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.
