Rework social security code for informal workers

The Code on Social Security 2020 (SS Code) was passed in Parliament in September 2020 and obtained presidential assent. Thankfully, its implementation has been postponed due to States not issuing notifications. Now, due to the Covid crisis, implementation of all the four new Codes on labour is to be postponed to next year. This is good, since there are many problems with the Codes, especially the SS Code.

The SS Code, once in place, will merge eight existing labour laws including Employees’ Compensation Act 1923, Employees’ State Insurance Act 1948, Employees’ Provident Funds and Miscellaneous Provisions Act 1952, Maternity Benefit Act 1961, Payment of Gratuity Act 1972, and Unorganised Workers’ Social Security Act 2008.

However, the SS Code does not still provide for universal social security for 91 per cent of India’s workforce. This is especially disappointing given that the demographic dividend of young workers who can support the aged and ageing will shrink from 2030 onwards, and disappear at the end of the decade.

Moreover, many ambiguities remain in the SS Code, which are discussed below.

This new Code attempts to reconfigure the social security landscape for the unorganised sector, defined to cover diverse occupations that include the self-employment too. Gig and platform workers have been defined separately — the conceptual distinction between self-employed and gig workers is left unstated.

The Central Government is set to play a pivotal role in devising and administering SS for the unorganised sector too. So far, SS for the sector was mostly absent and whatever little was provided was by State governments. Till now, respective State governments are responsible for formulation and implementation of social security schemes for unorganised sector workers. In the new SS Code, this responsibility has been partially assumed by the Centre.

Under the Code, both Central and State governments will formulate schemes on clearly demarcated areas. This means dual authority for an individual unorganised worker. What is not specified is who will be the implementing authority at the State levele, and the fragmentation of SS for unorganised workers will continue.

Further, every eligible unorganised worker shall be required to be registered with Aadhaar, on self-declaration basis, on a portal of the Central Government. Presently, in many States, unorganised workers are registered on the State portal. The question remains whether registered workers’ data on the State portal will be transferred to the proposed Central portal or existing beneficiaries need to register afresh.

Similar arrangements also apply for gig/platform workers too. Formulation of social security schemes for these workers rests with the Centre. The problem is that the SS Code provides for separate boards for unorganised and gig/platform workers. This approach seems overlapping as gig/platform workers are a subset of the larger set that is unorganised workers.

As unorganised workers span across the country, inter-State arrangements and cooperation become imperative. The Code does not provide for this. The Draft Rules provide for a nodal officer to be notified by the State government. However, as unorganized construction workers are footloose and move from one State to another in search of livelihood, inter-State coordination still remain unresolved. The Draft Rules did not provide any roadmap for such coordination.

About half of informal workers are self-employed who have no employer-employee relationship. Most unorganised workers are not attached to any specific occupation — they shift from one form of occupation to another based on availability.

Most unorganised workers fall within the State’s purview rather than the Centre’s. In fact, it would be difficult to even define an appropriate government for the unorganised workers, since they are mostly employed through layers of intermediaries. The SS Code provides for unorganised sector social security boards at the Central and State levels, but major part of the organisation seems to be with States.

Limited scope

The scope of the proposed Central Board seems limited. Presently, States have Unorganised Workers Welfare Board under the Unorganised Workers’ Social Security Act, 2008. Most States have Boards under this Act.

There is no explicit mention either in the Code or in the draft Rules, about the continuation of existing social security schemes run by State governments. As and when the Code becomes operational, unorganised workers need to register themselves on the Central portal. They are presently registered as beneficiary with the respective State governments. But it is not only about registration. The administration of social security for the unorganised sector has a different landscape in the new Code. There are no directions in the Rules how the existing SS schemes align with the proposed new landscape

For example, West Bengal has registered about 1.3 crore unorganised workers as beneficiaries under existing social security schemes. The database is maintained by the State. Now, when the Code becomes operational, will the workers migrate to the Central sphere or should they register themselves afresh in the Central portal?

In the new Code, the social security framework for unorganised workers has become unnecessarily complex and cluttered. There are dual authorities and overlapping zones. Provisions in the draft Rules further accentuate these anomalies. There is an urgent need for simplifying things and avoidance of multiple authorities before the Code goes into effect.

If the goal of the Central Government is not to universalise social security for unorganised workers in the foreseeable future (as it should have been), it should consider confining its role to advising State governments for effective implementation of existing schemes.

Mehrotra is the editor of ‘Reviving Jobs: An Agenda for Growth (2020)’, and Sarkar is an independent researcher and labour administrator with the West Bengal government

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