Issues with Social Security Code, 2020

News: The effectiveness of the Social Security Code (SS Code) 2020 in helping the informal workforce is questioned by many.

About Social Security Code, 2020:

  • The Code has widened coverage by including the unorganised sector, fixed term employees and gig workers, platform workers, inter-state migrant workers etc.
  • With the aim of making a national database for unorganised sector workers, registration of all these workers would be done on an online portal and this registration would be done on the basis of Self certification through a simple procedure. All records and returns have to be maintained electronically.
  • Social Security Fund will be created on the financial side in order to implement social security schemes.
  • There is uniformity in determining wages for the purpose of social security benefits. It has provided a wide definition for wage. Specific exclusions with ceilings have been provided for discouraging inappropriate structuring of salaries to minimise social security benefits.
  • It has brought in a facilitating approach by the authorities. Unlike the existing role of inspectors, the Code provides for an enhanced role of inspector-cum-facilitator whereby employers can look for support and advice to enhance compliances.
  • To enable that demand for human resources is met and to monitor employment information, career centres will be established.
  • Any failure to deposit employees’ contributions not only attracts a penalty of Rs. 1,00,000, but also imprisonment of one to three years. In case of repeat offence, the penalties and prosecution is severe, and no compounding is permitted for repeated offences.

Areas of Concerns:

  • Under the SS Code, the provision of maternity benefit has not been made universal. Maternity benefit is presently applicable for establishments employing 10 workers or more. The definition of ‘Establishment’ in the proposed code did not include the unorganised sector. Hence, women engaged in the unorganised sector would remain outside the purview of maternity benefit.
  • The SS Code maintains that the Employees’ Provident Fund Scheme will remain applicable, as before, to every establishment in which 20 or more employees are employed. Thus, for informal sector workers, access to employees’ provident fund remains unfulfilled too in the new code.
  • Gratuity shall be payable to eligible employees by every shop or establishment in which 10 or more employees are employed, or were employed, on any day of the preceding 12 months. But although payment of gratuity was expanded in the new Code, it still remains inaccessible for a vast majority of informal workers.
  • To avail social security, an informal worker must register herself on the specified online portal to be developed by the central government. The absence of definite and unambiguous provisions in the present code would further complicate achievement of universal registration.
  • Experience shows that there is an awful lack of awareness among informal workers regarding social security schemes. Online registration places a further challenge as most informal workers lack digital literacy and connectivity.
  • Informal workers also find it difficult to furnish all documentary papers required as part of the registration process. Furnishing proof of livelihood and income details in the absence of tangible employer-employee relations is very difficult. Such requirements deter informal workers from completing the registration and they continue to remain outside the social security ambit.

Solutions:

  • The SS Code 2020 merges existing social security laws and attempts to include informal workers within the ambit of social security administration. However, an examination of the code reveals that universalisation of social security remains an unfulfilled aspiration.
  • At a time when India chairs a BRICS meeting that is focused on issues of labour, especially informality, it fails to even recognise that India is ageing without social security, and the demographic dividend of the young workforce that could support the ageing ends in 15 years.
  • The provision of social security could be used to formalise the workforce to a certain extent.
  • Employers should be made to own up to the responsibility of providing social security to their workers. As the state has a responsibility but the primary responsibility still lies with employers since they are taking advantage of workers’ productivity.