The Hindu Business Line : Casting a safety net

The plan to provide health, life and social security cover to 30 crore unorganised workers will have a positive impact that will only be enhanced by industry chipping in.

The Government’s intention to augment relief to textile workers rendered jobless by the closure of units cannot be faulted. To this end, the Centre may relax the rules under the Textile Workers’ Rehabilitation Fund Scheme (TWRFS), started in 1986. Under the TWRFS, a laid-off worker is entitled to relief if he has put in at least five years in the closed unit; this provision could be relaxed to include workers who have worked for shorter periods. Workers in 161 closed non-SSI mills stand to benefit. However, the Government needs to take a broader view of social security systems and their crucial role in improving economic output. About 90 per cent of the country’s 400-million work-force have no health and pension cover. This situation is not just morally unacceptable — it also suggests that the economic benefits of investing in a social security system have not been appreciated.

With better health and education infrastructure as well as universal insurance cover in place, workers will be better equipped to tide over occasional spells of unemployment. This will lead to smoother resolution of industrial disputes in the event of restructuring or closure, and therefore to efficient allocation of land, labour and capital. If the Board for Industrial and Financial Reconstruction has revived barely 18 per cent of the 850 sick textile units registered with it, one of the reasons is that labour-management disputes become sticky in the absence of a social cover. Rather than lament the absence of ‘labour reforms’, industry should join the government as a stakeholder to create a social safety net. Such an investment will yield long-term returns, particularly in labour-intensive sectors such as textiles. Measures such as the TWRFS reflect a short-sighted approach. The Government should, instead, ensure the passage of the Unorganised Workers’ Social Security Bill, tabled in Parliament in September 2007. Apart from the Parliamentary Standing Committee on Labour making some critical observations, there has been little debate on the matter.

In order to implement this legislation, the National Commission for Enterprises in the Organised Sector (NCEUS) had proposed a five-year expenditure plan (2006-11) for the Centre and the States, with the coverage of workers increasing gradually each year. To provide basic health insurance, life insurance and social security cover to about 30 crore people in the unorganised sector, the NCEUS estimates an annual requirement of Rs 25,672 crore, with the Centre contributing Rs 20,853 crore and the States the rest. The Standing Committee rightly points to limitations in coverage and scope, but this can be improved upon with more resources. Industry should pitch in, at least in the interest of ensuring a healthy and productive workforce. To carp about the fiscal impact of such initiatives is to miss the big picture.

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More Stories on : Editorial | Textiles | Social Security

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