Your assets will determine if you get free safety net or not

Labour ministry proposed universal social security coverage for unorganised and self-employed poor

Less well-off citizens keen to get social security from the government free of cost under the proposed universal social security scheme might have to state the value of their total fixed assets, such as house, jewellery and electronic goods.

At present, social security benefits in India are restricted to the formal sector. The labour ministry has proposed universal social security coverage -- preventive and general practitioner care, benefits for sickness, unemployment, old age, employment injury, maternity and invalidity.

The ministry has proposed to gauge what should be the minimum wage for the unorganised and self-employed poor through the value of their total fixed assets. Those above the threshold sought to be fixed might be asked to pay something for the social security benefit.

The draft code, circulated by the ministry, says a subscriber to the fund proposed in this regard, whose monthly income is higher than the minimum wage, would have to pay for the benefits. For those earning below the minimum wage and deemed unable to contribute, benefits will be provided from the fund.

And, says a senior official, if a person seeking registration claims to be in the latter category, it will be necessary for him to declare his assets.

"We have determined a scientific formula based on assets to assess income and determine if a person is eligible to contribute for his own social security benefits," said the official.

The proposed fund is a three-tier one. In the case of the unorganised sector, workers won't have to contribute anything if the wage or monthly income is less than the minimum to be determined on the asset-based criteria. Welfare funds to be set up by the central and state governments will pitch in.

There is a concept of a wage ceiling which would be higher than the minimum wage.

For the organised sector, workers will have to contribute 12 per cent of the monthly income. Existing safety nets such as employees provident fund (EPF) and employees state insurance corporation (ESIC) would be subsumed in this.

Currently, employers contribute 8.33 per cent of the basic pay to the EPF. If the employee is eligible for ESIC, 4.75 per cent.

If the earning is less than the wage ceiling but more than or equal to the minimum wage of an unorganised or self-employed worker, his contribution will be 20 per cent of the minimum wage. If the earning is more than or equal to the wage ceiling, then 20 per cent of the monthly income.

The ministry will involve panchayats and municipal bodies for registration of workers. "This will ensure that identification of workers will be a smooth process and fraudulent claims can be removed. Random inspection and verification will also be carried out," the official said.

It has been proposed that the Union comptroller and auditor general do an annual audit of the fund.