The Ministry of Labour and Employment is developing a comprehensive model social security scheme for the 5.73 crore ‘building and other construction workers (BOCWs)‘ registered across the States. This ambitious initiative will be funded by an unutilised corpus exceeding ₹70,000 crore, accumulated from welfare cess levied on construction costs.

This substantial fund represents the aggregate of unspent monies held by individual State and Union Territory Building and Other Construction Workers Welfare Boards. These funds are primarily generated through a cess, ranging 1- 2 per cent, collected from employers on the total cost of construction.

Sources indicate that the Ministry aims to create a model social security scheme that States can adopt. This scheme would provide individual pensions to registered workers upon their retirement at 60 years of age. Given that labour is a State subject, the Centre can only offer this as a guiding framework. It is noteworthy that some States and UTs, such as Delhi, already provide pensions to BOCWs.

Social security

The proposed scheme aligns with the government’s broader objective of extending social security benefits to gig and platform workers, in addition to the existing PM Jan Arogya Yojana. It is expected to be rolled out by the year-end.

Ministry sources clarified that registered workers would become eligible for social security benefits only after completing a continuous number of years of service, with the specific criteria still under development. The Employees’ Provident Fund Organisation (EPFO) is being considered as the fund manager for this welfare scheme.

While the Ministry’s model scheme will guide States and UTs, the ultimate determination of pension amounts, eligibility criteria, and disbursement methods for registered BOCWs will remain at their discretion.

In the event of a BOCW’s death before reaching 60, the accumulated funds due to them will be disbursed to their family, similar to other life insurance schemes. Should a worker pass away after turning 60, the declared nominee in their family will be entitled to receive the pension. Ministry sources affirmed that no funds due to a worker will be retained by the government; they will be handed over to the family according to the finally decided norms.

The Ministry believes that the current unspent cess of over ₹70,000 crore is not being adequately utilised by States, prompting the need for this centralised initiative. State governments and UT administrations have been mandated to collect these welfare funds since the enactment of the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act in 2005.

Top state

Official Ministry data reveal significant disparity in BOCW registration, with Uttar Pradesh having the highest number at over 1.64 crore, while Ladakh reports no registered BOCWs.

Various reports by the Comptroller and Auditor General (CAG) have highlighted instances where the labour cess collected for construction workers’ welfare was not used for its intended purpose. In some States, funds were left idle or diverted for other governmental expenditures, depriving workers of their entitled benefits, as observed during the Covid-19 pandemic in 2020.

Published on June 10, 2025