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A Critique of India’s Unorganised Workers’ Social Security Act, 2008

by T S Sankaran, 16 February 2009

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The Unorganised Workers’ Social Security Act, 2008(Act 33 of 2008)

- —A Critique

There is general dissatisfaction bordering on serious discontent among the vast masses of unorganised labour about the contents of the recently enacted The Unorganised Sector Workers’ Act, 2008(Act 33 of 2008) as also the manner in which the law had been passed in Parliament . What the workers want, not as a munificence from the Government but as their lawful right as the citizens and workers of our country,was a comprehensive law encompassing al aspects of their work and life at work including regulation of their employment,wages, social security, safety, conditions of work and so on, all to be administered through tripartite bodies, for each group of employments, at the national, state , district and lower operational levels down to the village.That the unorganised workers , be they wage labour, home based workers or self employed workers, with their dependents account for the bulk of our population and therefore of the electorate, and the fact that they contribute to two thirds of our national product and form 93% of our workforce seem to have been ignoredby both the Government and the Houses of Parliament.A lso, it is strange that the recommendations of the Second National Labour Commission, the Report of the Petitions Committee of Lok Sabha, the Report of the Parliamentary Standing Committee for Labour and the Report along with draft laws prepared by the National Commission for Enterprises in the Unorganised Sector have all been ignored.This reveals, apart from the apathyshown to these august authorities , an utter indifference to the political fall out that this course of action may entail. Be that as it may, let us look at the provisions of the Act and see how far these are anaemic and inadequate and even dysfunctional. I. The long title of the Act is that it is an Act"to provide for social security and welfare of the unorganised workers and for other matters connected therewith or incidental thereto" The term "social security" has not been defined in the law and what is even more strange , the term does not occur in the body of the law in any substantive sense. Unless the expressions"social security" and "welfare" are used interchangeably, in which case there is no need to be pompous and call it the "Social Security " Act, the emphasis seems to be only on schemes of welfare. See sections 3(1),3(2), 3(4),5(3), 5(8)(c), 6(3),6(8)(c)and 16;no doubt, the phrase "social security"occurs in a few places, as for example in the heading of Chapter II, designating the National and State level Boards as "social security" Boards, in section 9(a), ,in section 10(4) and finally in the heading of Schedule I. It is significant that in section 3(2)which refers to Schedule I, the description of these schemes is as "welfare" schemes While on this, let us also refer to the loose usage of the terms: in sections 3(1), 3(2)and 3(4), it is referred to as welfare schemes; in sections 5(3) and 6(3)the expression used is labour welfare while in section5(8) (c) and 6 (8) (c) the term used is social welfare.Considering that the kinds of schemes listed out in Schedule I are schemes for the general population and not exclusively for workers, the use of the term"social welfare" seems more appropriate. While on this, let us also recognise that bulk of these schemes have been devised and designed as Poverty Alleviation efforts and generally directed at persons and families below the Poverty Line.If, in a legislation on social security for unorganised workers, these are the schemes that are the basis for formulation and notification of suitable "welfare" schemes by the Central Government under section 3(1), it is no wonder that the unorganised workers’ organisations like the National Campaign Committee for Unorganised Sector Workers suspect the worst and believe that this Act is essentially for workers below the Poverty Line and that the attempt is to create a cleavage among workers as being above or below the Poverty Line.That the definition of the term "self employed worker" in section 2(k) and of the term"wage worker" in section 2(m) of the Act provide for limits to be prescribed by the government for monthly earnings or of extent of land holdings or of monthly wage only strengthens the suspicion that the act is essentially designed to cover BPL workers. A vigilant Parliament should have built into the law these limits, if such limits are at all needed,instead of leaving it to the Executive to decide these from time to time. This is a case of perhaps excessive delegation of legislative authority and prerogative. Excessive delegation of legislative authority is also seen in section 1(3)of the Act where the commencement of the Act is left to be decided by the Central Government.Not even a time limit, say 12 months, has been prescribed.Apart from these ,one is struck by total lack of legislative policy or intent. Surely, the Parliament is entitled to, and in fact obliged to, build into the law what constitutes appropriate and adequate social security for this vast mass of unorganised workers and their dependents, what eligibility criteria,if any, ought to be prescribed,what will be the scale of benefits that the w orkers and their families are entitled to receive and under what conditions,what will be the funding arrangements that must be put in position to meet the cost of social security and so on.In stead of doing all these and more, what our Parliamentarians are content with is to enact a law which enables the Central and State Governments to do whatever they deem expedient.Aren’t the people of this country, particularly the workers, entitled to receive,in this sixtieth year of our Republic, minimum standards of social security, on the scale and spread adumbrated in the relevant I L O Convention drawn up more than fifty years ago?When the Constitution of India in Article 41 talks of public assistance in cases of unemployment, old age, sickness and disablement and in other cases of undeserved want,it covers the entire population.In the case of workers, particularlyy unorganised workers who contribute by their labour to two thirds of our national product, surely, they are entitled to something more than what Article 41 contemplates. The long title of the Act refers to "matters connected therewith or incidental thereto". What can these matters be, in the context of social security and welfare?In considering this , we ought to keep in mind that this Act is for workers; and for workers, other than those strictly self-employed,the basic requirement for them to be eligible for several of the benefits of social security and welfare,is employment. Without any employment either as a home based worker or wage worker as defined in the Act(we shall come to the definitions a little later), the workers will not be in a position even to pay the minimal contribution as may be prescribed under section 10 (4) of the Act, which makes it quite clear that nonpayment of the contribution disentitles the worker from getting any benefits.Work and employment are so essential , both for earning a livelihood and for leading a life of dignity, that employment and work are the starting point for any scheme of things for workers.Therefore , any law which does not deal with this issue of employment, its regulation, wages, conditions of work, and so on will be not merely incomplete but dysfunctional if it proceeds to deal with social security on a stand alone basis.It is this compulsion that has led to the demands from all workers and their organisations including NCCUSW for an integrated comprehensive law.It is also necessary to recognise that in an integrated law, it will not be adequate to have a single monolithic Board for the whole country at the national level and one Board at the State level. The issues relating to regulation of employment, fixation of wages keeping in mind that in the unorganised sector bulk of the payments are on a piece rate basis,and conditions of work will vary considerably from sector to sector and therefore there is need to group all allied occupations and employments into separate sectors and set up Boards for each such sector.T he examples and experiences of Kerala and Tamil Nadu are pointers in this regard.The draft law prepared by NCCUSW had attempted to group the employments into thirteen or fourteen groups and recommended tripartite Boards for each group at various levels. II. Let us now look at section 2 of the Act. (i) It is surprising that the term "Family" has not been defined. It will be a poor defense to say that this has been left out to be defined in the schemes to be drawn up. To avoid varying definitions drawn up by different State Governments, it is necessary to define it in the Central Act. There is usually a tendency to define "family" in a very restricted manner to include only the worker, his/her spouse and upto two children. Dealing as we are with the most disadvantaged sections of our society and keeping in view our social traditions where family ties are strong and go well beyond the nuclear family, it is desirable to give an extended definitions to include not merely the spouse and all children but also parents of the worker and/or the spouse, dependent widowed sister, dependent widowed daughter-in-law and so on. Only then will the "Social" in social security attain its full stature. (ii) The expression "District Administration" occuring in section 2(c) has not been defined; With the spread of administrative hierarchies of various developmental and regulatory departments of government, there is considerable presence of almost all departments at the District Level, Labour Department also being one such. Section 8 of the Act entrusts to it the record keeping function but the proviso to this section seems to equate District Administration with District Panchayats in rural areas and urbal local bodies in urban areas. If the intention is to entrust the record keeping functions including the work of registration of workers as per section 10(2) and section 10(3) of the Act to elected urban and rural bodies, it could have been explicitly stated in the law. The entire dilemma could have been avoided if the workers were taken into confidence and the entire administration of the funds and the schemes entrusted to Tripartite Bodies at various levels, with a certain degree of linkage between the levels. (iii) The term "Unorganised Worker" has been, inter-alia, defined in section 2(m) as "a home based worker, self employed worker, or a wage worker in the unorganised sector......". The term "Unorganised Sector" restricts the coverage to those enterprises employing workers who number less than 10. This numerical limit may raise problems. For example, in the case of brick kilns not using power in the manufacturing process, the number of persons employed ,even if it be for only a portion of the year, will be well above 9, this definition will make the workers ineligible for coverage. If the argument is that such enterprises will get covered under, say the Factories Act, 1948, what happens to those enterprises where the employment is between 10 and 19? Also enterprises employing 9 or less number of workers may include cyber cafes, beauty parlors, real estate agencies and so on but their employees may not even like to be referred to as unorganized workers. It is perhaps in this context, section 2(n) defining "Wage Worker" prescribes a monthly wage limit. Be that as it may, the employment limit of 9 in defining an enterprise as unorganised sector may need a relook. A question has been raised whether home based worker should also be included in the definition of the term "Unorganised Worker". This is for the reason that there already exists a demand for a separate self contained law for home based workers, for whom the ILO has also adopted a Convention. If the coverage of the law is, as in the present law ,restricted to social security and welfare, then perhaps there is no special reason for excluding home based workers. But then, regulation of both employment and piece rate wages which is the essence of home based work would warrant a law that will cover these aspects also. The first part of the definition of the term "Unorganised Worker" includes a wage worker which term has been defined in section 2(m). Here again, the Central and State Governments are authorized to notify an amount as monthly wage as the case may be. It is not clear why the Central Government should at all be authorized to notify a monthly wage, particularly when different rates may be prescribed by the Central Government and a State Government. If for purposes of uniformity of coverage it is felt desirable to authorize the Central Government, then legislative policy should warrant the law itself to prescribe a limit, with a provision for changes once in 6 months depending on the upward or downward movement of Consumer Price Index numbers. The same procedure may be followed in respect of "self employed worker", in which case also there is provision in section 2(k) for a limit on monthly earnings to be notified by the Central or State Government. The second part of the definition of the term "Unorganised Worker" includes "a worker in the organised sector who is not covered by any of the Acts mentioned in Schedule II to this Act". The intention behind this inclusion is laudable because it is well known that in the so-called "Organised Sector", there are thousands of workers particularly contract labour, casual labour and so on who may not be covered by the laws in Schedule II. The point to note, however, is that there are different employment limits prescribed in the various laws. For example, the Industrial Disputes Act, 1947 which presumably has been included because of the provisions in Chapter V(A) of the Act, there are employment limits for eligibility to lay off; it must also be noted that this Chapter covers only factories, mines and plantations as defined in those respective Acts. Likewise the coverage under some of the Acts in Schedule II is not universal. These Acts apply only to certain kinds of establishments and with different employment limits. One is not sure whether any detailed study was undertaken to see how far this inclusion will be really beneficial to the "left out" workers of the organised sector. The use of the words "any of the Acts" and the inclusion of Workmen’s Compensation Act, 1923 in the Schedule may result in bulk of the workers falling between two stools. One only hopes that this does not happen. In this context, it is relevant to point out that during the debate on the Bill in Lok Sabha, an amendment was moved by one of the members to section 2(m) to read as follows:- Substitute "(m) Unorganised Worker means an unorganised sector worker and also includes worker in the organised sector not protected by the existing laws relating to social security" Explanation: For the purposes of this Act, unorganised workers would also include any class of workers like Anganwadi workers who are not covered or protected or benefited by the existing laws relating to social security in the organised or unorganised sector." This amendment was negatived. This is a pity. It almost makes one think that Anganwadi workers are deliberately kept out of even this scheme of things. The basic purpose of the definition of the term "Unorganised worker" must be to ensure that atleast for the limited purpose of social security and welfare, no worker is left out. Along with that, the term "Social Security" and "Family" must be defined so that the benefits that are covered by the ILO Convention on minimum standards of social security accrue to the worker and his family. The law must stipulate that the funds needed for providing these minimum benefits must be provided by the Central and State Governments in prescribed proportions; a small contribution could and should be collected periodically from the workers. The basic drawback of the law as enacted is that none of these substantial provisions has been incorporated in the law to indicate legislative policy and intent. III Let us now look at the operative portions, such as they are, of the law in Chapters II, III, IV and V. We have in earlier sections, commented on the inadequacy of the law in various matters. We would like to be more specific in this part with reference to actual provisions of the law. Notwithstanding the limited nature of these comments, confined as they are to the actual provisions in the law, let the reader keep in mind that any law for unorganised worker providing only for social security welfare will be inadequate and incomplete. As already pointed out, those social security benefits referred to in section 3(1) of Chapter II should include unemployment and others indicated in the ILO Convention. The scale of these benefits should also be spelt out in the law instead of leaving it to the Central Government to be notified through schemes. Within the parameters on the nature and scale of benefits which ought to be spelt out in the law, the Government can and should draw and notify schemes and even this only after prior publication giving everyone concerned an opportunity to give his or her comments on the proposal. While on this, it is necessary to know the basis on which some welfare schemes are to be notified by the Central Government as in section 3(1), while other welfare schemes are to be notified by the State Governments as in section 3(4). If old age protection is in the Central sphere, why is old age homes in te State sector? Likewise, if disability cover is in the Central sector, why is employment injury benefit in the State sector? In the same way, while the contents of a scheme to be notified by the Central Government have been indicated in section 4(2), there is no such stipulation in respect of schemes to be notified by State Governments. Chapters III and IV deal with National and State Social Security Boards respectively. These Bodies which were originally designed to be merely advisory bodies have now been assigned some specific functions both at the Central and State Levels. Incidentally, section 6(8)(a) seems to call for some reformulation. A thought that occurs in the context of provisions relating to National and State Level Boards is whether in the matter of implementation of schemes, there is any need at all to distinguish between schemes notified by Central Government and those by State Governments. We must recognise that the law is concerned with social security and welfare of the unorganised sector and not with the regulation of employment and wages; also, the implementation is sought to be done through District Administration or elected local bodies. (The total non involvement of trade unions in the whole operation is a matter that we will refer to later). That being so, why should the Central Government administer any schemes under this Act as stated in section 8(c) of the Act?; much less, why should the National level Board monitor such schemes? In this connection, we may with advantage look at the implications of section 16 which reads as follows:- "16. Nothing contained in this Act shall affect the operation of any corresponding law in a State providing welfare schemes which are more beneficial to the unorganised worker than those provided for them by or under this Act.". Firstly, it must be pointed out that there are no benefits provided by the Act; If at all, any benefits are to accrue to the unorganised workers, it can only be under the Act through schemes notified under the Act. In fact, this is the principle criticism namely legislative policy and intent have not been spelt out. Apart from that, there may be welfare schemes in many states benefiting unorganised workers which are not through any "corresponding law" but by executive decisions; even if these benefits at the State level are less beneficial, what happens to them under section 16? Either way, are these benefits at the State level to be enjoyed in addition to or in place of what the schemes under this Act provide? What will be the manner of determining the extent of Central Government funds that will be made available to a State Government in the above situations? Will that also be determined by the Central Government and if so, on what authority? Surely one expects the law to be clear and precise on these matters. Before the Indira Gandhi National Old Age Pension Scheme, in its initial form, was put in place, several states had already their own old age pension schemes and the Central scheme had made several provisions regarding the release of central funds to the State Government in such a situation. One is not sure what the methodology was and to what extent it was successful. In any event, that experience should have been utilised and built into the present law. Also, the question of deciding whether one set of schemes at the State level is less or more beneficial than those under this Act is not easy to decide. Further, we must remember that under Central laws, welfare funds have been created and welfare benefits (including housing which under the present Act, is according to section 3(4)(c), is in the State Governments’ list of responsibilities) provided to beedi workers, some mine workers and so on; What happens to these funds and their activities? Will they continue to function and if so, will the proposed National or State level Boards have any monitoring responsibilities over these. All these are issues that ought to have been thought through and appropriately provided for in the law. The present formulation in section 16 may create more problems than it will solve! Going back to provisions in Chapters III and IV, it can be seen that the composition and functions of the National level Body needs change. There is no need to have 5 representatives of Central Government’s ministries and departments besides the Chairman who is the Union Minister of Labour and Employment and Member Secretary who is the Director General, Labour Welfare in that ministry. Perhaps, one more Central Government’s representative from the Ministry of Social Justice and Empowerment and another each from the Ministries of Law and Finance to be specifically mentioned in the law will be adequate. The resultant saving of two seats can be alloted to State Governments raising their number from 5 to 7. The stipulation in section 5(3) and section 6(3) that the members of the Board shall be "from amongst persons of eminence in the fields of labour welfare, management, finance, law and administration" seems unnecessary. At best, this need only apply to the "eminent persons from civil society" referred to in section 5(2)(c)(iii) and section 6(2)(c)(iv). One is surprised that expertise in social security is not considered necessary! If the substantive provisions for social security for the unorganised workers are tentative leaving it to the Central and State Governments to formulate the schemes, the arrangements for implementing the schemes such as those in sections 8,9 and 10 are even weaker. Firstly, as already pointed out, monolithic boards at the National and State Levels will not and cannot carry out the functions. This will require particularly at the State level sectoral Boards for each group of allied employments. These Boards ought to be tripartite in character, may be with inclusions of persons well versed in social security, law, finance and other specified fields. These Boards at State level should have their establishments, again of a tripartite nature, at the lower levels such as Districts, Tehsils and so on. These will be the agencies for the implementation of the schemes with built- in dispute settlements machinery and so on. While no doubt, the District administration and local bodies will have representation on these bodies as part of Government representatives, the functioning will be tripartite and democratic. Workers’ representatives can be elected through secret ballot. Trade unions, who have been totally ignored in the scheme of things in the Act should be encouraged to play their legitimate role including the registration of workers and espousing their causes. There is no need for setting up workers felicitation centers as indicated in section 9. The functions suggested for these centers can and should be done by trade unions; this will not merely help the trade unions to work closely with the workers but also, enable them to grow in strength. Perhaps, it is the fear of the latter, that had led to the total ignoring of trade unions in the law. To conclude, the Act as it now stands is totally an exercise in futility. There is no aspect of this law that is commendable unless it be the provisions in section 10(3) relating to the issue of "a smart card carrying unique identifcation number and shall be portable". This law has ignored the demand for a separate law for agricultural labour given its size and variety. The law has failed to indicate clearly the extent of funds that must be earmarked for providing social security and welfare. This could have been done by prescribing a minimum percentage of Central and State’s revenue budgets or of their GNPs to be earmarked for this purpose. In all, the Act suffers from a serious lack of legislative policy and intent. Anything that can be done by way of change will, it appears, be an improvement!.