for Unorganized Sector Workers

Justice V.R. Krishna Iyer
Baba Adhav
Working President
S. Bhatnagar
Correspondence Address:
B-19, Subhavna Niketan
Pitampura, Delhi-110034
Phones: 91-11-27013523, 27022243
Mobile: 9810810365
E-mail: nccusw@vsnl.net
Website: www.nirmana.org
R. Venkataramani
Sr. Advocate- Supreme Court
Geetha R.
South Regional
Comments on NCEUS's draft
Unorganised Workers Social Security Bill, 2006.
T.S. Sankaran

1.      The National Commission for Enterprises in the Unorganised Sector (NCEUS) submitted recently to the Central Government its first Report along with a copy of the draft of The Unorganised Workers Social Security Bill, 2006.It may be recalled that the NCEUS had earlier, in 2005, circulated its initial draft of the Unorganised Sector Workers Social Security Bill, 2005, along with the draft of the Unorganised Sector workers (Conditions of Work and Livelihood Promotion) Bill, 2005.

2.      Following the submission of the two draft Bills, the Commission has further deliberated on the subject and is now putting forth a revised Bill on Social Security along with a Report elaborating in detail its proposal for a national social security scheme in which all those in informal employment will be eligible.

The Commission will also be submitting another report in justification of the draft bill dealing with conditions of work and livelihood promotion.

3.      While awaiting the draft Bill relating to Conditions of Work and Livelihood Promotion for Unorganised Workers, let us look at the final draft of the Unorganised Workers Social Security Bill, 2006 (hereinafter referred to as the Bill).

We begin by looking at the changes, if any, that the Bill has made to the earlier 2005 Bill. There are a few changes.

(i)    The expression "Unorganised Sector Worker “ has been consistently changed in all relevant places to "Unorganised Worker", leaving out the word "Sector". This seems essentially to be a drafting change so that the inclusion of "wage worker in the organised sector without any social security cover" in clause 2(l) does not make the latter to be workers in the unorganised sector; otherwise, this has very little significance.

(ii)    The definition of the term" Unorganised Sector" in clause 2(k) has undergone change, including an employment limit of ten; we shall refer to this later in this paper.

(iii)    The significant change in the Bill is in respect of old age security, as one of the elements of the National Social Security Scheme. Whereas the 2005 Bill envisged "old age pension to all workers above the age of 60 years", the Bill in clause 4(1)(iii)proposes "old age security in the form of old age pension for BPL workers above the age of 60 years and Provident Fund cum employment insurance benefit to all other workers" Thus a distinction is sought to be made, in the matter of old age protection between workers below and above the poverty line. The implication of this will be discussed later in the paper.

(iv)    The wage limit for coverage has been raised from Rs 5000 per month to Rs 6500 per month, both in clause 2(j) and clause 2(m) of the Bill. One may question the need for this change or even the need for the earlier limit of Rs 5000, when we are already trying to distinguish workers as above and below the poverty line. The wage limit merely adds another dimension to the implementation process and may be of little avail

   As far as one could make out, these seem to be the changes.

4.      On the earlier 2005 Bill, I had already given my comments in my letter to Dr Jaya Shankar, who was then a full time member of NCEUS and who had participated in the discussions held in Delhi in September 2005, under the auspices of the National Centre of Labour

The basic point in that letter was to reiterate the firm and consistent stand that NCCUSW has been maintaining on the need for an integrated law which will encompass regulation of employment, fixation of wages, dispute resolution, occupational safety and health etc besides social security, and the need for tripartite systems at various levels, for both formulation of schemes and for their implementation. WE NEED TO REITERATE THAT. The Central Trade Unions seem to be ambivalent about this; the lessons learnt in the campaign for a central law for construction labour in which the NCC had worked shoulder to shoulder with all these Central trade Unions under the leadership of Justice V.R.Krishna Iyer seem to have been forgotten or perhaps ignored. Memory seems to have also failed them in regard to the unanimous recommendations made by the Technical Group on Umbrella Legislation for the Unorganised Sector, of the National Seminar that the Ministry of Labour organised in November 2002 and in which all the Central trade Unions participated.

5.      In asking for an integrated law in which the workers and their representatives will not be merely "beneficiaries" but also participants in the entire process, NCCUSW or for that matter the National Centre of Labour, is not asking for the moon. The hard experience in respect of the law for construction workers strengthens the conviction that unless the workers and their representatives are in the driving seat in the total process, the situation now obtaining in respect of the 1996 laws, where even after ten years, the laws have been non-starters in most of the states, will be repeated in respect of all laws for the unorganised workers.

Therefore any detailed discussion on the Bill, without a look at the proposed companion law on Conditions of Work and Livelihood Promotion will not merely be incomplete but is also, likely to jeopardise the contents of the companion law. The earlier draft of 2005 proposed by the NCEUS on this was a mere shell of a law and even that shell did not contain any inkling of what the legislative policy is in respect of vital matters like regulation of employment, employment security, protection and strengthening of existing rights over resources, wages, and the role of workers and their organisations in the formulation and implementation of schemes through tripartite bodies at all levels. The rally that NCCUSW organised in May 2005 in Delhi and the demands made there are still too fresh in our minds to be forgotten or ignored.

One wishes that the NCEUS had critically examined why the 1996 laws for construction labour, described as "one of the notable initiatives" are more honoured in their breach than in their observance. The brief reference to these laws in the Report at pages 30-31 is grossly inadequate, besides being inaccurate in certain aspects.

6.      One of the points I had mentioned in my letter to Dr Jaya Shankar related to the definition of the term "Unorganised Worker". Clause 2(l) of the Bill defines an unorganised worker to mean "a self-employed worker or a wage worker in the unorganised sector and includes wage workers in the organised sector without any social security cover" The later part of this inclusive definition is presumably intended to cover those workers in the organised sector like contract labour and casual labour who do not get any social security cover from the employer. The use of the phrase" without any social security cover" is likely to raise questions as to what the term "social security" means; does it mean any or all the items under the National Social Security Scheme listed out in Clause 4 of the Bill or will it also include promotional social security measures. Also, considering that the E P F Act, 1952 will apply to every employee including contract labour from the first day itself in respect of an establishment to which that act applies, will such an employee be left out of the scope of the Bill; if so, the desirable intention will not be served. I think this matter calls for some detailed analysis and discussion.

7.      The change in the pattern of old age protection, under which BPL workers will get a pension on reaching the age of 60 years, while the rest will get covered by a Provident Fund cum unemployment insurance, though seemingly logical, may be operationally not easy, apart from the expected criticism that the Scheme seeks to create a division between the unorganised workers in terms of benefits. Even the identification of BPL workers will be difficult and as SEWA points out" central government contribution only for workers below poverty line is fraught with problems, primarily because the list of BPL persons excludes many very poor people whose names do not simply get into this list for various reasons". Will there be a tendency on the part of the state administrations to push more and more workers into the BPL category, in respect of whom the contribution will be made by the Central government. As regards the workers above the BPL,.NCEUS itself in para 8.31 of its report recognises that "the income criteria may not be practically enforceable in a number of cases and self-selection may be the main basis for inclusion/exclusion of workers in the scheme" These aspects also call for detailed discussion.

8.     In para 8.17 of its report, NCEUS has stated" Given the low earnings of the workers in the informal economy, there is a strong case for providing social security to the informal workers without contribution from the workers" .In the face of this, the reasons advanced in para 8.18 of the report for prescribing a contribution from the workers , namely that this will give a "sense of ownership and develop a stake in the effective functioning of the social security schemes" appear thin and doctrinaire. Also the NCEUS’s admits the absence of identifiable employers (as in the case of self-employed poor) in many cases or the difficulties in collecting from a large number of employers of small establishments makes it unattractive to have a system based on contributions from the employers either. NCEUS, in para 8.18 has stated "Thus a contribution from the employers through a levy of tax or cess is an indirect method of collection of contribution for a social security system" If so, this should be so for the workers also, more so for the workers. In this context it is relevant to point out that the NCEUS admits that ultimately it is the responsibility of the government to find mechanism of financing the Scheme beyond the amounts which can be collected from the workers and the employers. Considering the uncertainties and difficulties in the way of collecting contributions from the workers and their employers and noting that the NCEUS itself estimates the possible cost of financing the national scheme at less than 0.50 percent of the GDP. one is surprised at the timidity shown by the NCEUS in not recommending that the entire expenditure be met out of public funds. and doing away with contributions from workers and employers. (It will be interesting to know how the NCEUS calculated the likely collections by way of contributions from workers and their "employers" in the case of self-employed workers. Talking of self-employed workers, it is very necessary that some scheme should be drawn up to mitigate the loss that may be sustained by such workers as a result of natural disasters which destroy their means of production and their livelihood)

When the Constitution of India, in Article 41,mandates that the State shall , within the limits of economic policy and development, make effective provision for securing the right to life, to education, and to public assistance in cases of unemployment, old age , sickness and disablement and other cases of undeserved want, it encompasses both promotional and protective aspects of social security and in fact urges universal social security protection and not merely for the workers , much less on a contributory basis. More than half a century is too long a period for the State to seek escape on the plea of limits of economic policy and development. If, as is demanded by NCCUSW and others, three percent of the GDP is earmarked for this, being raised annually by half to one percent till a satisfactory level of social security is reached, then we will have on ground a worthwhile social security system.