Labour code to provide social security cover to all workers

Small entrepreneurs have raised some concerns over the government’s proposal to provide social security coverage to its entire workforce.

Small entrepreneurs feel that they may have to bear a little bit of financial burden due to contribution (towards social security schemes).

Background:

The Centre had last month proposed a labour code on social security which will provide social security cover to the entire workforce in the country, including self-employed and agricultural workers.

Highlights of the ‘draft code on Social Security and Welfare’:

• According to the code, even households employing domestic help will also have contribute towards schemes including provident fund and gratuity for the worker. Factories employing even a single worker will have to contribute towards social security benefits, as per the proposal.
• Every working person in the country will be covered under the social security code whether she belongs to the organised sector or the unorganised sector. For the first time, cover to agricultural workers is being provided along with self-employed people. The target is to provide social security benefits to 45 crore workers.
• The proposed code seeks to cover “any factory, any mine, any plantation, any shop, charitable organisations” and all establishments or households employing casual, part-time, fixed-term, informal, apprentice, domestic and home-based workers. All such establishments or factories will be liable to pay compensation if they fail to contribute towards the social security schemes of the workers.
• The total contribution to be made by employers towards Employees’ Provident Fund and Employees’ State Insurance Scheme is proposed to be capped at 30% of the workers’ income. At present, employers contribute 31.5% of the workers’ income towards these schemes.
• According to the proposed code, self-employed workers will contribute 20% of their monthly income towards provident fund, pension and other related schemes. Self-employed workers will also include “a person who takes land on share cropping or any other form of rent, and tills the same using his own or family members’ labour.”
• All the entities – whether factories or households – will have to register their workers through an Aadhaar-based registration system, according to another proposal, and self-employer workers will be required to register themselves.
• A National Social Security Council, chaired by the Prime Minister, has been proposed to streamline and make policy on social security schemes related to all the Ministries. Other members would include: Finance Minister, Labour Minister, Health and Family Welfare Minister along with employer and employees’ representatives.