Social Security for Unorganised Workers: Report

The NCEUS estimated that the number of workers in the informal sector on January 1, 2000 was 340 million, and the number of workers in the informal and  formal sectors was 362 million. They constituted 86 per cent and 91 per cent, respectively, of the country’s total workforce.

In informal employment, there is an absence of any kind of protection for workers. An overwhelming majority of informal workers have no facility to deal with ill health, accidents, death and old age.

The central government has ensured social security entitlements (backed by legislation) mainly for organised workers. Such entitlements are available only to unorganised workers in certain occupations, covering a mere 21 million (6 per cent) of 362 million workers.

A 2005 study of unorganised workers in Karnataka showed that 92.3 per cent of those surveyed felt that benefits related to old age, unemployment, death, maternity, sickness and employment injury were important.

Kerala was ahead of all the other states in terms of welfare funds for unorganised sector workers. When this report was written, the state was in the process of implementing schemes that would provide social security to 54 per cent of its informal workers.

International experience has shown that a country need not wait till it is fully industrialised and has high levels of per capita income to extend social security to those who have been excluded from its cover.

The NCEUS proposed the National Social Security Scheme under which annual financial contributions will be made by the worker, the employer and the government to welfare funds administered by government-appointed boards. These contributions will be used as premiums for insurance to cover hospitalisation, maternity and life insurance, and old age security. The National and State Social Security Boards will negotiate with insurance agencies on behalf of the worker and ensure that he or she gets the best possible deal.

Under the scheme, a health and maternity policy will provide the following benefits to a worker and his or her family of five: Rs. 15,000 for hospitalisation; Rs. 1,000 for maternity-related costs (per birth); Rs. 25,000 in case the earning head of the household dies; and Rs. 50 per day for 15 days of hospitalisation in the case of sickness.

For old age security, the NCEUS recommended a monthly pension of Rs. 200 for all below poverty line (BPL) workers above 60, and a Provident Fund for all other workers.

Focus and Factoids by Tarun Gidwani.