Social Security

SYLLABUS: General studies paper 2

Context:

The on-going coronavirus pandemic has affected a large section of Indian society especially the poor and marginalised population and it has called for universalization of social security in India.

Why does Social Security need universalization?

• Poor and Marginalized section pushed towards poverty: An unprepared government has rendered low paid, informal workers, who constitute 91% of the workforce, totally hapless, pushing them further into poverty.
• Large number of informal workers is outside the ambit of any social security: The absence of definite and unambiguous provisions in the social security code would complicate the achievement of universal registration of beneficiaries from the informal sector.
• Absence of Cooperative Federalism: Providing holistic social security cover for the unorganised workforce in a simple and effective manner is something lost in the Centre State labyrinth and jurisdictional or institutional overlap.
• Lack of maternity benefit for women in the unorganized sector: the definition of Establishment in the proposed code did not include the unorganised sector.
• The women engaged in the unorganised sector would remain outside the purview of maternity benefit.
• Existing laws have failed: The laws have been a non-starter, with poor registration of workers, practically no funds earmarked, and no schemes formulated under the law.
• It is necessary to acknowledge that the existing laws and schemes have failed to cover most of the workers in the unorganised sector and have failed to provide meaningful benefits.

Significance of Universalization of Social Security:

• Protection of vulnerable sections of the society: The universalization of certain schemes is conceded to be a better alternative because it would ensure security for all the workers and citizens, including elderly in the country.
• Low operational cost of schemes: The universalization has its advantage as it is easy to monitor, and has very low administrative costs in comparison to other schemes.
• Improvement in sex ratio of the country: Another dimension of universal pension scheme can be that preference for a male child as a support in old age could come down though this area needs further research to empirically establish a causal relationship.
• Promotion of economic growth: The adequate social security enhances economic growth and reduces the burden of tax financed schemes through generation of additional revenue.
• Central role in reducing and preventing poverty: The social protection systems play a key role in reducing inequality, social exclusion and social insecurity.
• The combined effect of social security transfers on poverty reduction among the respective groups of the population should be better acknowledged and measured.

Role of Social Security Code in achieving universalization:

• Creation of social security fund: It seeks to establish a social security fund and tap the corporate social responsibility fund to offer unorganized sector workers medical, pension, death and disability benefits via the employee state insurance corporation.
• Increase in role of national government: It will empower the central government to exempt select establishments from all or any of the provisions of the code and makes Aadhaar mandatory for availing benefits under various social security schemes.
• It will offer flexibility to the government to lower the EPFO monthly contribution by employees to boost their take home salary.
• Formalization of informal sector: Under the new code, every employer and contractor will be obliged to maintain registers and deliver returns every month to the State Board providing details of the employees in respect of whom contributions become due.

Concerns associated with Social Security Code:

• Ambiguity and overlapping of laws: The legal framework as proposed in the Code and Rules implies that the basic onus lies on informal workers registering as beneficiaries.
• Similar provisions are already there in existing social security schemes run by State governments under the Unorganized Workers Social Security Act, 2008.
• Digital Illiteracy: The online registration places a further challenge as most informal workers lack digital literacy and connectivity.
• The informal workers also find it difficult to furnish all documentary papers required as part of the registration process.
• Absence of tangible employer-employee relation: Most informal workers are footloose casual workers (26% of all workers) and self-employed (46% of all) and they move from one place to another in search of livelihoods.
• Furnishing proof of livelihood and income details in the absence of tangible employer employee relations is very difficult.
• Maternity benefit under SS code is not universal: Under the SS Code, the provision of maternity benefit has not been made universal.
• The maternity benefit is presently applicable for establishments employing 10 workers or more.
• Centralisation of social security: While the SS Code espouses universalization and claims to cover every worker, it keeps the power to fix the threshold for eligibility under the Code with the Central government.

Measures to be adopted to achieve universal social security:

• Inter-State cooperation is a must: It becomes imperative because unorganised workers are spread across the length and breadth of India.
• Increase in role of central government: It should conceptualize a basic structure, which if successful, should be adopted by States after necessary customization.
• Implementing rights-based social protection and anchoring rights in law: It calls for the establishment of social protection floors and higher levels of protection by law.
• The only way of effectively guaranteeing social security rights is to specify clearly by law the role, responsibilities and rights of all the parties concerned.
• Social solidarity is a prerequisite for universal social protection: It strengthens social cohesion and social peace, and it is a powerful weapon against poverty and inequality, and an effective instrument for making societies more equal and just.
• Inclusive social protection systems: These are important tools to work towards social inclusion and equality, including gender equality, and to address inequalities and discrimination.
• Step up efforts to reach basic income security: In order to close social protection gaps, contributory (social insurance) schemes and non-contributory schemes are essential components of national social protection floors, with a view to securing at least basic income security for all.

Way Forward:

• The provision of social security could be used to formalise the workforce to a certain extent and employers should be made to own up to the responsibility of providing social security to their workers.
• The state has a responsibility but primary responsibility still lies with employers since they are taking advantage of workers’ productivity.
• A well-defined social security programme needs to be welfare oriented, inclusive, wider-based and better implemented.
• It would be advantageous to have universal schemes at least for the next few decades, until India achieves a better per capita income and has achieved total eradication of poverty.

Dialing Mains: 

The universalization of social security remains a distant aspiration in the newly introduced codes on social security. Comment (8 Marks, 120 words)