Govt dilutes proposal to give universal social security coverage to workers

The National Democratic Alliance (NDA) government has diluted its proposal to provide universal social security coverage to all workers in the country, keeping in mind a slowing economic growth rate, according to a senior government official.

In the latest draft of the Code on Social Security Bill, 2019, the government has decided to stick to the current thresholds for providing social security benefits to workers by industry.

A third draft of the Code on Social Security Bill has been circulated for consultations with trade unions and industry. 

According to the proposed Bill, companies with at least 20 workers will need to deduct contribution from workers’ salary for benefits under the Employees’ Provident Fund schemes and the firms with at least 10 workers need to do the same for contribution under the Employees’ State Insurance scheme. This is the same as what is applicable in the country at present. “At this stage when we are witnessing a slump in economic growth, it is difficult for the government to come up with a radical proposal to provide social security coverage to all workers. We do not want to bring any disruptions for the small industries,” a senior government official said, requesting anonymity. 

The gross domestic product growth fell to over six-year low of 5 per cent in the first quarter of 2019-20. A universal social security cover would have increased the financial burden of small companies who are not part of any social security law.

The first draft, which was released in April 2017, had proposed a universal social security cover to all workers — organised or unorganised, formal or informal, regular wage earner or self-employed — through self-contribution or a partial contribution, to be made by either employers or the government.

The unions opposed the first draft, mainly because it sought to form a decentralised social security system subsuming the present Employees’ Provident Fund Organisation (EPFO) and Employees’ State Insurance Corporation (ESIC).

However, after several rounds of consultations, a second draft was made public in March 2018, which had proposed the implementation of the proposed law in a phased manner, along with a public-private partnership (PPP) model for managing the provident fund (PF) and insurance accounts of subscribers. The second draft had excluded covering self-employed workers under the ambit of the proposed social security law and had retained EPFO and ESIC as separate entities.

The unions had also opposed the PPP model for managing the PF and insurance accounts of workers and hence, this proposal was also shelved.

The current social security laws exclude about 90 per cent of the workforce, mainly in the unorganised sector. The first draft of the proposed law had sought to provide social security net to the workforce of over 450 million in the country (as against around 45 million now).