Among
the several important failures of the Indian development
process so far, the complete neglect of working conditions
and social security for most of our citizens is one
that is especially marked. Yet, until recently, this
issue received almost no attention from policy makers
and certainly very little attention from the media,
which has never extended itself to highlight the everyday
problems of ordinary people. The National Labour Commissions,
both the first and second, did highlight the special
and continual problems faced by workers in unorganised
activities, but these have mostly been treated as reflecting
a depressing reality rather than as objects of policy
intervention.
Of
course, there have been some minor measures by central
and state governments towards some social security provision
to deprived and marginalised categories, such as pensions
for widows, but these have been so limited in scope
and so paltry in amount that they have amounted to almost
nothing. That is why the concern expressed in the UPA
government's National Common Minimum Programme, and
the subsequent setting up of a high-level Commission
to look specifically into these and other issues relating
to enterprises and employment in the unorganised sector,
was greatly to be welcomed.
The first report of this Commission has just been released
(''Social Security for Unorganised Workers: Report of
the National Commission for Enterprises in the Unorganised
Sector'', Government of India, May 2006) and it makes
far-reaching but workable proposals to provide some
minimal social security to the vast majority of our
workers. It also provides the framework for important
and necessary legislation to ensure that this is provided,
which should become an immediate priority of this government.
The first issue of course is defining the universe which
is covered by the term ''unorganised''. The unorganised
sector is defined by the Commission as referring to
all unincorporated enterprises owned by individuals
or households, employing less than ten people. However,
it is also recognised that even in the so-called formal
sector, there are many workers who do not have the rights
and privileges of ''organised'' workers, and therefore
includes in its purview not only all those working in
the unorganised sector, but also those workers who are
in the formal sector, but without any employment security
and social security provided by the employer. Table
1 indicates the inter-relationship between the two categories.
Table
1 >>
The
nature and extent of the problem then immediately become
obvious. Using these definitions, the Commission estimates
the number of workers in the unorganised sector to stand
at 340 million in January 2000, and the total informal
workers (including those working without protection
in the organised sector) at 362 million. This amounts
to 86 per cent and 91 per cent respectively of total
employment in India at that time.
It is often thought that informalisation is a feature
that is predominant in agriculture and some services,
with more ''modern'' sectors exhibiting less of it. In
actual fact, most formal or organised economic activities
also rely on the use of ''informal' - that is, unprotected,
workers to different degrees, so that their prevalence
is much more widespread than is commonly supposed in
almost all the sectors. Chart 1 provides an indication
of the share of informal workers to total workers across
sectors. Barring the utilities, that is electricity,
gas and water supply, informal or unprotected workers
account for more than half of workers in all the sectors,
and two-thirds or more in all other sectors except mining
and quarrying.
Chart
1 >>
The
most important feature shared by all these workers is
the absence of any sort of protection: whether it be
employment security, pension, or coverage for risks
such as ill health, accidents, death etc. Indeed, for
most of these the most basic protection, that is minimum
wage, is also not ensured. The problem is compounded
for the very large proportion of workers who are self-employed
at low levels of productivity and therefore income,
where it is not possible to put any responsibility of
protection or social security upon employers.
The
Commission divides the social security problems of all
informal workers into two categories. The first is seen
to arise out of capability deprivation, and essentially
relates to the terms, conditions and remuneration of
employment. This creates such problems as inadequate
work availability, low earnings from work, insecurity
of contract and possibility of termination, low health
and educational status leading to access to only low
productivity jobs. The second category of problems belongs
to those arising from both predictable and unforeseen
adversity, because of the absence of any safety nets
to meet ill health, accidents, old age and death.
The first set of problems clearly require more than
social security measures, since they reflect broad development
processes and macroeconomic strategies that have involved
the persistence of poverty, low levels of education,
aggregate low productivity and so on. It is clearly
unrealistic to expect social security measures to address
these larger problems in any meaningful way. Instead,
this Report focuses on measures to alleviate to some
extent at least, the second set of problems, and to
provide to the bulk of citizens in India who have hitherto
been excluded, at least a modicum of basic protection
against adversity.
It is clear that there is no alternative to a very proactive
role of the state in providing such security. The Report
provides some very interesting international experience,
both historical of some developed countries and current
of some developing countries such as China, Indonesia,
Tunisia and Brazil, to show how such measures to provide
social security can be combined with measures to increase
aggregate economic growth. The important lesson from
all this international experience is that a country
need not wait until it is fully ''industrialised'' with
high levels of per capita income, to extend social security
to those who have so far been excluded.
Various such schemes have indeed been suggested, for
example by the National Commission on Rural Labour and
the Second National Labour Commission. However, this
particular Commission has suggested a bold new scheme
which departs from these earlier proposals in some significant
ways. There are several major differences, and important
features of these recommendations, which make this a
very different proposal which is intended to lead to
landmark legislation:
-
It
is a national initiative proposing universal coverage
of all informal workers in both rural and urban
areas, and in both unorganised and organised sectors.
-
It
is a rights-based scheme, proposing a legally enforceable
entitlement.
-
All
informal workers are eligible to join, irrespective
of occupation or duration of employment.
-
It
is a voluntary and contributory scheme, whereby
the worker, the employer and the government each
pays Rs. 1 per day per worker. (In the case of BPL
workers, the worker's contribution is to be borne
by the central government.)
-
It
is designed to provide a minimum combination of
health, life and old age benefits at the national
level. State governments are free to add to this
as they choose, in terms of contributions or additional
benefits.
The
basic benefits that are recommended by the Commission
consist of the following:
Health
insurance:
-
Hospitalisation
costs for member and family up to Rs. 15,000 per
year.
-
Maternity benefits up to Rs. 1000 per delivery for
member or spouse.
-
Sickness cover for earning head of family at Rs.
15 per day for a maximum of 15 days.
-
One time grant of Rs. 25,000 in case of accidental
death or Rs. 15,000 for permanent disability of
breadwinner.
Life
insurance:
Old
age security:
-
All
BPL workers to get pension of Rs. 200 per month
after the age of 60 years.
-
All
non-BPL workers to be entitled to a Provident Fund
accumulating from the date of registration into
the scheme and earning a guaranteed return of 10
per cent per year.
-
Provident
Fund scheme can also be used a unemployment relief
- after 10 year's contribution, if the worker becomes
unemployed, s/he would be entitled top draw up to
50 per cent of the accumulated sum as unemployment
benefit for a period of 6 months. When the worker
becomes employed again, s/he can continue with the
scheme by renewing the contribution.
Of
course these are not huge amounts that are being provided
under the proposed scheme, and the amount of coverage
is still so low that it would still leave most families
with need to look elsewhere to finance the total costs
of these contingencies. But in a context where thus
far there has been nothing at all in terms of either
state provision or even access to pension funds and
insurance schemes for most of the poor, these are likely
to play an extremely important role in providing some
degree of relief from uncertainty and fear of the future
which are currently such a constant feature of the material
life of informal workers.
Another
criticism could be that this kind of scheme will be
very expensive and put a huge and unmanageable burden
upon the government. But in fact the costs are relatively
little in relation to the huge benefits in terms of
providing some social security coverage to some many
millions of workers. Estimates by the Commission, described
in Table 2, indicate that even if the scheme covers
as many as 343 million workers, as projected for 2010-11,
the estimated costs for Central and State government
combined with administrative costs of implementing the
scheme, are not likely to exceed even half a per cent
of GDP. In the next few years the scheme would cost
only around 0.3 per cent of GDP, which is a negligible
amount.
Table
2 >>
There
are clearly very pressing economic and political reasons
why this proposal should be taken extremely seriously
by the Central Government, and why the enabling legislation
should be placed as soon as possible in Parliament.
There is first of all the obvious issue of justice and
socio-economic rights, which implies that the denial
of basic protection to the vast majority of workers
is simply unacceptable and should be remedied as soon
as possible.
In
addition, there is the economic argument in favour of
such protection - it is now widely accepted internationally
that the absence of social security debilitates workers,
affects labour productivity and thus has implications
that extend far beyond the workers and their families
themselves. The indirect costs of the absence of social
security, as pointed out in the Report, might well be
expressed in the greater social costs of policing and
management of illegal and criminal activities, widespread
ill-health and various other social problems.
But there are also political reasons, which no government
in a democracy can afford to ignore. It is increasingly
clear that the process of development in India must
become more socially and economically inclusive if it
is not to generate very severe social tensions that
can lead to disruption and violence. This proposal,
along with the National Rural Employment Guarantee Act,
provides important steps in the direction of a more
inclusive economy, which is the necessary underpinning
of a stable and democratic society.
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