Social Security for Unorganised Workers: Report

FOCUS

The National Commission for Enterprises in the Unorganised Sector (NCEUS) was set up in 2004 by the United Progressive Alliance (UPA) government as an advisory body and a watchdog for the informal sector. This report by the NCEUS recommended a social security scheme for unorganised workers, which would cover minimum benefits such as old age pension, life insurance, maternity benefit, disability benefit (accident compensation), minimum healthcare and sickness benefit. The NCEUS argued that the government needed to move beyond limited social assistance schemes and introduce a full-fledged social security programme for all kinds of workers, especially unorganised workers. The Commission also drafted the Unorganised Workers’ Social Security Bill, which forms part two of this report. 

    FACTOIDS

  1. 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.

  2. 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.

  3. 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.

  4. 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.

  5. 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.

  6. 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.

  7. 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.

  8. 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.

  9. 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.

  10. The National Old Age Pension Scheme covered 6 million people of the 363 million unorganised sector workers in the year 2000.

    Factoids and Focus compiled by Tarun Gidwani.

AUTHOR

National Commission for Enterprises in the Unorganised Sector, New Delhi

The Commission had the following members: Dr. Arjun K. Sengupta, Dr. K.P. Kannan, Dr. R.S. Srivastava, V.K. Malhotra, Dr. T.S. Papola and B.N. Yugandhar.

COPYRIGHT

National Commission for Enterprises in the Unorganised Sector, New Delhi

PUBLICATION DATE

01 May, 2006

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