Towards a Peoples' Movement for a Universal Social Security in India

Issue No : 73  October - December 2009

By J. John

A recent document of the International Labour Organization (ILO) estimates that at the beginning of the twenty-first century, access to any form of social protection remains a dream for 80% of the world’s population.¹ Social security in India exists only for 7% of the workers - those who are employed in the so- called formal sector. Why so many in India are denied the benefit of social security and what could be our strategy for ‘Social Security for All’?

It is widely recognized that ‘social security’ constitutes a ‘basic human right’ and is enshrined in major international human rights instruments such as the Universal Declaration of Human Rights and the International Covenant on Economic, Social and Cultural Rights. Among the many social security Conventions of the ILO, the Social Security (Minimum Standards) Convention, 1952 (No. 102), is regarded as the main instrument to realize the right to social security, which makes it obligatory on the part of the member States to implement social security schemes for workers.

The ILO calls social security the measures to address ‘contingencies of life’ of a worker. It defines social security as ‘the protection which society provides for its members through a series of public measures against the economic and social distress that otherwise would be caused by the stoppage or substantial reduction of earnings resulting from sickness, maternity, employment injury, invalidity and death; the provision of medical care; and the provision of subsidies for families with children’ (ILO, 1984). The UN Committee on International Covenant on Economic, social and Cultural Rights in their General Comments No. 19 (2008) emphasizes that ‘the right to social security encompasses the right to access and maintain benefits, whether in cash or in kind, without discrimination in order to secure protection, inter alia, from (a) lack of work-related income caused by sickness, disability, maternity, employment injury, unemployment, old age, or death of a family member; (b) unaffordable access to health care; (c) insufficient family support, particularly for children and adult dependents’.

These definitions emphasize that social security is a protection that society provides to its members; it is work-related, in the sense that it recompenses lack of work-related income; it addresses the contingencies of life; and it has a redistributive character by virtue of which, it plays an important role in poverty reduction and in preventing social exclusion.

Social Security and the Spirit of the Constitution

The Constitution of India provides for right to equality, right to life and right of social protections in explicit and implicit manners. The overall spirit of the Constitution guarantees social security measures to workers. The Constitution provides the rights to equality (Article 14), freedom of speech and association (Article 19) and rights against discrimination (Article 15) and exploitation such as the right against traffic in humans, against forced labour (Article 23), and against child labour (Article 24). The State is also constitutionally bound to provide adequate means of livelihood, see that the health and strength of workers and tender age of children are not abused, and that citizens are not forced by economic necessity to enter avocations unsuited to their age or strength (Article 39 [a), (b) and (e)]. The Constitution further envisages that the State shall make effective provision for securing the right to work, to education and to public assistance in case of unemployment, old age, sickness and disablement (Article 41) and for securing just and humane conditions of work and maternity relief (Article 42). The State is also expected to endeavour to secure work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure (Article 43) to raise the level of nutrition and the standard of living of its people, and for the improvement of public health. 

These solemn commitments have remained largely on paper and the Indian State has miserably failed in providing universal social security to its workers and people.

National Planning and Dual Social Security Systems

Worse, the national planning and economic development pursued by the Government of India since its independence has promoted a dual system of social security in India, one for the industrial workers and another for those with not such a clearly defined employer-employee relationship. Institutionalized social security coverage for the ‘industrial workers’ is provided through the Employees State Insurance Act, 1948; the Employees Provident Fund and Miscellaneous Provisions Act, 1952; the Workmen’s Compensation Act, 1923; the Maternity Benefits Act, 1961, and the Payment of Gratuity Act, 1972. Other Acts include Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948, Coal Mines Labour Welfare Fund Act, 1947, Mica Mines Labour Welfare Fund Act, 1946, Assam Tea Plantation Provident Fund Act, 1965 and Seamen’s Provident Fund Act, 1966. As mentioned earlier, these benefits are available only to less than 8% of the workforce in India and most of the ‘industrial workers’ in informal employer-employee relationships are excluded from these benefits. At various points of time, to deny universalization of social security, the ruling classes of India have used arguments that ‘there is no wealth to divide’,  ‘most of the workers are in self-employed and informal categories’ and  ‘the workers are poor’. Strangely, the poverty of workers has been used as an argument against institutionalizing a measure that would have helped in combating poverty and in promoting distributive justice.

In its intended objective, these measures reflected the constitutional objectives of Equity and Justice, but was also premised on a concept that all workers will eventually become industrial workers with a defined employer-employee relationship. Therefore, the argument was that these rights will become available to all the workers who get graduated to the industrial working class. This was not to happen, as history has shown. Eventually, a dual labour market of the organized and the unorganized, with diverging social security systems catering to these diverging groups got entrenched in India. Labour relations laws and social security laws are premised on a definable employer-employee relationship.

The Indian ruling classes showed the audacity to throw crumbs of charity to 90% of Indian workers in the form of a large number of disparate and poorly organized schemes and programmes to provide social assistance to specific categories of poor, purported to generate employment during slack seasons and droughts, and improve access of the poor to land and other productive assets. These schemes are arbitrarily assigned to various ministries; are for shorter durations with inadequate funding; and are non-statutory in character. These are targeted, inherently exclusive and the implementation depends on the whims and fancies of the bureaucrats. Some examples are the National Social Assistance Programme (NSAP) for Poor and Elderly including the components of National Old Age Pension Scheme (NOAPS), National Family Benefit Scheme and National Maternity Benefit Scheme. Besides, there are direct social security schemes like the Targeted Public Distribution System (TPDS) and Antyodaya Anna Yojana (another public distribution scheme). It is a pity that India’s Five-Year Plans consistently maintained this charity-oriented perspective on social security through disparate poverty eradication schemes and social assistance programmes. Most social protection and poverty alleviation schemes are directed at the below the poverty line (BPL) population as a second level of targeting, the first being exclusivity and perceived vulnerability of certain groups of economic actors or non-actors, imposing on the recipients a double ignominy. These are welfare schemes and not justiciable rights of the recipients – they are not legal rights which one can bring a case to court for if not granted. These schemes are changed frequently, presumably based on bureaucratic imperatives or political exigencies, leaving the beneficiaries confused. For most schemes there are no adequate budgetary allocations. Worse, the schemes have restricted coverage, applicable only to BPL categories of population. It may be recalled that even a person earning Rs. 12 per day in a village is not considered Below Poverty Line as per the current BPL norms. Generally, targeted measures do no acknowledge the possibility that contingencies in life can push people from the Above Poverty Line (APL) category to the BPL category. All these measures have neither addressed absolute poverty in India nor helped in reducing the gap between the rich and the poor.

This dualistic social security system served another political function, of consolidating a divided society - between those who hold formal jobs with full social security coverage and the rest of the population. This was also a clever and a pre-emptive move by the elite to create a chasm among the working population and build a culture of subservience among the targeted poor by throwing welfare schemes at them.

Social Security, Poverty and Income Inequality

According to the World Bank’s latest estimates on global poverty, India has 456 million people or about 42% of the population living below the new international poverty line of $1.25 per day, constituting 33% of the global poor. A recent report by the Suresh Tendulkar Committee set up by the Planning Commission (2009) has argued that more than 37% of Indians live in poverty as compared with the officially estimated 27.5%. The National Commission on Enterprises in the Unorganized Sector (NCEUS) has pointed out that going by consumer expenditure data, 78% of Indians are forced to manage with Rs. 20 or less per day - indicating three-fourths of the population live in poverty. An expert committee, set up by the Rural Development Ministry and headed by N C Saxena, has observed that 50% of Indians are Below the Poverty Line (BPL) if one takes into account the criterion of calorie intake, where as the Planning Commission has said only 28.3% of the population is BPL. Ninety-two 92% of the country’s workforce, 394.9 million of 457.5 million, according to NSSO 2004-05, is employed in the informal or unorganized economy. It is hard to believe that such a huge majority of the people are poor because they are not working, or they cannot or do not want to work. The poor work hard and yet the income they earn is not sufficient to meet theirs and their families’ basic necessities. They are the working poor in India. Unanticipated expenses arising out of contingencies in life like sickness, unemployment, crop failure, natural disaster, work related accidents, childbirth or old age are to be met from their meagre earnings, which could land them in a vicious cycle of indebtedness, poverty and chronic hunger. The glaring absence of universal, state-run social security has contributed to the perpetuation of poverty and vulnerability of the majority of Indian workers.

In a capitalist society, social security provisions also perform the task of income distribution, though at a minimum level. But from the very beginning, India’s political elite resisted distribution of wealth. In 1947, political leaders, intellectuals, industrialists and trade unions entered into an unwritten contract that the immediate objective was nation-building and creation of wealth because ‘there was no existing wealth to divide’. Pandit Jawaharlal Nehru made this observation in his famous speech in Lahore Session of the Indian National Congress (31st December 1929), the session, which sowed the seeds of India as a Republic. In 1955, Nehru expressed a similar sentiment. He said, ‘These goals can only be achieved by a considerable increase in national income and our economic policy must, therefore, aim at plenty and equitable distribution. We must produce wealth, and then divide it equitably. How can we have a welfare state without wealth?’ We could see that this statement is repeated by political and economic leaders throughout India’s governance history of sixty years. We created wealth and India is now the fourth largest economy in terms of purchasing power parity and is projected, along with China, to rule the world in the 21st century. India’s GDP (at current prices) grew from Rs. 9,678 crore (one crore = 10 million) in 1950-51 to Rs. 4,693,602 crore in 2007-08 and is growing more than 9% every year. But various studies have shown that India’s income inequality, the difference in income between the rich and the poor, has been increasing, especially since 1991, when India opted for liberalization of its economy. According to a UN classification, India is 72nd in income inequality among the nations of the world.

Ineffectiveness of Established Social Security Systems

With globalization comes the debate on the effectiveness of social security systems, not only in the poor and developing countries but also in the advanced capitalist countries. The ILO, in its recent campaign for social security for all, admits that though the Convention No. 102 constituted a useful benchmark for meaningful income replacement benefits, it has not been effective in the extension of social security coverage to all those in need. Only 43 countries have so far ratified this Convention and India is not among them. The ILO observes that the relatively low rate of ratification, especially in developing countries, constitutes an indicator of their lack of suitability and relevance for these countries. The well-established social security systems in the industrialized countries, based on defined, lifelong employment and contributions are reportedly facing challenges consequent to increase in the number of pensioners compared to new entrants to jobs and the changes that are effected by globalization, liberalization and privatization on business processes and nature of employment. The government is abdicating its responsibility to raise revenues and administer income distribution functions. Social security systems are being privatized.

India is faced with the biggest challenges of extending the social security benefits to the excluded 93% of its workforce, eliminating hunger from its 350 million to 400 million people and ensuring distribution of the wealth being generated. Unfortunately, the effort so far has been to create ‘social safety nets’ to cushion the impoverishment and prevent an organized backlash by way of refusing to extend the established social security benefits to the rest of the workforce and by continuing with targeted welfare programmes.

Consequently, when the Government of India passed the ‘Unorganized Workers Social Security Act’ (UWSSA) on 17 December 2008 supposedly for the benefit of about 423 million unorganized workers and their dependents, it fell short of everything that was required. The structural gaps and inadequacies made it totally ineffective. The Act does not define social security. Social security schemes are not included as part of the body of the Act, implying that they can be changed without discussion in Parliament, thereby denying the workers the benefit of consistency and justiciability. Unemployment and livelihood rights are not covered under the Act. It diluted the existing Acts such as the Maternity Benefit Act and the Workmen’s Compensation Act. Most importantly, it is premised on principles of targeting and exclusion because its provisions, largely, are restricted to BPL workers and do not address social inclusion and gender equity vis-a-vis social security to dalits, adivasis and women. (Ed.: See Box 2.) The Act did not have a financial memorandum attached to it.

India’s social security system for the ‘industrial workers’ is the result of massive movements of industrial workers in the first half of the twentieth century. In the first half of twenty-first century, when India is expecting rapid economic growth, only such a massive movement by the excluded workers will ensure distribution of income. The wealth is generated by all, but the economic and political powers restrict it to be enjoyed by a few. The poor and the vulnerable should raise their voice and demand a legitimate share of the wealth. In the process, the movement should resist targeted schemes and welfare measures and demand universal social security as a right.

The ILO has proposed the idea of ‘a social protection floor’, which is a basic set of essential social transfers, in cash and in kind, to provide a minimum income and livelihood security for poor and vulnerable populations and to facilitate access to essential services, such as health care. It includes (a) all residents have access to a nationally defined set of essential health care services; (b) all children enjoy income security at least at the poverty level through family/child benefits aimed at facilitating access to nutrition, education and care; (c) some targeted income support for the poor and unemployed in active age group; (d) all residents in old age and disability enjoy income security at least at the poverty level through pensions for old age and disability (ILO, 2009). The ILO has established that even least developed countries can afford ‘a social protection floor’, though it falls within the targeted framework of social security.

The idea of basic income guarantee as an alternative to targeted, means-tested and employer-employee relationship-based social security system has great relevance in Indian context. A basic income is an income unconditionally granted to all on an individual basis, without means test or work requirement. Basic income is a guarantee by the State and not a charity. It takes away the economic and social stigma attached to targeted welfare systems, avoids huge expenses on administration and prevalence of corruption. It will also overcome the constraint of indefinable employer-employer relationships in informal set-ups and the predominance of self-employment in economic activities.

*    This article is an abbreviated, edited version of the article submitted by the author to the Asian Regional Roundtable on Social Security, Hong Kong, 8-9 October 2009, organized by AMRC, the Hong Kong Polytechnic University and the Hong Kong Social Security Society.
1.    Based on a keynote speech at the National Convention on Social Security for Unorganized Workers, organized by ‘Social Security Now’ (SSN) on 8-10 January 2009, Patna, Bihar, India