1 Social Security System in India
Otojit Kshetrimayum Associate Fellow, VVGNLI & Anoop Kumar Satpathy Fellow, VVGNLI
2 Framework Labour Market Trends in India
Social Security in India: Background Types of Social Security Programmes in India Social Security in Organised Sector Social security in Unorganised Sector Social Security System in India: Challenges
3 Labour Market Trends in India
4 Labour Force, Workforce and Unemployed (UPSS)
National Sample Survey (NSS) In Million Labour force 381.94 406.84 470.14 469.87 Workforce 374.45 397.88 458.99 460.17 Unemployed 7.49 8.96 11.15 9.70 (As a proportion of labour force in percentage) Unemployment rate 1.96 2.2 2.37 2.06
5 Gender-wise Break-up of Labour Force (in million)
NSS Rural Urban Male Female Total 201.98 106.75 78.87 19.25 (69%) 126.00(31%) 406.85 222.91 126.49 94.24 26.50 317.15(67%) 152.99(33%) 470.14 236.09 106.41 103.13 24.25 339.22(72%) 130.66(28%) 469.88
6 Gender-wise Break-up of the Workforce (In million)
NSS Rural Urban Male % Female % Total Male Female 198.61 105.69 75.38 18.20 273.99(69%) 123.89(31%) 397.88 219.30 124.21 90.77 24.72 310.06(68%) 148.93(32%) 458.99 232.27 104.80 100.17 22.92 332.44(72%) 127.72(28%) 460.17
7 Sectoral Disaggregation of Workforce
NSS Workforce (in million) Shares (%) Primary Sector Secondary Tertiary 240.3 64.6 93.6 60.39 16.24 23.52 259.3 85.9 113.9 56.50 18.71 24.82 238.2 100.7 120.8 51.76 21.89 26.52
8 Category-wise Disaggregation of Workforce
NSS Workforce (in million) Shares (%) SE RWS CL 209.3 58.2 130.3 52.6 14.6 32.8 259.0 70.0 130.0 56.4 15.2 28.3 233.2 75.3 151.6 50.7 16.4 32.9 SE-Self Employed; RWS-Regular Wage & Salaried; CL-Casual Labour
9 Social Security in India: Background
II Social Security in India: Background
10 Social Security providing organisations
State Market Member-based Organisation Private Households Instruments Social insurance, social assistance, transfers, provident funds Insurance policy or contract Mutual arrangements, voluntary work Gift exchange, state contingent loans, remittances, transfers Mode of operation Top-down Individualistic Mainly bottom-up Bottom-up Incentives Rule of law, regulations Maximisation of profit and/or utility, price signals and quantity adjustment Balanced reciprocity, self-interest, voluntarism, solidarity social norms and values, altruistic behaviour, charity, self-interest Sanctions Exclusion of people from programmes; withdrawal of programmes Level of premium, limit supply of insurance Social pressure, exclusion from the organisation Social pressure, inherent family contract Classification Central; local Profit oriented firms; private contractors NPOs; cooperatives; mutuals; religious groups Family; kinship; neighbourhood
11 Social Security in India
It is the sum of all government regulations and provisions that aim at: >> enhancing the people’s living conditions, including legislation/acts/laws, regulation, and planning in the fields of old age, wage, unemployment, and social exclusion, sickness and health care, and >> income security measures such as food security, employment, education and health, housing, social insurance, and social assistance.
12 Social Security: Role of the State
In the Indian context, the State bears the primary responsibility for developing appropriate systems for providing social protection and assistance to its workforce. The matters relating to Social Security are listed in the Directive Principles of State Policy and the subjects in the Concurrent List of the Constitution of India.
13 Indian Constitution & Social Security
Concurrent List (List III in the Seventh Schedule of the Constitution of India) - Item No. 23: Social Security and insurance, employment and unemployment. - Item No. 24: Welfare of labour including conditions of work, provident funds, employers’ liability, workmen’s compensation, invalidity and old age pension and maternity benefits.
14 Indian Constitution & Social Security
Part IV: Directive Principles of State Policy - Article 41: Right to work, to education and to public assistance in certain cases The State shall, within the limits of its economic capacity and development, make effective provision for securing the right to work, to education and to public assistance in cases of unemployment, old age, sickness and disablement, and in other cases of undeserved want. Article 42: Provision for just and humane conditions of work and maternity relief The State shall make provision for securing just and humane conditions of work and for maternity relief.
15 Social Security in India: A Policy Overview
A critical part of the public policy and its development agenda. Since independence (1947), India extended social protection measures to workers in the organised sectors (almost 90% of industries were state owned shortly after independence). For workers in unorganised sector, the emphasis was on promotional measures through special programmes and later on through social assistance programmes. Post 1991 economic reforms paved the way for a beginning of debate, formulation, and visioning of viable social security programmes in India. Various efforts of the Government of India, in recent years, such as designing of new right based social security schemes, recasting of earlier schemes, introduction of innovative methods towards effective identification and enrolment of beneficiaries, and enactment of a comprehensive legislations for social protection of unorganized sector workers
16 Types of Social Security Programmes in India
III Types of Social Security Programmes in India
17 Types of social security programs in India
Contributory Schemes Welfare Schemes Social Assistance Promotional Social Security
18 Contributory Schemes Generally statutory, administered by the governments (except insurance schemes). Accident insurance, medical facilities, old age pension, gratuity, provident fund, maternity benefits, income security, and unemployment allowance. Many of these are operated by boards at the state level.
19 Welfare schemes The central government imposes a cess on employers for workers engaged in, for example, lime-stone, dolomite, iron ore, manganese, chrome, and mica mines, the beedi industry, and the film making and the theatre industry.
20 Social Assistance Centrally sponsored schemes like the National Social Assistance Programme with its three components of old age pension scheme, national family benefit scheme, and national maternity benefit scheme.
21 Promotional Schemes Nationwide programmes such as the public distribution system, the Integrated Child Development Programme, the Mid Day Meal programme in primary schools, the supplementary Nutrition Programmes, the rural employment programmes (National Rural Livelihood Mission), Mahatma Gandhi National Rural Employment Guarantee Scheme.
22 India’s Social Security System: An Overview
EPFO Schemes Civil Service Public Sector Enterprises (Usually DB Schemes) Schemes for Unorganized Sector NGOs, Family, and Comm unity Welfare Bodies State Assistance Schemes National Assistance Schemes Pension products of Life Insurance Companies Local Bodies State Government Central Government EDLI EPS - DB EPF DC Small saving s schemes India’s Social Security System NCPS GPF GS Voluntary Tax Advantaged Occupational Pension ( traditionally DB but significant shift to DC) Group Insurance
23 India’s Social Security System: An Overview
Legends: DB Defined Benefit DC Defined Contribution EDLI Employees’ Deposit Linked Insurance Scheme EPF Employees’ Provident Fund EPS Employees’ Pension Scheme GPF Government Provident Fund GS Gratuity Scheme NCPS New Civil service Pension Scheme NGO Non-Government Organizations
24 V Social Security in Organised Sector
25 Social Security: Organised Sector
In India, the organized sector, which accounts for about 6 percent of the total workforce, benefit from a fair minimum standard of social security. The principal social security laws enacted in India for organised sector workforce are: Employees State Insurance Act, 1948, Employees Provident Funds & Miscellaneous Provisions Act, 1952, Employees Compensation Act, 1923, Maternity Benefits Act, 1961 and Payment of Gratuity Act,1972. These legislations provide social security benefits like medical facilities, employment injury/ maternity benefits, insurance, pension and gratuity etc to industrial and factory workers.
26 Employees State Insurance Scheme
Employees State Insurance Act, 1948 Aim medical care services (medical care is also provided to families of the insured persons) and cash benefits. Coverage Applies to factories employing 10 or more persons. Employees of factories and establishments covered under the Act drawing monthly wages upto Rs.15,000/- per month. Extended to provide health care to workers in the unorganised sector (Beedi workers, cine workers & non-coal mine workers). As on 31st March 2011, the scheme applied to 0.44 million employers employing 1.55 crore insured persons at 790 centres.
27 Employees State Insurance Scheme
Contribution Employers percent of wages of the covered employees. Employees percent of their wages. Agency State governments except for Delhi, Noida and Model Hospitals wherein ESIC is directly providing medical services. Delivery: Medical Care service (direct) system- 146 hospitals; 42 annexes; dispensaries and 93 ISM Units panel (indirect) system panel doctors. Delivery: Cash benefits Network of 610 Branch Offices & 187 Pay Offices related Sickness, Permanent Disablement & Death benefits.
28 Employees Provident Fund Organisation
Employees Provident Funds & Miscellaneous Provisions Act, (w.e.f. 14th March, 1952). Aim: To provide social and economic security to industrial and other workers covered under the Act and their dependants in case of their premature death. Coverage: Every establishment specified in the schedule-I to the Act and employing 20 or more persons. Three schemes under the Act: Employees’ Provident Fund Scheme, 1952 Employees’ Pension Scheme, 1995 and Employees’ Deposit linked Insurance Scheme, 1976
29 Employees’ Provident Fund Scheme, 1952
Came into force from 1st November, 1952. Aim Financial security for the employees in an establishment by providing a system of compulsory savings. Benefits Employees' Provident Fund Scheme takes care of following needs of the members: (i)Retirement (ii)Medical Care (iii)Housing (iv) Family obligation (v) Education of Children (vi) Financing of Insurance Polices Coverage 182 specified industries/classes of establishments. 6,15,902 establishments & factories with a membership of 50.8 million as on 31st March, 2010. Contribution As per amendment-dated 22nd September, 1997 in the Act, both the employees and employer contribute to the fund at the rate of 12% of the basic wages, dearness allowance and retaining allowance, if any, payable to employees per month.
30 Employees’ Pension Scheme, 1995
Came into force from 16th November, 1995. Aim conceived as a Benefit defined Social Insurance Scheme formulated following actuarial principles for ensuring long term financial sustenance. Coverage: all the new members of Provident Fund and the existing members who were contributing to the Employees' Family Pension Scheme-1971. Benefits: Member pension including disablement pension, widow pension, children pension, orphan pension, dependent parent pension, nominee pension Contribution No separate contribution Derives its financial resource by partial diversion from the Provident Fund contribution, the rate being 8.33% of the wages and the Central Government contributes at the rate of 1.16% on wages at the end of the year.
31 Employees’ Deposit linked Insurance Scheme
Came into force from 1st august, 1976. Benefit On death while in service, Provident Fund accumulations plus an additional amount equal to the average balance in the provident Fund account of the deceased during the preceding one year is paid to the family. Maximum amount of benefit payable is Rs. 1,30, 000. Coverage All employees who are members of the provident Fund in exempted as well as un-exempted establishments. 60 million members across the country. Contribution Employees are not required to pay any contribution. Employers contribute to the insurance fund at the rate of 0.5% of the pay of the members
32 Employees Compensation Act, 1923
Came into force from 1st July, 1924. Benefits If personal injury is caused to a workman by accident arising out of and in the course of his employment his employer shall be liable to pay compensation. Compensation- Rs. 1,20,000 in case of death and Rs. 1,40,000 in case of disablement resulting from injury. Funeral expenses- Rs. 5,000 Reimbursement of the actual medical expenditure incurred by the employee for treatment of injuries caused during course of employment without any ceiling.
33 Maternity Benefits Act, 1961
Came into force from 12th december,1961. Aim Regulates the employment of women for certain period before and after child-birth and provides for maternity and certain other benefits. Coverage Applies to mines, factories, circus industry, plantations and shops or establishment employing 10 or more persons including any such establishments belonging to Government except the employees who are covered under Employees State Insurance Act, 1948.
34 Payment of Gratuity Act, 1972
Aim Payment of gratuity to employees engaged in factories, mines, oil fields, plantations, ports, railway companies, motor transport undertakings, shops , educational institutions or other establishments. Gratuity is payable at the time of termination of her/his service either (i) on superannuation or (ii) on retirement or resignation or (iii) on death or disablement due to accident or disease. Benefits Every employee, other than apprentice, irrespective of his wage is entitled to receive gratuity after she/he has rendered continuous service for five years or more. The ceiling on maximum amount of gratuity has been raised from Rs million to Rs. One million w.e.f. 24th May, 2010.
35 Social Security in Unorganised Sector
VI Social Security in Unorganised Sector
36 Social Security: Unorganised Sector
94% of the Indian work force is in the unorganized sector. The unorganized sector is quite heterogeneous in terms of types of workers who work in the sector and their geographical spread. Providing social security benefits in a phased manner to the vast workforce in the unorganized sector and making sustained efforts in this direction.
37 Social Security: Unorganised Sector
Three categories of social security programmes for unorganised sector workers: Social Assistance Programmes Food-based transfer programmes Income transfer programmes Cash-transfer programmes Social Insurance Schemes and Welfare Funds
38 Social Assistance Programmes
Food-based Transfer Programmes Mid Day Meals Scheme (1995) Community Grain Bank Scheme (1996) Targeted Public Distribution System (1997) Antyodaya Anna Scheme (2000)
39 Social Assistance Programmes
Income Transfer programmes: Food for Work Programme Jawahar Rozgar Yojana Sampoorna Gram Swarozgar Yojana Jawahar Gram Samridhi Yojana Employment Assurance Scheme Pradhan Mantri Gram Sadak Yojana Food for Work Programme for Calamity Hit States Mahatma Gandhi National Rural Employment Guarantee Act
40 Mahatma Gandhi National Rural Employment Guarantee Act, 2005
Came into force on 2nd February, 2006 Aim: To enhance livelihood security of households in rural areas of the country by providing at least one hundred days of guaranteed wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work. First ever law internationally that guarantees wage employment at an unprecedented scale. Funding: Central: the entire cost of wages of unskilled manual workers; 75% of the cost of material, wages of skilled and semi-skilled workers. State: 25% of the cost of material, wages of skilled and semi-skilled workers; unemployment allowance. Coverage ( ): 626 districts all over India 120 million job cards issued 55 million households provided employment; 49% share of women in workforce
41 Cash Transfer: National Social Assistance Programme
A flagship welfare program of the Government of India initiated on 15 August 1995. The scheme is administered by the Ministry of Rural Development, Government of India although the beneficiaries could hail from either urban or rural areas. The scheme is completely sponsored by the Central Government. The NSAP is implemented in the States/UTs in accordance with the general conditions applicable to all components of the NSAP as well as specific condition applicable to each component. NSAP at present, comprises of Indira Gandhi National Old Age Pension Scheme (IGNOAPS), Indira Gandhi National Widow Pension Scheme (IGNWPS), Indira Gandhi National Disability Pension Scheme (IGNDPS), National Family Benefit Scheme (NFBS) and Annapurna. Under the union budget raising the allocation under the National Social Assistance Programme (NSAP) by 37 per cent from 6,158 crore in to 8,447 crore in
42 National Social Assistance Programme
i) Indira Gandhi National Old Age Pension Scheme (IGNOAPS): Under the scheme, BPL persons aged 60 years or above are entitled to a monthly pension of Rs. 200/- up to 79 years of age and Rs.500/- thereafter; Coverage: 17 million ( ) ii) Indira Gandhi National Widow Pension Scheme (IGNWPS): BPL widows aged years are entitled to a monthly pension of Rs. 200/-. Coverage: 3.4 million ( ) iii) Indira Gandhi National Disability Pension Scheme (IGNDPS): BPL persons aged years with severe and multiple disabilities are entitled to a monthly pension of Rs. 200/-. Coverage: 1.3 million( ) iv) National Family Benefit Scheme (NFBS): Under the scheme a BPL household is entitled to lump sum amount of money on the death of primary breadwinner aged between 18 and 64 years. The amount of assistance is Rs. 10,000/-. Coverage: 0.3 million ( ) v) Annapurna: Under the scheme, 10 kg of food grains per month are provided free of cost to those senior citizens who, though eligible, have remained uncovered under NOAPS. Coverage: 1 million ( )
43 Social Insurance Schemes
Janshree Bima Yojana Aam Admi Bima Yojana Rashtriya Swasthya Bima Yojana or National Health Insurance Scheme
44 Rashtriya Swasthya Bima Yojana or National Health Insurance Scheme
Came into force on 1st April, 2008 Aim: to provide protection to BPL households from financial liabilities arising out of health shocks that involve hospitalization. Benefits: Beneficiaries under RSBY are entitled to hospitalization coverage up to Rs. 30,000/- per year for most of the diseases that require hospitalization. Funding: Central: 75%; State: 25%; For North Eastern States:- Central: 90%; State: 10%; Scheme beneficiaries pay only Rs. 30 as the registration fee. Coverage Extends to five members of the BPL family which includes the head of household, spouse and up to three dependents. 20.8 million- Active Smart Cards distributed as on 12th April, 2012. 3.4 million- Total Hospitalisation Cases as on 12th April, 2012. Extended to cover construction workers, NREGA beneficiaries, street vendors, beedi workers and domestic workers. Further extended to sanitation workers, ragpickers, mine workers, rickshaw-pullers and autorickshaw and taxi drivers.
45 Social Security Through Central Welfare Funds
Separate Legislations have been enacted for setting up 5 Labour Welfare Funds to provide health care, education, recreation, housing and water supply to workers employed in certain non-coal mines, beedi industry and cine workers. The finances are raised by imposing cess on the commercial activity of the target group. The Mica Mines Labour Welfare Fund Act, 1946; The Limestone and Dolomite Mines Labour Welfare Fund Act, 1972; The Iron Ore, Manganese Ore and Chrome Ore Mines Labour Welfare Fund Act, 1976; The Beedi Workers’ Welfare Fund Act, 1976; and The Cine Workers’ Welfare Fund Act, 1981.
46 The Unorganised Workers Social Security Act, 2008
Recent Legislative Interventions & Initiatives on Social Security in Unorganised Sector The Unorganised Workers Social Security Act, 2008 National Skill Development Policy, 2008
47 Social Security System in India: Challenges
VI Social Security System in India: Challenges
48 Social Security System in India: Challenges
Funding of social security measures; The unavailability of reliable data; Lack of involvement of the people in designing the packages of the diverse schemes; A poorly designed and executed household targeting mechanism Lack of coordination and overlap in delivery of programmes reduces accountability of those responsible for social security delivery.