For Unorganised Workers, New Social Security Code Creates Needless Confusion

About 93% of India's workforce is in the unorganised sector, highlighting the need to develop a clear and comprehensive policy for their social security.

India’s labour ministry is currently in the process of finalising the rules for the ‘Code on Social Security 2020’, which was passed by the parliament last September.

The draft rules were put in the public domain last month for getting general feedback and it is expected that this would be finalised in the near future.

There are a few issues pertaining to this Code and Draft Rules presently under consideration.

First, there is a certain duality in the manner in which the administration of social security for the unorganised sector has been dealt with. Second, there is a certain degree of overlapping in the definitions of the unorganised sector.

Both issues merit serious consideration and debate.

Duality in the administration of social security schemes

In the Code on Social Security 2020 and the Draft Rules framed thereunder, the Centre is set to formulate social security schemes for unorganised workers. Till now, respective state governments were responsible for the formulation and implementation of social security schemes for unorganised sector workers. In the new Code on Social Security, this responsibility has been assumed by the Central government.

Under Section 109 (1), the Central government shall frame and notify, from time to time, suitable welfare schemes for unorganised workers on matters relating to: (i) life and disability cover; (ii) health and maternity benefits; (iii) old age protection; (iv) education; and (v) any other benefit as may be determined by the Central government.

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Furthermore, under Section 109 (2), the state government shall frame and notify, from time to time, suitable welfare schemes for unorganised workers, including schemes relating to: (i) provident fund; (ii) employment injury benefit; (iii) housing; (iv) educational schemes for children; (v) skill upgradation of workers; (vi) funeral assistance; and (vii) old age homes.

A worker cuts iron rods outside a workshop at an iron and steel market in an industrial area in New Delhi, India, December 12, 2017. Photo: Reuters/Adnan Abidi/File Photo

Thus, it seems that both the Central and state governments will formulate schemes for unorganised sector workers on clearly demarcated areas. There would, therefore, be a dual authority from the perspective of an individual unorganised sector worker. Further, under Rule 50 (a) every eligible unorganised worker shall be required to be registered with Aadhaar, on a self-declaration basis in the form on the portal, as specified by the Central government.

Similar kinds of provision and arrangements are also there for gig and platform workers too. Under Section 113 (1), every unorganised worker, gig worker or platform worker shall be required to be registered. Accordingly, Rule 50(2) deals with registration of gig worker and platform worker and any other such worker and provides that – “(a) every eligible gig worker or platform worker, under Section 113 shall be required to be registered with Aadhaar, on self-declaration basis in the form on the portal, as specified by the Central Government”.

The formulation of social security schemes for gig and platform workers rests with the Central government. Under Section 114 (1), the Central government may frame and notify, from time to time, suitable social security schemes for gig workers and platform workers on matters relating to— “(a) life and disability cover; (b) accident insurance; (c) health and maternity benefits; (d) old age protection; (e) crèche; and (f) any other benefit as may be determined by the Central Government”.

Also, with respect to construction workers who are predominantly unorganised, the responsibility of registering such workers lies with the respective state government.  Under Section 106 (1), it shall be the responsibility of the state government and the state building workers’ welfare board to register all such workers working as building or other construction workers within the geographical area of the state, on the specified portal of the Central government and the state government or board through Aadhaar.

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For implementing schemes for building workers, a vital change occurred as the entire procedure has changed. Henceforth, building and unorganised workers need to register as a beneficiary in the portal to be developed by the Central government and not by state rules. This will bring a large impact on the whole process and many procedures, now in progress. There would be significant changes requiring to be managed for complying with the provisions of the Code.

Thus, from the above deliberations, it is apparent that there are provisions in the Code and Rules itself that provide for the constitution of social security board at both Centre and state. This will again create unnecessary complexities.

Also, provisions have made for separate boards for unorganised workers and gig/platform workers. This approach too seems overlapping as gig/platform workers are a subset of the larger set that make up ‘unorganised workers’. Further, as unorganised sector workers are spread across the entire length and breadth of the country, inter-state arrangement and cooperation become all the more imperative. The Code does not provide for such eventualities.

The Draft Rules provide for a nodal officer to be notified by the state government. Every state government shall designate nodal officer for the purpose of registration, renewal and updating of particular(s) of building workers through official gazette. However, as unorganised construction workers are footloose workers and move from one state to another in search of livelihood, inter-state coordination still remains undefined and unresolved. The Draft Rules do not provide any roadmap for such coordination.

In this context, it can be said that a major part (about 93%) of India’s labour force is in the unorganised sector. About half of unorganised sector workers are self-employed where it would be very difficult to decipher any sort of employer-employee relationship. Most of the unorganised sector workers are not attached to any specific occupation. Rather they shift from one form occupation to another based on availability. Moreover, unorganised sector workers are footloose – they keep moving from place to another in search of livelihood.

Most of the unorganised sector workers fall within the states’ purview rather than the Centre’s. In fact, it would be difficult to even define an appropriate government for the unorganised sector workers, since they are mostly employed through layers of intermediaries. There may be unorganised sector social security boards at the Central and State levels, but a major part of the organisation seems to be with states. The scope of the Central board seems very limited. But state boards have serious constraints of financial resources weighed against the tasks at hand.

Also, there is no explicit mention either in the Code or in the Draft Rules about the continuation of existing social security schemes run by the state governments. As and when the Code becomes operational, unorganised workers need to register themselves on the Central portal. They are presently registered as beneficiary with the respective state governments. When Code comes into operation, whether these unorganised workers need to register afresh on the Central portal is still not clear. It’s not about registration only, formulation and administration of social security for unorganised sector have a different landscape in the new Code. There is no direction on how existing social security schemes align with proposed new landscape.

For example, West Bengal has already registered about 1.3 crore unorganised workers as beneficiaries under different existing social security schemes. Such database is maintained with the state government and state also formulate and implement various social security schemes for different segments of unorganised workers. Now, it is not clear what will happen to these large number of beneficiaries when the Code becomes operational. Will they migrate to Central sphere or they register themselves afresh in Central portal is a question which remains unanswered.

Overlap in the definitions

The 2020 Code introduces definitions for ‘gig worker’ and ‘platform worker’. Gig workers refer to workers outside the “traditional employer-employee relationship”.  Platform workers are those who are outside the “traditional employer-employee relationship” and access organisations or individuals through an online platform and provide services for payment.

The Code also creates provisions for unorganised workers. An unorganised worker is defined as one who works in the unorganised sector and includes workers not covered by the Industrial Disputes Act, 1947, or other provisions of the Bill (such as a provident fund or gratuity). It also includes self-employed workers. The Code mandates different schemes for all these categories of workers. However, there may be some overlap between their definitions.

Representational image for gig workers. Photo: Reuters/Kai Pfaffenbach

Consider the example of a driver working for an app-based taxi aggregator. Here, there is no employee-employer relationship. For example, appointment letters are not issued, social security benefits are absent, work hours are not regulated by the employer, and the driver may choose to work for a competitor taxi aggregator. Therefore, the nature of the work involved may lie outside the purview of a ‘traditional employer-employee relationship’, making him a ‘gig worker’. However, the driver is able to pursue this job only through an online platform. This would meet the definition of a ‘platform worker’ as well. Such a driver may also be an ‘unorganised worker’ as he may be self-employed.  With such overlap across definitions, it is unclear how schemes specific to these categories of workers will apply.

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In the new Code, the social security framework for unorganised workers has become unnecessarily complex and cluttered. There are dual authorities and overlapping zones. Provisions in the Draft Rules further accentuate these anomalies.

There is an urgent need for simplifying things and avoidance of multiple authorities. Also, rules should clearly specify the roadmap for seamless integration of existing social security schemes run by the state governments with the new ecosystem conceptualised in the Code.

Existing social security schemes for unorganised workers are predominantly managed by the respective state governments. This should not be tampered with. The central government may provide the basic ecosystem and advise state governments towards effective implementation of such schemes.

Kingshuk Sarkar is an independent researcher and also works as a labour administrator with the Government of West Bengal. He can be contacted at [email protected]. Views expressed are that of the author and not necessarily that of the organisation he belongs to.