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SOCIAL SECURITY LAW UNORGANIZED LABOUR

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SOCIAL SECURITY LAW UNORGANIZED LABOUR
By: Mr.M. GOVINDARAJAN
November 6, 2019
All Articles by: Mr.M. GOVINDARAJAN       View Profile
  • Contents

Introduction

Manpower is the essential for the development of the economy of a country.  The countries in the world are working for the development of the workforce so as to enhance its economy.  It is inevitable in any country to have unorganized workforce because of the prevailing situation in the respective countries.  The International Labour Organization tries to reduce this unorganized sector.  In Indian the unorganized workers are more.  Our country is striving its every nerve to reduce this sector by extending various social benefits to the unorganized workers.   Our country is in the overhaul process of labor laws according to the changes in the changing economic scenario.   Unorganized workers will be taken care of by the new laws.

Classification of unorganized worker

The unorganized worker is classified into four groups

  • By Occupation;
  • By nature of employment;
  • Service Category;
  • Special Category.

Characteristics of unorganized labor sector

The increase in the unorganized sector is due to its salient characteristics.  Some of the salient features of the unorganized labor sector are as below-

  • Low productivity in unorganized sector compared to formal sector;
  • Lower wages to workers in unorganized sector than formal sector;
  • Poor working conditions prevailing in the unorganized sector;
  • Excessive seasonality of employment;
  • Absence of social security measures to the unorganized workers;
  • Negation of social standard;
  • Poor human capital base (in terms of education, skill and training) as well as lower mobilization status of the work force;
  • Any effective legal action against it is seen as a step of impairing.

Characteristics of unorganized labor

The unorganized labor sector is due to the shortcomings in many aspects among the unorganized workers.

  • They have limited or no education or other skills.
  • They are hugely scattered and don’t have political pressure groups.
  • They don’t have fixed jobs i.e. have seasonality as compared to formal sector workers.
  • Social stratification is more in them in rural areas on the basis of Caste and sub-castes.
  • The unorganized sector has insufficient labor laws relating to them.
  • The working environment to them in very poor.

Unorganized sector in India

In India, the unorganized labor is unprotected.  The unorganized workers were often exploited before liberalization in economy.  The unorganized sector workers constituted 89% of the work force as of now.  This is a dangerous situation where a large section of population doesn’t receive the benefits of liberalization and consequently social inequality widened.  The unorganized sector of the economy in India is the largest sector in terms of employment of the workforce.   It consists of agriculture and such related activities as forestry, livestock and fishing as well as non agriculture.

The Central Government referred the ‘Unorganized Workers Social Security Bill, 2006’ to a Committee.  A series of meetings, discussions and presentations had been made at various fora.  The draft bill was circulated.  The Committee examined on social security for unorganized workers and recommended to enact an Act on unorganized social security.  It is intended to provide a measure of social security to the workers in the unorganized sector and propose a model that will be inclusive in nature and provide for a clearly demarcated division of responsibilities between the Central and State Governments. 

The Unorganized Worker’s Social Security Act, 2008

The Central Government, on the recommendations of the Committee, enacted the Unorganized Worker’s Social Security Act, 2008.  The Act gave powers to the Central Government and State Governments to formulate suitable welfare schemes, from time to time, for the unorganized workers.  Such schemes shall be funded as per the provisions contained in the scheme. The Act provides for the establishment of workers facilitation centres to perform the functions prescribed including to assist the workman to obtain registration from District Administration.  The Act requires that every unorganized worker shall take registration from the District Administration.    He shall not be less than 14 years of age.  The District Administration shall issue an identity card to the unorganized worker on his application.

The Act also provides for the constitution of the National Social Security Board for unorganized workers by the Central Government and also the State Social Security Board for unorganized workers by the respective State Governments.

Statistics for unorganized sector

There is no separate published data for unorganized sector as a whole.  A National Commission on Enterprises in the Unorganized Sector estimates that in 2005 out of the 458 million persons employed in India, 95% or 435 million worked in the unorganized sector, generating 50.6 percent of the country's Gross Domestic Product.  

The unorganized sector is on the increase in all segments.  For example the details of organized and unorganized workers in the Indian retail market are shown in the following table-

Indian Retail market – Organized v. Unorganized

(in $ billion)

Year

Organized

Unorganized

2014

39.26

462.43

2015

46.82

509.94

2016

55.84

563.55

2017

66.6

627.4

2018

79.43

697.71

The above table shows an increase in the unorganized sector every year.

The Economic Survey of 2018-19, released on July 4, 2019, says ‘almost 93%’ of the total workforce is ‘informal’. But the Niti Aayog's Strategy for New India, released in November 2018, said: ‘by some estimates, India's informal sector employs approximately 85% of all workers’.

The latest Periodic Labor Force Survey (PLFS) of 2017-18 released in May 2019, gives a glimpse of it. It says, even among the regular wage/salaried workers in the non-agriculture sector (of the informal sector), 71.1% had no written job contract, 54.2% were not eligible for paid leave and 49.6% were not eligible for any social security benefit.

Draft Code on Social Security, 2019

After years of deliberations, the Central Government has finally circulated the draft social security code, a key labor law proposal that seeks to amalgamate a clutch of existing laws and proposes several new initiatives including universal social security for unorganized sector workers and, insurance and health benefits for gig workers including the Ola and Uber drivers

The Ministry of Labor & Employment has prepared a draft Code on Social Security, 2019 (‘Draft Code’ for short) on 17.09.2019, in which the following acts are proposed to be repealed-

  • The Employees’ Compensation Act 1923;
  • The Employees’ State Insurance Act, 1948;
  • The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952;
  • The Maternity Benefit Act, 1962;
  • The Payment of Gratuity Act, 1972;
  • The Cine Workers Welfare Fund Act, 1981;
  • The Building and other Construction Workers Cess Act, 1996;
  • The Unorganized Workers’ Social Security Act, 2008.

The draft code has been placed in the web site of the Ministry inviting the comments/suggestions from the stakeholders/other members of the public by 25th October, 2019.

Schemes provided under the draft Code

The draft Code provides the following social security schemes-

  • Employees Provident Fund;
  • Employees Insurance Schemes;
  • Gratuity;
  • Maternity Benefit;
  • Employee compensation;
  • Social Security for unorganized sector.

Social Security for unorganized sector

Before going to see the social security schemes to the unorganized sector under this Code we may see the definition of the expressions ‘unorganized sector’ and ‘unorganized worker’.

Clause 2(l) of the draft Code defines the expression ‘unorganized sector’ as an enterprise owned by individuals or self-employed workers and engaged in the production or sale of goods or providing service of any kind whatsoever, and where the enterprise employs workers, the number of such workers is less than 10.

Clause 2(m) of the Code defines the expression ‘unorganized worker’  as  a home-based worker, self-employed worker or a wage worker in the unorganized sector and includes a worker in the organized sector who is not covered by the Industrial Disputes Act, 1947 or Chapter III to VII.

Welfare Schemes to the unorganized workers

The draft code gives powers to the Central Government and State Governments to formulate and notify welfare schemes for the unorganized workers.  The following are deemed to be the welfare schemes-

  • Pradhan Mantri Shram Yogi Manndhan;
  • Pradhan Mantri Laghu Vyapari Manndhan Yojana;
  • Indira Gandhi National Old Age Pension Scheme;
  • National Family Benefit Scheme;
  • Janani Suraksha Yojana;
  • Handloom Weavers’ Comprehensive Welfare Scheme;
  • Handloom Artisans’ Comprehensive Welfare Scheme;
  • Pension to Master Craft persons;
  • National Scheme for Welfare of Fishermen and Training and Extension;
  • Janshree Bima Yojana;
  • Aaam Admi Bima Yojana;
  • Rashtriya Swasthya Bima Yojana;
  • Pradan Mantri Kisan Pension Yojana.

These schemes and other schemes that may be formulated by the Central Government and State Governments will enhance the quality of the life of the unorganized workers.

Central Government scheme

The Central Government may formulate welfare scheme for the unorganized workers on the matters relating to-

  • life and disability cover;
  • health and maternity benefit;
  • old age protection; and
  • any other benefit as may be determined by the Central Government.

Funding of the Central scheme

Any welfare scheme notified by the Central Government for the unorganized workers is to be funded to extend the benefits available in the scheme.  The funding pattern may be as by any one of the following methods-

  • wholly owned by the Central Government ; or
  • partly funded by the Central Government and partly funded by the State Government; or
  • partly funded by the Central Government, partly funded by the State Government and partly funded through contributions collected from the beneficiaries of the scheme or the employers as may be specified in the scheme by the Central Government; or
  • funded from any source including corporate social responsibility fund within the meaning of the Companies Act, 2013 (like CSR) or any such other source as may be specified in the scheme.

Contents of the Scheme

The Central Government scheme shall provide for such matters which are necessary for effective implementation of the scheme including the matters relating to all or any of the following-

  • scope of the scheme;
  • authority to implement the scheme;
  • beneficiaries of the scheme;
  • resources of the scheme;
  • agency or agencies that will implement the scheme;
  • redressal of grievances; and
  • any other relevant matter.

A special purpose vehicle may be constituted by the Central Government for the purpose of implementation of the scheme.

State Government Scheme

The State Government may formulate welfare scheme for the unorganized workers on the matters relating to-

  • provident fund;
  • employment injury benefit;
  • housing;
  • educational schemes for children;
  • skill up gradation of workers;
  • funeral assistance; and
  • old age homes.

Funding of the State scheme

Any welfare scheme notified by the Central Government for the unorganized workers is to be funded to extend the benefits available in the scheme.  The funding pattern may be as by any one of the following methods-

  • wholly funded by the State Government; or
  • partly funded by the State Government, partly funded through contributions collected from the beneficiaries of the scheme or the employers as may be specified in the scheme;
  •  funded from any source including corporate social responsibility fund within the meaning of the Companies Act, 2013 or any such other source as may be specified in the scheme.

The State Government may seek financial assistance from the Central Government for the schemes formulated by it. The Central Government may provide such financial assistance to the schemes of the State Government for such periods and on such terms and conditions as may deem fit.

Record keeping

The Central Government or State Government who formulate the social security scheme provide the form and the manner of keeping the records electronically or otherwise relating to the scheme and the authority by whom the records shall be maintained.  Such records shall bear continuous number for proper management of the scheme and for avoiding any duplication and overlapping in records.

Registration of unorganized worker

An unorganized worker shall be eligible to register himself under the draft code to get the benefits of the welfare schemes formulated by the Central Government or State Government.   He has to fulfill the following conditions-

  • he has completed 16 years or such other age as may be prescribed by the Central Government;
  • he meets such socio economic criteria as may be prescribed by the Central Government; and
  • he has submitted a self declaration electronically or otherwise in such form, in such manner and to such authority containing such information as may be prescribed by the Central Government.

The eligible unorganized worker shall make an application for registration in such form, accompanied with such documents, to such registering authority as may be prescribed by the Central Government.  The registering authority shall register such unorganized worker.   A distinguishable number shall be assigned to the application or by linking his application to the Aadhaar number.

Contribution

The draft Code requires the registered unorganized worker to make contributions to get the benefits of the welfare schemes.  The amount of contribution may be specified in the scheme.  The Central Government or the State Government shall also make such contribution as specified in the scheme.

Workers facilitation centres

 The Central Government or State Government may set up workers facilitation centres as may be considered necessary from time to time to perform the following functions-

  • disseminate information on available social security schemes for the unorganized workers;
  • facilitate filling, processing and forwarding of application form for registration of unorganized workers;
  • assist unorganized worker to obtain the registration from the authority specified in the scheme; and
  • facilitate the enrolment of the registered unorganized workers in social security schemes.

Scheme for gig workers and platform workers

The draft code also proposes to frame welfare schemes for gig workers and platform workers for the first time.

A ‘gig worker’ is a person who performs a work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship.

A ‘platform worker’ is a person engaged in or undertaking platform work, which is an employment form in which organizations or individuals use an online platform to access other organizations or individuals to solve specific problems or to provide specific services in exchange for payment.

The Central Government may formulate and notify suitable social security schemes, from time to time, for gig workers and platform workers on the following matters-

  • the life and disability cover;
  • health and maternity benefits;
  • old age protection; and
  • any other benefit as may be determined by the Central Government.

The above scheme may provide for-

  • the manner of administration of the scheme;
  • the agency or agencies for implementation of the scheme;
  • the role of aggregators in the scheme;
  • the source of funding of the scheme; and
  • any other matter as the Central Government may consider necessary for administration of the scheme.

Social Security Board

The draft code provides for the constitution of National Social Security Board by the Central Government and the State Social Security Board by the respective State Government to perform such functions as assigned by the respective Government.

Conclusion

The Government floated this draft code for the comments/suggestions of the stakeholders by 25.10.2019.  The Government will consider the comments/suggestions of the stakeholders and make the new social security law in future.   It is hoped that the Code and the rules made there under will uplift the life style and economic status of the unorganized workers and their number will be reduced to the most extent in future.

 

By: Mr.M. GOVINDARAJAN - November 6, 2019

 

 

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