The Social Security Code 2020 (SS Code) was passed in Parliament in September 2020 and received presidential approval. Fortunately, its implementation has been delayed because states have not made any notifications. Now, due to the Covid crisis, the implementation of all four new labor codes has been postponed until next year. This is good as there are many problems with the codes, especially the SS code.
Once the SS Code is in effect, eight existing labor laws will be merged, including the Employee’s Compensation Act 1923, the Employee’ State Insurance Act 1948, the Employee’ Provident Funds and Miscellaneous Provisions Act 1952, the Maternity Benefit Act 1961, the Payment of Gratuity Act 1972, and Unorganized Workers Social Security Act 2008.
However, the SS code still does not provide universal social security for 91 percent of the Indian workforce. This is especially disappointing as the demographic dividend of young workers who can support the elderly and aging populations will shrink from 2030 onwards and disappear by the end of the decade.
In addition, many ambiguities remain in the SS code, which are discussed below.
This new code seeks to reconfigure the social security landscape for the unorganized sector, defined to cover various professions, including self-employment. Gig and platform workers are defined separately – the conceptual distinction between self-employed and gig workers is not stated.
The national government will also play a pivotal role for the unorganized sector in devising and implementing SS. So far, SS for the sector has been mostly absent and what little was provided was provided by state governments. Until now, the respective state governments are responsible for formulating and implementing social security schemes for workers in the unorganized sector. In the new SS Code, this responsibility has partly been taken over by the Center.
Under the code, both central and state governments will formulate regulations in clearly defined areas. This means double authority for an individual disorganized worker. What is not specified is who the state-level executive authority will be, and the fragmentation of SS for disorganized workers will continue.
Furthermore, every eligible disorganized employee must be registered with Aadhaar, on a self-declaration basis, on a central government portal. Currently, in many states, unorganized workers are registered on the state portal. The question remains whether registered employee data on the state portal will be transferred to the proposed central portal or whether existing beneficiaries will have to re-register.
Similar arrangements also apply to gig/platform workers. The establishment of social security schemes for these workers rests with the Center. The problem is that the SS code provides separate boards for disorganized and gig/platform workers. This approach seems overlapping, as gig/platform workers are a subset of the larger set made up of disorganized workers.
As disorganized workers sprawl across the country, interstate arrangements and cooperation become necessary. The Code does not provide for this. The draft rules provide for a nodal officer to be notified by the state government. However, as disorganized construction workers are footless and move from one state to another in search of livelihood, interstate coordination still remains unresolved. The draft rules did not provide a roadmap for such coordination.
About half of the informal employees are self-employed without an employer-employee relationship. Most disorganized workers are not tied to a specific profession – they switch from one profession to another based on availability.
Most disorganized workers fall under the jurisdiction of the state rather than that of the Center. In fact, it would be difficult to even define an appropriate government for the disorganized workers, as they are usually employed through layers of intermediaries. The SS code provides for disorganized sectoral social security councils at the central and state levels, but most of the organization appears to be with the states.
The scope of the proposed Central Council seems limited. Currently, states have a Council for the Welfare of Unorganized Workers under the Social Security of Unorganized Workers Act, 2008. Most states have a Council for the Welfare of Workers under this Act.
There is no explicit mention in either the Code or the draft rules of the continuation of existing social security systems administered by state governments. Once the code becomes operational, disorganized workers must register on the central portal. They are currently registered as beneficiaries with the respective state governments. But it’s not just about registration. The implementation of social security for the unorganized sector has a different landscape in the new Code. There are no indications in the rules as to how the existing SS schemes fit in with the proposed new landscape
For example, West Bengal has about 1.3 crore of disorganized workers registered as beneficiaries under existing social security schemes. The database is maintained by the State. When the Code becomes operational, will the workers migrate to the Central sphere or will they have to re-register in the Central portal?
In the new Code, the social security framework for unorganized employees has become unnecessarily complicated and cluttered. There are dual powers and overlapping zones. Provisions in the design rules further accentuate these anomalies. There is an urgent need for simplification and avoidance of multiple authorities before the code takes effect.
If the goal of the central government is not to universalize Social Security for disorganized workers in the near future (as it should have been), it should consider limiting its role to advising state governments on the effective implementation of existing ones. arrangements.
Mehrotra is the editor of ‘Reviving Jobs: An Agenda for Growth (2020)’, and Sarkar is an independent researcher and labor administrator in the West Bengal Government