Needed, a well-crafted social security net for all

Context: The article is discussing the state of social security benefits and programs in India. It highlights several concerning issues related to social security coverage and implementation in the country. It points out the lack of coverage, unequal distribution, underutilization of funds, and the need for more effective policies and implementation to ensure social security for all workers in the country.

Decoding the Editorial

The article highlights several concerning issues related to social security coverage and implementation in the country.

Lack of Coverage: The article points out that a significant portion of India’s salaried workforce, around 53%, does not have access to social security benefits. This includes benefits such as provident funds, pensions, health care, and disability insurance.
Inequitable Distribution: Even among the poorest 20% of India’s workforce, only a very small percentage (1.9%) has access to any social security benefits. This highlights the inequitable distribution of social security benefits in the country.
Gig Workers: The gig workers, who constitute around 1.3% of India’s active labour force, also lack access to social security benefits. This category of workers often faces challenges in obtaining social security coverage due to their non-traditional employment arrangements.
Poor Ranking: According to a ranking by Mercer CFS, India’s social security system is placed at a low rank (40 out of 43 countries) in 2021. This indicates that India’s social security system is performing poorly compared to other countries.
Budgetary Limitations and Underutilization: While policies for social security are announced, budgetary allocations for these programs have been limited. Additionally, there have been instances of underutilization of allocated funds, as seen in the example of the National Social Security Fund.
Ineffective Implementation: The article provides examples of ineffective implementation of social security programs. For instance, the National Social Assistance Programme, meant to provide pensions to elderly individuals, is noted to have stagnated at a very low contribution level. There are also instances where funds collected for social security purposes were not properly utilized.
Challenges in Implementation: The article emphasizes that achieving comprehensive social security coverage for all of India’s workforce requires fiscal feasibility and effective administration. The complexities involved in providing widespread social security benefits are highlighted.

Schemes Overseas:

In various countries around the world, social security systems differ significantly in terms of design, coverage, and implementation.

Brazil: General Social Security Scheme:

Brazil’s social security system is contribution-based and provides coverage for a wide range of situations, including income loss due to accidents at work, disabilities, death, medical treatments, family burdens, and even unemployment.
Unemployment insurance is funded through worker support funds, and healthcare is covered by the Unified Health System. In cases of insufficient funds, the National Treasury steps in.
The system aims to provide a safety net for workers and their families in various life circumstances, including those working in the informal sector.

Germany: Social Insurance System:

Germany’s social security system is based on a combination of social insurance and public assistance programs.
Social insurance covers areas such as health, pension, long-term care, unemployment, and accidents at work. Contributions are made by both employees and employers.
Public assistance programs provide a basic level of support for individuals with low incomes or those who cannot contribute to the social insurance system.

Sweden: Universal Social Protection:

Sweden has a comprehensive social protection system that covers healthcare, pensions, unemployment benefits, parental leave, and more.
The system is funded through high taxes and offers universal coverage, ensuring that all citizens have access to social security benefits regardless of their employment status.

United States: Social Security and Medicare:

The U.S. has a social security system that provides retirement, disability, and survivor benefits to eligible individuals.
Medicare is a government-funded healthcare program that primarily serves individuals aged 65 and older, as well as certain disabled individuals.
The U.S. system is funded through payroll taxes and provides targeted benefits for specific life events.

Canada: Employment Insurance and Healthcare:

Canada’s social security system includes Employment Insurance (EI), which provides temporary income support for individuals who lose their jobs or are unable to work due to illness or pregnancy.
Healthcare in Canada is publicly funded and provides universal coverage for medical services.

Netherlands: Comprehensive Social Security:

The Netherlands has a comprehensive social security system that includes old-age pensions, disability benefits, unemployment benefits, and healthcare coverage.
The system is funded through contributions from both employers and employees.

Steps that India needs to take:

The article highlights the need for comprehensive social security reforms in India and outlines several steps that the country should consider taking to achieve this goal.

Expand Contribution-Based System for Formal Workers: Expand the scope of the Employees’ Provident Fund Organisation (EPFO) system to cover more formal workers. This involves increasing both employer and employee contributions to the EPFO system.
Partial Contributions for Informal Workers: For informal workers with meaningful income, such as those self-employed or working in informal enterprises, introduce a system of partial contributions to social security. This could be achieved by encouraging informal enterprises to formalise and contribute.
Government Support for Unemployed and Low-Earning Workers: The government should step in to provide social security support for those who are unemployed, have stopped seeking work, or do not earn enough. This could include provisions for basic income or other forms of support.
Reform and Enforce the Code on Social Security: Continue and strengthen the implementation of the Code on Social Security, which seeks to provide a statutory framework for social security. This involves offering life insurance, disability insurance, accident insurance, maternity and health-care benefits, old-age protection, and crèche facilities for gig workers and informal sector workers.
Digitization and Simplification: Improve and simplify the process of enrolling workers into social security programs. While the e-Shram platform has made progress, more effort is needed to encourage registration and ease the burden on informal workers. Employers should also be incentivized to participate in the process.
Broaden Social Security Coverage: Extend the coverage of social security beyond construction and gig workers to encompass a broader range of labour categories. Consider implementing a nationwide labour force card and expanding successful existing schemes.
Special Focus on Vulnerable Workers: Pay special attention to the needs of domestic workers, who often face job insecurity and lack of benefits.
Support for Migrant Workers: Provide support for migrant workers who often face discrimination and challenges in accessing social services. Expanding social services such as child care can benefit this group.
Loosen Restrictions and Streamline Processes: Remove existing restrictions on benefit portability and cooling periods for transferring social security benefits. Simplify registration processes to encourage more workers to enroll.
Encourage Employer Responsibility: Foster a system where employers, even temporary ones, are responsible for participating in the social security system. This could include making social security entitlements mandatory rather than voluntary for informal employers.

Strengthening the Existing Schemes:

The article emphasises on the need to strengthen existing schemes:
- For example the Employees’ Provident Fund (EPF), the Employees’ State Insurance Scheme (ESI), and the National Social Assistance Programme (NSAP), with budgetary support and expansion of coverage.
Administratively, there is much tinkering that can be done.
- For example, the existing social security framework for unorganised workers has become complex, with overlapping areas of authority between the State and Centre, and confusing definitions being used such as between a platform worker, an unorganised worker and someone who is self-employed.
We need a more significant push to raise awareness about social security to ensure that more workers are aware of the available benefits.
Organisations such as the Self-Employed Women’s Association which run Shakti Kendras (worker facilitation centres), may be funded to run campaigns (especially for women) to provide greater information on social security rights, along with services and schemes that the government offers.
India has to consolidate its existing social security schemes/ad hoc measures and provide universal social security to its entire labour workforce.
With jobs becoming increasingly on-demand and hire/fire policies proliferating, India’s workers are increasingly insecure on the job front. To have the fruits of growth trickle down while offering a sense of social security, policymakers must discard supply-side shibboleths to embrace policies that enable equitable growth.