The Proposed Labour Code on Social Security, 2018

THE Draft Labour Code on Social Security seeks to repeal 17 laws. The first question that this raises is as to why full-fledged and functional systems that are in place including the Employees Provident Fund Organization (EPFO), the Employees State Insurance Corporation (ESIC) and the various welfare boards are being dismantled completely in this manner without any reason whatsoever. In fact, the Building and other Construction Workers Welfare Board which has been made functional with the intervention of the Supreme Court and has only now started working, is also being dismantled.

Secondly, the Code allows the Government to fix a threshold limit in respect of the establishment to which the Code would apply, the income limit and the wage ceiling, and also allows them to exempt any establishment from its scope, clearly bursting the purported objective of the Code being universal.

Further, the Code allows the Central Government to exempt any employer or class of employers from the levy of cess, bringing into serious questions the manner in which it would function.

The method of enforcement and the functioning of the enforcement agency is also unclear. Further the inspection scheme being pushed forth by the Government which drastically reduces the power of inspectors raises further doubt in respect of enforcement.

Code on Social Security is, essentially, aimed at relieving capitalists' accountability and answerability towards its workforce. The code is a fundamental departure from the concept of social security that is supposed to take care of health benefits, retirement benefits and other benefits for workers to lead a decent life at the fag end of their life span. It was basically the responsibility of the employers and also the state. Now, the responsibility is being thrown on to the shoulders of workers while industrialists who earn profit out of labour power of their workers are not responsible for their well-being but for paying wages.

The para 353 of "The World Development Report 2019" that talks about changing nature of work and future of work says, "Enhanced social assistance and insurance reduce the burden on labor regulation of having to deal with risk management. As people become better protected through enhanced social assistance and insurance systems, labor regulation could, where appropriate, be made more flexible to facilitate movement between jobs. For example, if seeking to provide a livable income, countries could choose to use more social assistance to supplement earnings and relax pressure on minimum wages that are set at levels that exceed labor productivity. Similarly, income support for the unemployed could be provided by unemployment benefits rather than by severance pay."

Hence, the World Bank prescription is to relieve the owners of capital from the responsibility of its own labour and the responsibility is now shifted to the society and the individual workers. Social security measures suggested by the World Bank, is to follow the western model where even unemployed are protected to the full till they find a job. More than right to work, it was right to income that governed the policy of social security. But, the present code does not provide any guaranteed minimum income, to be precise, may not even ensure minimum wages but for floor wages for those work. For others, it is only a barest minimum health insurance - some may be financed by the government while others who are part of labour force are forced to fund their own insurance. The World Bank report is perceiving a situation where enlarged social security coverage but with much reduced benefits can offer a cushioning effort to the denial of minimum wages and also social security benefits by the employers.

 

On the other hand, the code is offering reduced percentage of contributions from employers while even the informal workers in organised sector will have to contribute around 17.5 percent of their wages and the self-employed 20 percent. The social security envisaged is of three layers - bare minimum social assistance for the aged, social insurance for the workforce and a fund created through savings and cess.

On the other hand, the lakhs of crores of funds lying with PF, welfare boards and all will be divided and handed over to state boards and based on schemes which are not stated in white and black in the code but will be decided subsequently by the governments now and then. Central government will only act as a fund manager for the state boards and will engage in pumping a portion of funds to the speculative market. In such a situation, existing crores of PF members only have promises and their returns are not categorically assured by the code. The transition from existing schemes of PF, ESI, welfare board funds, etc., are full of only promises and not backed by concurrent schemes.

Industrialists employing more than 100 workers are free to choose their own alternative social security mechanism and given a clean chit for a major fraud on workers and their earnings. Samajik Surakhsa Mitras who are basically honorarium based workers are vested with greater powers including conciliation and recommendations while labour conciliation machinery and inspection systems are almost dismantled but for maintaining some semblance of it.

So, the government is following the dictates of World Bank in a much convoluted form that is un-favourable to workers and favourable to industrialists. This is not a social security legislation but a legislation that provides security to the capitalists.