Why in news?
The Draft Labour Code on Social Security and Welfare was published for public comments.
What is the existing problem?
- India’s Constitution and some of the ILO Conventions on social security provide a framework for development of a social security system.
- The central labour laws provide for social security such as maternity benefit, accident and disablement compensation, provident fund and gratuity.
- But they cover at best around 8% of the workforce in India.
- Unorganised workers, though huge in number, have been ignored for long.
What are the positives of the bill?
- It covers employees and non-employees including domestic workers, farm workers, self-employed of all types, and so on.
- It seeks to address these grave shortcomings and attempts to conceive of a universal social security cover in a ‘Single Code’ by merging all existing schemes and laws.
- It reduces the payroll tax to 17.5% and subsidises the gratuity cost to 2% of total salary cost.
What are the shortcomings?
- It defines “woman” as an “employee who is a woman in the context of maternity benefit under this code”; “monthly income” has not been defined.
- It inadvertently legalises “oral contract” by defining it as an attribute of informal worker.
- The canvas of coverage is vast and this gives rise to an apprehension over the capacity of the State to enforce this Code.
- The Code does not define “social security” nor provide the components of social security and the percentage benefits under each component.
- There are huge concerns about the funds for delivering varieties of benefits in the Code.
- The coverage is huge and the contributions apart from organised sector employers and employees are difficult to realise.
- The Code also envisages a huge administrative architecture, namely, the National Council, the Central Board, the State Board, an Executive Committee, a Standing Committee, and Central and State Advisory Committees.
- The Code lists numerous functions for each body (some over-lapping) and bureaucratisation will be its greatest hazard.
- It omits employers or does not give adequate representation to unions.
- The top-down approach of this Code is a serious limitation.
Source: Business Line
