Assembly of Working People 2008: Social Security

What is Social Security?


Social Security caters to the universal human need for reassurance and support in times of unemployment, illness, disability, death and old age. The State bears the primary responsibility for developing appropriate systems for providing protection and assistance to its workforce and their families. [p 53, Chapter 6: Social Security, Annual Report 2005-2006, Ministry of Labour, Government of India]


What is the problem of Social Security in India?


The Social Security schemes in India cover only a small segment of the organized work force, which may be defined as workers who are having a direct regular employer-employee relationship within an organization. The social security legislation in India derives their strength and spirit from the Directive Principles of the State Policy as contained in the Constitution of India. [p57, Chapter 6: Social Security, Annual Report 2006-2007, Ministry of Labour, Government of India]


Critique of the Bill as Passed by the Rajya Sabha


The primary criticism of this bill arises from the fact that it attempts to formulate a social security net for workers in the informal sector but all the schemes that it has currently included do not take the applicant to be a ‘worker’. All the schemes are devised in such a manner that the status of the beneficiary as a worker is irrelevant. In addition to this the following issues are of serious concern regarding the current bill:

  • On the Definition of Agricultural Workers: By doing away with the definition of agriculture the bill has bundled agricultural workers with all other categories of informal sector workers. Agricultural workers represent the single largest category in the informal sector and are also the most deprived. Hence the legislation has failed to understand and internalise the specificities of this category and has therefore failed to reach out to them.
  • On Defining the Unorganised Sector: The present bill defines the Unorganised Sector as that comprising of ‘enterprise(s) owned by individuals or self- employed workers and engaged in the production or sale of goods or providing service of any kind whatsoever, and where the enterprise employs workers, the number of such workers is less than ten’ as opposed to the original definition that included all private enterprises employing less than 10 workers engaged in the production and sale of goods and services. The modification leads to the exclusion of the entire workforce that is informally employed in the organised sector from the purview of this Act thereby defeating the very purpose of this Act in the present context of increasing contractualisation and outsourcing of work in the organised sector.
  • Definition of a wage worker: The bill leaves the monetary ceiling of a wage worker to be decided upon the government. This is delegated legislation without precedent. Furthermore, in that powers in this matter under the bill are to be left to either the central or to state government it will leave the option of different state governments declaring different ceilings creating opportunities for states to have lower ceilings and thereby compete with one and another as ‘capital friendly’ states. In all existing labour legislation such ceilings are every bit a part of the legislative mandate. Not just must this mandate remain within the remit of the powers of legislature there is need to break new ground by shifting the ceiling from a monetary sum to a principal of wage payment. Hence we demand that the ceiling should be fixed at 4 times the floor level national minimum wage as recommended by the Ministry of Labour. This will allow for both uniformity as well as well as do away with the need for corrective amendments from time to time.
  • Definition of the Unorganised Worker: The bill defines an Unorganised worker as “a home-based worker, self-employed worker or a wage worker in the unorganised sector and includes a worker in the “organized sector who is not covered by any of the Acts mentioned in Schedule II to this Act”. Schedule II lists the following Acts:
    • The Workmen’s Compensation Act, 1923 (8 of 1923)
    • The Industrial Disputes Act, 1947 (14 of 1947)
    • The Employees’ State Insurance Act, 1948 ( 34 of 1948)
    • The Employee’s Provident Funds and Miscellaneous Provisions Act, 1952 ( 19 of 1952)
    • Maternity Benefit Act, 1961 (53 of 1961)
    • The Payment of Gratuity Act, 1972 ( 39 of 1972)

This ensures that a contract worker working in the organised sector is out of the purview of this Act.


  1. Implementation of the Act: No agency or authority is defined by the bill for the implementation of social security provisions. The National [Chapter III] and State Boards [Chapter IV] have purely recommendatory, advisory and review powers. The power to issue identity cards and has been grated to District Administration and record keeping to Panchayats and Urban Bodies. While this decentralisation is welcomed implementation of the social security provision needs to be handed over to specialised department of government, at every level – national, state and local, that is imbued with the spirit of social security as a universal right rather than an anti-poverty hand out. This gains particular importance in rural areas, with the experience behind us where the implementation of the NREGA is very much seen at the district and the block level as a give-away rather than a right guaranteed by parliament. In view of the Right to Information Act, 2005 the foregoing provisions must be complimentary to the Act reducing one step in the procedures for access to information.
  2. Social Security Schemes: The Act includes a number of existing schemes but almost all these schemes are for people Below the Poverty Line (BPL) possessing BPL cards. There are no schemes that may include the lowest end of the urban working class. A brief summary of the schemes is attached as Annexure I.


How to implement the Act


The Bill with its problems has been passed by the Rajya Sabha. With all its gaps we need to use this Act as yet another tool for organising rural and urban workers in the informal sector. Along with building up a campaign for a separate legislation for regulation of work and for amendments in the present bill, we need to realise that howsoever limited, this bill opens up the avenue for bringing rural and urban workers in the informal sector together on the issue of social security. The Act has very limited scope but it provides a necessary break in the general notion of social security schemes.


For the first time, like in the NREGA, the government has given the lowest end rural and urban workers a right to a minimum social security. Proper implementation of the schemes would also mean that the workers will get a portion out of the total pie in the government’s budget allocation in addition to the minimal benefit the schemes would provide. In this attempt, it is essential for the workers to register in large numbers under these schemes. It would not only open up the fissures within these schemes but also strengthen the organisation of the workers.




  1. Legislation for both regulation of employment and provision for social security: Social security is a necessary but insufficient provision for removing the insecurity of workers in the informal sector. In order to remove insecurities of workers in the informal sector concurrent and simultaneous legislation must be put in place to regulate employment and conditions of work in the informal sector, where in separate legislative protection be provided for agricultural workers and non-agricultural workers alongside legislation for universal social security.
  2. Criteria for Social Security Legislation: Social security legislation that covers the poorest section of the workforce must be universal in its reach and coverage and must provide for such benefits that are caused by inability to access gainful employment. By implication, a universal social security benefit must be aimed at all citizens and not just workers. Core benefits as defined as the minimum provision of benefits must by their very nature be non contributory. These basic values were protected to some extent in the recommendations of the National Commission for Enterprise in the Unorganised Sector and have been considerably diluted in subsequent drafts by the Ministry of Labour.
  3. Framing of Schemes: It is critical to provide National Minimum Social Security Benefit and define the basis of it in terms of, in relation to and in quantitative proportion with the statutory minimum wage. The National Minimum cannot be in any way linked to either the contribution of workers or be subject to the availability of funds. In the event of funds raised through employers’ contributions, taxes and levies falling short, then the costs of the National Minimum must be met through the Central Government’s budgetary funds.
  4. Representation of Trade Unions: The composition of Central and State boards assumes an enormous role of experts. The Bill envisages no role for trade unions. Social security is a right in a representative democracy and hence, workers cannot be represented at large [clause 5(2)c(i) and (ii)and 6(2)c(i) and (ii)] but must be represented through the democratically verified strength of the membership of trade unions.
  5. Dispute Resolution Machinery and Provisions for Violations of Legislation: The bill provides no machinery for raising of disputes and dispute resolution. Nor does it provide for any penalties for violations of the act. Furthermore, it places the entire burden of proof of violation on beneficiaries.
  6. Enforcement of the Act: There should be compulsory enforcement of employers to employ only 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.