NEWS LETTER

Concept of Social Security

The onslaught of globalisation and privatisation have pushed to the background the concern for human welfare and the role of the State in promoting welfare . The apologists for the private sector and the market economy have been ridiculing welfarism as outmoded and are advocating the dismantling of the welfare system Indeed there is an on going debate all over the world about the crisis of the welfare state which is said to be in liquidation or in retreat. This subject ranks high on the political agenda in many countries. But there has been no fundamental change in the welfare system in any country except perhaps the former socialist countries. Some adjustments have been made in the welfare schemes. To tide over immediate financial difficulties but the welfare system as such exists and there is reason to believe that it will continue to exist. At the General Assembly of the International Social Security Association, an association of social security institutions, held in 1992, it was noted that all over the world –in both developed and developing countries- there is a growing need for social protection, and nowhere is this need diminishing.. Modern social state is an extension of the liberal State based on the rule of law created as a reaction to undesirable conditions of society . It has to continue so long as those conditions persist in one form or the other .

India is avowedly a Socialist State. Its aim is to eliminate inequality of income and status and standards of life. The basic framework of socialism is to provide a decent standard of life to the working people .. The new economic policy based on liberalisation has not renounced this social philosophy underlying the Constitution of India dictum. According to the former Prime Minister who initiated the new economic policy it was not meant to be discarded. He has explained the new policy as follows.

“Five decades ago, India made a tryst with destiny. The most important ingredient of that tryst, taken from Mahatma Gandhi’s well-known Talisman, was simple : “when you wish to know if anything you want to do is good or not, imagine the face of the poorest man in the land and ask yourself whether your proposed act will be of any gain to him…..Parliament endorsed the Talisman when the Lok Sabha declared : ‘The basic criterion for determining the lines of advance must not be private profit but social gain, and that the pattern of development and structure of socio-economic relations should be so planned that they result not only in appreciable increase in national income and


1.  The role of social security systems on the threshold of the new millenium by Walter Geppert in Social Security Tomorrow: Permanence      and change ; International Social Security Association Geneva
2.  ibid
3.  Nakara v Union of India AIR 1983 SC 130

employment but also in greater equality in incomes and wealth’ Neither Parliament itself nor any political party has said anything opposed to this dictum so far. Private profit may have since entered our calculations more but social gain has never been jettisoned.”

The concept of social security has developed in the course of a historical process .A sense of insecurity is inherent in human condition as man is exposed to various kinds of risks and dangers. Initially, the dangers were perceived in the external environment by the threats posed by natural phenomena As civilization progressed man began to look upon his fellow beings as his enemies and to protect himself against them. Societies and States were formed and the institutions of the army and the police came into being. As civilization progressed further social ills and economic dangers began to pose greater threat to human life . So social security was born to protect them against such risks.

According to UNDP , .“For most people, a feeling of insecurity arises more from worries about daily life than from the dread of a cataclysmic world event. Will they and their families have enough to eat? Will they lose their jobs? Will their streets and neighborhoods be safe from crime? Will they be tortured by a repressive state? Will they become a victim of violence because of their gender? Will their religion or ethnic origin target them for prosecution?

In the final analysis, human security is a child who did not die, a disease that did not spread, a job that was not cut, an ethnic tension that did not explode in violence, a dissident who was not silenced. Human security is not a concern with weapons-it is a concern with human life and dignity..”

“Human security can be said to have two main aspects. It means, first, safety from such chronic threats as hunger disease and repression. And second, it means protection from sudden and hurtful disruptions in the patterns of daily life – whether in homes, in jobs or in communities. Such threats can exist at all levels of national income and development.

“The loss of human security can be a slow, silent process – or an abrupt, loud emergency. It can be human made – due to wrong policy choices. It can stem from the forces of nature. Or it can be a combination of both-as is often the case when environmental degradation leads to a natural disaster, followed by human tragedy.”

How to ensure human security ? In addressing this question we are mainly concerned with the dangers which affect the livelihood and the quality of life of the people and not with the physical dangers to life and property in the form of enemy action or anti social elements..


4.  Banking on Basic Truths by P.V.Narasimha Rao Outlook June 25, 2001
5.  Human Development Report 1993
6.  ibid

There are different perceptions of the need for such security and the means of ensuring it .

Initially, at the beginning of the industrial revolution  “the philosophy  of the day was that workers could and should make their own arrangements  to counteract life’s risks yet  they were so absorbed in the day to day struggle for survival  that it was unrealisitic to  expect  them to anticipate  or plan for possible or distant eventualities” It gave rise to social insurance and social security. Social insurance and social security  came into being. The world has since gone round the circle. The current thinking again is that  every  individual should make his or her arrangements for meeting the contingencies or risks of life  so as the free the State and the employers from the obligation to look after the  people and the employees..

Self reliance  is undoubtedly laudable and  necessary. This was one of the  precepts taught by Gandhiji.   ”The concept of human security stresses that people should be able to take care of themselves : all people should have the opportunity to meet their most essential needs and to earn their own living.  This will set them free and help ensure that they can make a full contribution to development – their own development and that of their communities, their countries and the world.   Human security is a critical ingredient of participatory development”. But  this philosophy  may not hold good  for all people in all circumstances... which necessitates public action .

The philosophy of self protection is based on the  effeciency of the market mechanism and the faith in the free play of the market forces. It is well known that though a free market provides the most efficient mechanism  for the exchange of goods and services, the market is hardly free  anywhere. Most markets are stifled by barriers . and  they have tended to be  unfriendly to  people .  Wherever  markets are dominant  there is inequality  poverty and large scale unemployment They  exercise no value  judgements  and have no concern for equity. The motivation for the market forces  is private profit  and not social good. In a sense it is antithetical to social good  and it cannot safeguard  the interests of the community. On the other hand it  drains out the natural resources  which the UNDP  describes as “a continuing hemorrhage “

“Every country (therefore)  needs to establish effective social safety nets to catch the victims of the competitive struggle – such as the temporarily unemployed – and to protect the lowest income groups, the young, the old and the disabled.” 

The economically developed countries   have established such safety nets  on which they are spending up to 40 % of their GDP  Developing countries generally and  India in particular,   are lagging behind  in this area as well.. According to the World Labor Report, 2000, the public  expenditure on social security in India is 1.8  % of  GDP against 4.7 % in Sri Lanka and 3.6 % in China. It is one of the  measures of human  development these countries have achieved  and the distance they have yet to travel. It is obvious that.


7.  Social Security Principles International Labor Office . Geneva 1998
8.  ibid

we have travel a long way to ensure that all the people  in India are covered by social security.

Comments on the Unorganised workers  Social Security Act, 2008 and recommendations made toNCL
by Shri.R.K.A.Subramanya advisory board member, NCL and former secretary general,social security association of India(SSAI)

It is noted and stated fact that the Unorganised workers Social Security Act, 2008 is an enabling legislation. It lays down the framework  for  the schemes to be formulated  to provide social security to the workers . The  law requires  that  the Central and State governments should frame rules  and constitute National and State level Boards .  Eventually schemes will be formulated on the recommendations of the Boards  and they may take into consideration all the suggestions made by the various authorities.

Title of the Act: The Acts provides  for the social security and welfare of unorganized workers . In other words, the scope of the  Act has been broadened to  includes social security as well as welfare  benefits  of the workers

The Act will come into force  on such date as the Central Government may by notification in the Official Gazette appoint . There is no information whether  the Act has in fact been brought  into force and if so from what date . If it has not yet been brought into force  the Government may asked to bring into force immediately or before the close of this year .

Definitions : Self employed Worker : The Government is yet to notify  the ceiling of monthly income or the land ceiling  subject to which the Act will be made applicable  to the self employed workers

Unorganised worker: According to the definition  an enterprise where  the number of workers employed is less than 10  will be deemed to be in the unorganized sector .Any establishment  employing ten or more persons will be  deemed to be in organized sector  At present  the ESI and the EPF Acts are applicable to establishments employing twenty or more persons . Although there are proposals  to extend  the coverage of these Acts to establishments employing less than 20 persons,  no decision has been taken  on these proposals . In the given circumstances, unless the  application of the existing  laws  is extended  to smaller  those establishment employing ten to twenty person, they will not be covered under the new Act nor   under the existing Acts. Government should take an early decision to extend the application of the existing laws to all establishment employing ten or more  persons.

Workers employed  in an establishment employing less than twenty but more than ten  are not now covered  under the ESI or the  EPF Act . But they may be covered under the  Workmen’s Compensation Act, Maternity Benefit Act   or the Payment of Gratuity Act which are applicable to establishments employing lesser number of workers  or where  there is no limitation on the application of the Acts on the basis of the number of person employed . Each of these Acts provides only for single benefits . If they are excluded  from coverage under the new Act  they will be deprived  of the other benefits  to which they would be entitled  under  that law . It  is therefore desirable to omit the words “any of the” in the definition  of the term “unorganized worker”  in clause “m “ of  Section 2.

The wage ceiling for application of the Act has to be notified.

Chapter II

The Act  requires that the Central Government should formulate  and notify  from time to time  suitable welfare  schemes  for unorganized workers  on matters relating to :

  1. life and disability cover
  2. health and maternity benefits
  3. OldAge protection
  4. any other benefit  as may be determined  by the Central Government

 

The State Government may  formulate  and notify  from time suitable welfare schemes  for unorganized workers , including schemes relating to

  1. provident fund
  2. employment injury benefit
  3. housing
  4. educational  schemes
  5. skill upgradation of workers
  6. funeral assistance
  7. oldage homes

Although all the schemes to be framed by the Central government or the State governments are described as welfare schemes ,  the schemes to be formulated by Central government are  in the nature of social security benefits and are mandatory  and those  which may be formulated by State Government  are  in the nature of welfare schemes and are optional except  for the employment injury benefit . Employment injury benefit  is in the nature of social security and should have been included in the list of schemes  to be formulated by the Central government mandatorily

As per Convention no 102  there are nine branches of social security namely:

Medical care
Sickness benefit
Employment injury benefit
Maternity benefit
OldAge benefit
Invalidity benefit
Survivors benefit
Unemployment Benefit
Family benefit

Of these the Act  provides for the following:
Life and disability  cover :  which means survivors benefit and invalidity  benefit
Health and maternity benefit: which means medical care  and maternity benefit
Oldage  protection :   provides oldage benefit
Employment injury  benefit:   employment Injury

There is  no provision  for sickness benefit   unemployment benefit  or  family benefit
There is however a provision for  any additional benefit to be provided for at the discretion of the Central Government.The Central Government must include employment injury benefit, unemployment  benefit and family benefits  in the list of  schemes.

Chapter III

The Act requires the Central Government to constitute a National Board to be known as the National Social Security Board . The composition and functions of the board have been specified .

Chapter IV
The Act also requires  every State government to constitute a State Board  known as the ---State Social Security Board  The composition and functions of the Board  have been specified .

Financing of the schemes formulated by the Central Government or the State Governments will be determined  by the respective Boards . Appropriate suggestions may be made when the Boards are constituted and  proposals are taken up for consideration

 The Act provides  that record keeping functions for purpose of the Act  shall be performed by District Administration or by district panchayats and urban local bodies

The Act provides that the State Governments  may set up  workers facilitation centres  for performing certain functions specified  therein; it  appears to be  optional.

Chapter V
The Act requires that  every unorganized worker  should be registered  with the District Administration for availing of the benefits ; The Act specifies who  would be eligible for registration and it provides for issue of a identity card  to each registered worker

Chapter VI

The Act requires  the Central as  well as State Governments to frame rules   for implementation of the Act  The A ct cannot be brought into force unless the rules are framed.

There is some ambiguity about the administrative arrangements for implementing of the Act. It appears the responsibility for  registering the workers , receiving their claims and dispensing the benefits rests with the district administration which is already overburdened with multiple functions. It seems necessary that a separate organisatrion should be  created to administer the  schemes framed under the Act.

Recommendation to NCL

1. NCL can now do is to urge the Government to frame rules bring the Act into force and constitute the Boards early. NCL may also ask the government to give it representation in these Boards In the meantime formulate its own views on the types of schemes it would like to have

2. Whether the schemes should be drawn up separately for each employment or groups of employments or collectively for all employments It may be seen from the Schedule to the Act ; that there two types of schemes already in force . Some schemes such as the Oldage Pensions Schemes are of general application ; while others are applicable to specific employments such as the National Scheme for Welfare of Fishermen, Handloom Weavers’ Comprehensive Welfare Scheme.

3. Most of the schemes listed in the Schedule are applicable to workers who are below the poverty line . Schemes have yet to be drawn up for application to workers who are above the poverty line. Provisions should be made for the workers above the poverty line.

4 The Act specifies the nature of benefits to be provided ; but it is silent about the quanta of benefits . These quanta have to be fixed after consultation with the Boards.

5. The Act specifies how the schemes may be financed . It is left to the Boards to say how any particular scheme should be financed , whether the workers have to make any contribution; if so, at what rate.

6. The Act is ambiguous about the administrative arrangements for implementing the Act . It is said that the District Administration will issue identity cards and that the same administration will keep the records The State Governments may as their option set up Welfare Facilitation Centres for certain functions. The arrangements for submission of claims and their disposal are not very clear.

 I set out below  some of the other comments  on the Act.