unorganised sector with a monthly income of Rs.5,000 and below. This may again lead to targeting errors and corruption. the implementation machinery still looks bureaucratic although decentralisation is mentioned. It is better to involve panchayati raj institutions more. Fourthly, legislation alone is not enough. For example, health insurance for all the workers...
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