Overview of the Social Security Scheme in India: ESIC Scheme Essay

Social Security is both a concept as well as a system. It represents basically a system of protection of individuals who are in need of such protection by the State as an agent of the society. Such protection is relevant in contingencies such as retirement, resignation, retrenchment, death, disablement which are beyond the control of the individual members of the Society. Men are born differently; they think differently and act differently. State as an agent of the society has an important mandate to harmonise such differences through a protective cover to the poor, the weak, the deprived and the disadvantaged.

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The concept of social security is now generally understood as meaning protection provided by the society to its members through a series of public measures against the economic and social distress that otherwise is caused by the stoppage or substantial reduction of earnings resulting from sickness, maternity, employment injury, occupational diseases, unemployment, invalidity, old age and death. The International Labour Organisation (ILO) defines Social Security as “the security that society furnishes through appropriate organization against certain risks to which its members are perennially exposed.

The ILO concept of social security is based on the recognition of the fundamental social right guaranteed by law to all human beings who live from their own labour and who find themselves unable to work temporarily or permanently for reasons beyond their control. At the international level, the preamble of the Constitution of ILO also referred to the need and protection of workers against sickness, disease and injury arising out of their employment, pension for old age, and protection of the interests of the workers who were employed in countries other than their own. Thus, the right to Social Security was recognized officially for the first time. Subsequently, the UN General Assembly, while adopting the Universal Declaration of Human Rights also recognized the right to Social Security by stating that every member of the society has a right to social security.

“Social Security” has been recognised as an instrument for social transformation and progress and must be preserved, supported and developed as such. Furthermore, far from being an obstacle to economic progress as is often said, social security organised on a firm and sound basis will promote progress, since once men and women benefit from increased security and are free from anxiety, will become more productive. There is considerable controversy about the social and economic effects of social security, and most of the current debate is focused on its supposedly negative effects.

Social Security is said to discourage people from working and saving to reduce international competitiveness and employment creation, and to encourage people to withdraw from the labour market prematurely. On the other hand, social security can also be seen to have a number of very positive economic effects. It can help to make people capable of earning an income and to increase their productive potential; it may help to maintain effective demand at the national level; and it may help create conditions, in which a market economy can flourish, notably by encouraging workers to accept innovation and change. Social security measures are generally income, maintenance measures intended to provide a minimum living to the people when they are deprived of the same due to invalidity, unemployment or old age.

The two basic elements of social security are provision of a ‘minimum living to those who are deprived of the same and ‘selective redistribution of income’ to a target group to reduce inequalities. Thus Social security is an instrument for social transformation and good governance. According to the ILO- World Labour Report-2000, the total security expenditure in India as percentage of GDP in 1996 was 1.8 whereas for the corresponding period the Social Security expenditure in Sri Lanka was 4.7, Malaysia 2.9 and China 3.6. In Argentina, the social security expenditure for the same period as a percentage of GDP reached the level of 12.4 and in case of Brazil 12.2. In comparison to Argentina and Brazil, the expenditure on social security in India is much less. The expenditure on social security cannot be directly related alone to the economic development. Intervention of the State would be essential and a co-relationship may have to be established for faster economic development.

Social Security in India was traditionally the responsibility of the family/community in general. With the gradual process of industrialization/urbanization, breakup of the joint family set up and weakening of family bondage, the need for institutionalized and State-cum-society regulated social security arrangement to address the problem in a planned manner in wider social/economic interest at national level has been felt necessary. Currently, on-going measures towards transformation process for trade and industry, increasing role of market forces and increase in longevity, in general world over has added a new dimension to the issue and enhanced the requirement further towards a planned and regulated institutionalized measure in the form of social security in its common understanding.

Social Security in Organised Sector in India

The social security schemes in India cover only a very small segment of the organised work force, which may be defined as workers who are having a direct regular employer-employee relationship within an organization. Out of an estimated work force of about 397 million, only 28 million are having the benefit of formal social security protection.

The Social Security Laws in India at present can be broadly divided into two categories, namely, the contributory and the non-contributory. The contributory laws are those which provide for financing of the social security programmes by contributions paid by workers and employers and in some cases supplemented by contributions/grants from the Government. The important contributory schemes include the Employees State Insurance Act, 1948 and the Provident Fund, Pension and Deposit Linked Insurance Schemes framed under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1948. The three major non-contributory laws are the Workmen’s Compensation Act, 1923, the Maternity Benefit Act, 1961 and the Payment of Gratuity Act, 1972.

Social Security in Unorganised Sector in India.

As already mentioned, the coverage under Social Security is about 10% of the working population mostly in the organised sector. The vast majority of the workforce is in the unorganised sector, which includes agricultural labour, cultivators, small traders and hawkers, artisans and other self-employed persons, porters, auto-rickshaw drivers and other transport workers etc. Bringing them under formal social security coverage has been found difficult due to the following reasons: a) Seasonal and intermittent nature of work, leading to difficulties in meeting the qualifying conditions. b) Low level and irregular pattern of earnings and employment; c) Absence of employer-employee relationship leading to difficulties in determining the principal employer and in assessing and recovering contributions. d) Relatively weak administrative structure, particularly in rural areas. Under the Employees State Insurance Scheme and Employees’ Provident Fund Scheme a very small segment of workers in the unorganized sector are covered. The huge gap in coverage in the unorganized sector requires for a fresh strategy to extend coverage of both the schemes to the unorganized sector.

The unorganised workforce is characterised by scattered and fragmented areas of employment, seasonality of employment, lack of job security, low legislative protection because of their scattered and dispersed nature, lack of awareness and high unemployment levels, perceived mis-match between the training requirements and the training facilities available, low literacy levels, outmoded social customs like child marriage, excessive spending on ceremonial festivities leading to indebtedness and bondage, etc., primitive production technologies and feudal production relations are further impediments not facilitating these workers to imbibe and assimilate higher technologies and better production relations.

The unorganised Labour can be categorised broadly into four categories as follows:-

a) Occupation : Small and marginal farmers, landless agricultural labourers, share croppers, fishermen, those engaged in animal husbandry, in beedi rolling beedi labelling and beedi packing workers in building and construction, etc. b) Nature of Employment: Attached agricultural labourers, bonded labourers migrant workers, contract and casual labourers come under this category. c) Specially distressed categories: Toddy tappers, scavengers, carriers of head loads, drivers of animal driven vehicles, loaders and unloaders belong to this category. e) Service categories: Midwives, domestic workers, fishermen and women, barbers, vegetable and fruit vendors, newspaper vendors etc. come under this category.

The unorganised nature of the workforce, dispersed nature of operational processes and lack of institutional back up reduces their bargaining power and their ability to take full benefits from the Acts and legislations enacted for their benefits. Further, low skill levels of this workforce provides little scope for them to move vertically in the occupational ladder to improve their financial situation. The growth of informal, unprotected work with shrinking formal employment compels the workers to bear an increasing direct burden of financing social needs, with adverse effects on their quality of life. That burden may also undermine the capacity of enterprises to compete with global economy.

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