2006 Statement on Draft Social Security Bill
NTUI Statement On the Recommendations and Draft Bill on Social Security for Unorganised Workers of the National Commission for Enterprises in the Unorganised Sector
The vast majority of workers in India are still employed in the informal economy. The national average of informal employment in India is 91 percent (NSS 56th Round, Employment Unemployment Survey). In this context regulation of employment and provision of social security all workers in the unorganised sector is of critical necessity. This has been the principal demand of the trade union movement in India.
According to the Report on “ Decent Work and Informal Economy” (Report VI, International Labour Conference, 90th Session 2002, International Labour Office, Geneva) an informal economy can be identified by the “seven essential securities which are often denied them: labour market security (adequate employment opportunities through high levels of employment ensured by macroeconomic policies); employment security (protection against arbitrary dismissal, regulation on hiring and firing, employment stability compatible with economic dynamism); job security (a niche designated as an occupation or “career”, the opportunity to develop a sense of occupation through enhancing competences); work security (protection against accidents and illness at work, through safety and health regulations, limits on working time and so on); skill reproduction security (widespread opportunities to gain and retain skills, through innovative means as well as apprenticeships and employment training); income security (provision of adequate incomes); and representation security (protection of collective voice in the labour market through independent trade unions and employers’ organizations and social dialogue institutions).” All these seven categories of essential security are completely lacking for the 91 percent workers under informal employment in the country. It is in this context that NTUI calls for legislations that adequately address these essential securities to all workers.
Much of the insecurity arises from the uncertainty of employment and income, which cannot be addressed unless a regulatory framework is put into place for the informal sector employment.
However, we recognise that social security is a universal right of all workers by virtue of them being citizens of India. This right can not be made contingent to guarantee of employment or income of workers; or contribution of employers to the social security fund of their employees, which is dependent on regulation of employment. We welcome and support the Unorganised Sector Social Security Bill, 2006 for upholding the universality of right to social security of all workers in the country, and placing the total responsibility for provision of social security to be funded through budgetary provisions of the Government. We however are concerned with serious inadequacies in the Bill, primarily on the quantum of social security provisions. There is a total disjunction between the stated approach underlining the Arjun Sengupta Report, and the outcomes and recommendations. The benefits under the Bill are totally inadequate to meet the actual needs of social security of workers and have been made contingent to a minimalist financial strategy.
NTUI therefore strongly demands the following modifications in the Bill:
NTUI recommendations for the Bill
- Registration: Registration along with provision of a unique social security number shall be the responsibility of the state and not the individual workers.
- Enforcement: There should be compulsory enforcement of employers to employonly registered workers, and violation should be made a criminal offence.However the benefits under the Social Security Bill should not be contingent on or linked to enforcement.
- Pension: It is fixed arbitrarily at Rs. 200 per month per worker. There is no basis for this calculation. Standard pension calculation is at 50% of average emoluments drawn by a worker during the terminal year of employment. The formula is similar in the case of other employees in the formal sector. There should be no discrimination in evolving the pension formula between the formal and informal sectors. The difference can only be in the quantum of pension, and not in the formula for calculating pension. We therefore demand that this be the standard pension formula for all workers in the informal sector, with the proviso that the minimum pension payable to a worker in the informal sector in any state shall be as calculated based on the minimum agricultural wage in the state or under NREGA, whichever is higher. At the present rate of a minimum wage under NREGA of Rs.60 per day, the minimum monthly pension of a worker in the informal sector would therefore be Rs. 60 × 30 × 0.5 = Rs. 900.
- Other benefits: Based on the above norms other benefits under the Bill should be proportionately revised upwards. The provisions related to women workers should adequately compensate for the reproductive and nurturing responsibilities that society has placed upon them.
- Finances: Arjun Sengupta’s Report estimates the financial requirement to 0.17% of the GDP in the first year and 0.39% of the GDP in the fifth year. This is an abysmally low expenditure to GDP ratio. The contributory base should be expanded in order to meet the additional financial commitment. It should include all employers employing more than 20 workers and the contribution should be in the form of a social security tax payable by all such employers. It is evident that given the minimum pension entitlement by the standard pension formula enumerated above works out to about five times the pension prescribed by the Arjun Sengupta Report, the financial requirement for this enhanced entitlement would still be under 2% of the GDP by the fifth year. This is lower than social security expenditure to GDP ratios for other comparable developing countries.
This we argue because we believe that there are very clear formal-informal sectoral linkages and hence the responsibility of providing for the social security of workers in the informal sector should not solely rest with their direct employers. Global commodity and value chains are clear examples of how the formal and informal economies are linked across the borders of many countries. As we move lower down the chain, employment relationships are more likely to be informal. In traditional activities, links are more apparent. For example, in an ILO study of waste picking in Pune, the process of recycling could be traced from the waste pickers to the traders to the wholesalers to the large recycling plants in the formal sector.
- Workers’ Participation: The bill only allows for worker participation in Worker Facilitation Centres, without adequately allowing unions and workers’organisations to become active partners in managing and controlling the scheme. The Bill should provide for proper structures, processes and protocols for effective participation.
- RTI: The Bill should provide for clear applicability of RTI Act covering all aspects of its functioning, as is done in the NREGA.
10 July 2006
Delhi