Social security plan


  • Recently government accepted the proposal on universal social security cover for 500 million workers, including those in the farm sector, seeking to start the process of putting in place a more secure welfare net .

Social security plan:-

  • It is a comprehensive social security system to provide retirement, health, old-age, disability, unemployment and maternity benefits to the 500 million workers.
  • This will be the second mass-benefit social scheme after the National Health Protection Scheme.
  • The plan is to implement the scheme in three phases over a 10-year period after which the government hopes to make it universal.
  • Three phases:-
    • The first phase will see all workers getting the bare minimum coverage, which includes health security and retirement benefits.
    • The second phase will see unemployment benefits being added while other welfare measures could be launched in the third phase.
  • The 500 million beneficiaries will be classifiedinto four tiers.
    • The first will comprise the destitute and those below the poverty line who cannot contribute to security payments with the cost being entirely borne by the government through tax-based schemes.
    • Workers in the unorganised sector who have some contributory power but cannot be self-sufficient may be covered under subsidised schemes in the second tier.
    • The third tier will include those who either by themselves or jointly with their employers can make adequate contributions so as to be self-sufficient.
    • The fourth tier will comprise the relatively affluent who can make their own provisions for meeting contingencies or risks as they arise.

Why such a plan is necessary?

  • Not only does the move extend a formal social safety net to the entire workforce, it could also accelerate the formalization of the economy. 
  • With this move the government will have complete data on the Indian workforce. This will tell about the job creation picture more reliably and offer retirement benefits to a large number of workers so far out of the social security net.
  • The dire state of finances of workers in the agricultural sector necessitates the provision of such relief.
  • According to a study submitted to the International Labour Organisation (ILO) in 2016, only one percent of the workers have access to social security. The social security system at present caters more to the formal sector. However, even within the organised sector, only over ten percent avail social security in some form or the other. Existing schemes have failed to be inclusive because of various conditions and thresholds imposed to qualify for the plan.
  • Seeding the unique identity numbers with Aadhaar will provide data on the entire workforce to the government. This could help to quicken the process of formalisation and minimise the wastage of resources through the duplication of benefits. 

Concerns :-

  • It only lightly touches upon the subject of unemployment.
  • Opposition:-
    • Households that employ domestic help are likely to show a lot of resistance because of the increase in cost that such a proposal imposes on them. Even small industries may face a similar issue with having to provide social security to all their workers.
  • Without proper labour reforms the utility of the scheme would be of no use
  • Funding issues:-
    • Funding such a plan is impossible without a complete revamp of India’s current system of budgets.
  • There are already other programmes :-
    • Health benefits for workers will for instance get subsumed in the ambitious National Health Protection Scheme (NHPS) that will be available to 10 crore households, so there is no need to provide for it separately.

Way forward :-

  • In addition to ensuring that workers get a fair wage, the provision of social security also entails actions such as investing in the skill and training of workers to improve their marketability. A move of this nature and magnitude is therefore necessary.
  • Labour reforms must be linked to the ease of doing business, creating a habitat where jobs can be fostered. Reforms must be linked to worker benefits, while simultaneously easing the compliance burden on small and medium enterprises. The labour law must be rationalised by defining minimum wages and linking them to inflation.
  • MGNREGA should be restructured and linked to apprenticeship programmes in industry and agriculture.

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