• Research & Analysis Services I Academic I Market & Industry I Government Policy I
Indian Labour Market in Flux: Law Reforms to Provide Flexibility to Employers or Welfare of Workers or Both? Part 2

Indian Labour Market in Flux: Law Reforms to Provide Flexibility to Employers or Welfare of Workers or Both? Part 2

Part Two of a Two-Part Series

The 2019 bill empowered the Central Government to set up social security funds for unorganised workers, gig workers and platform workers. The 2020 bill states that the central government will set up such a fund and make a provision for registration of all three categories of workers. Furthermore, state governments will also set up and administer separate social security funds for unorganised workers.

Other than non-farm workers, the Government of India had announced a plan to provide social security in terms of pension to farmers also which is Kisan Maan Dhan, Pension Scheme for small and marginalised farmers. Under the scheme, around five crore small marginalised farmers will get a minimum pension of Rs 3000/month on attaining the age of 60. Farmers aged 18 to 40 years will be eligible to apply for Kisan Maan Dhan Yojana. Under the scheme, farmers will have to make a monthly contribution of Rs 55 to Rs 200, depending on their age of entry, in the Pension Fund till they reach the retirement date (age of 60 years). The central government will make a contribution equal to the same amount in the pension fund for farmers.

As pointed out by the Second NCL, GoI has announced measures of social security including the expansion of health facilities and provision of unemployment allowances.

To strengthen the Employee State Insurance (ESI) scheme, Finance Minister Nirmala Sitharaman in her press conference on 14 May 2020, talked about the steps being taken for the welfare of workers through ESI wherein ESI is to be made available on a voluntary basis for those firms employing less than ten people.

The Employee State Insurance Act, 1948 has a wider spectrum than factory act, in the sense that while the factory act concerns the health, safety, welfare, leave etc of the workers employed in the factory premises only. But the benefits of this act extend to employees whether working inside the factory or establishment or elsewhere or they are directly employed by the principal employee or through an intermediate agency if the employment is incidental or in connection with the factory or establishment.

Employee State Insurance Corporation (ESIC) is a multidimensional social system tailored to provide socio-economic protection to the worker population and immediate dependent or family covered under the scheme. As of March 31, 2019, the reserve funds stood at a massive Rs 91,447 crore and profit worth Rs 9,000 crores.

The challenges faced by ESIC over the years include a jump in subscriber base leading to overburdened, but under-utilised corpus with a series of amendments, the labour ministry extended the scope of ESIC to cover those earning up to Rs 21,000 from Rs 15,000 earlier, leading to the immediate addition of one crore people to its subscriber base. Post this change, in FY-19, 12.85 lakh employers and 3.6 crore employees contributed Rs 22279 crore to the ESIC. Thus there has been a 94 percent growth in contribution, whereas the employee count increased by 71 percent.

Further, it has poor infrastructure, complicated paperwork, lax administration, unreasonable processes, and a lack of transparency on part of employers.

At present, over 150 hospitals and 1,400 dispensaries across the country offer medical assistance to ESI subscribers. In order to improve the current situation, the body has tied up with 1,500 private hospitals to cater to the larger number of subscribers. Besides, ESIC is building 30 new hospitals, and recruitment of doctors, nurses and paramedical staff is already on.

Other than the expansion of ESIC, GoI relaxed eligibility norms to offer almost 4 million industrial workers 50% of their three months average salary as unemployment benefit due to the job loss or possible job loss between 24 March and 31 December 2020. The proposal was approved at a meeting of the ESIC board headed by the Union Labour Minister Santosh Gangwar. The ESIC has calculated that the move will benefit some 4.1 million beneficiaries in the March to December 2020 period.

The 12 digit Aadhaar number shall be used for the identification of the claims. This will be done via the Atal Beemit Vyakti Kalyan Yojana, a scheme in place since 2018, which had a provision to give 25 percent unemployment benefit but had technical hindrances.

The SS Bill mandates an employee or a worker (including an unorganised worker) to provide his Aadhaar number to receive social security benefits. This may violate the Supreme Court’s Puttaswamy-II judgement.

In its judgement, the Court had ruled that the Aadhaar card number may only be made mandatory for expenditure on a subsidy, benefit or service incurred from the Consolidated Fund of India. In the context of mandatory linking of Aadhaar for registration of unorganised workers, the Standing Committee on Labour (2020) noted the government’s assurance that this provision will be re-examined.

Moreover, the ESIC has decided to extend the scheme for one more year up to 30 June 2021 and also to set up ICU and HDU services at 10 percent of total beds in ESIC hospitals.

Instead of accumulating surplus funds, the funds of ESIC should be invested aggressively to establish new medical infrastructure, upgrade current medical infrastructure, and improve services provided to the increasing number of beneficiaries. If ESI coverage has to be extended all over India, we would require at least one ESI dispensary per district and several model ESIC hospitals in every state.

The issues with ESI stem largely due to the ineffective delivery mechanism it is reliant on. Therefore, it is recommended that the ESIC shift its focus to ensuring that benefits reach workers universally either by expanding its reach through Ayushman Bharat or by implementing a card-based system. This will address the trust deficit that currently exists leading to employees opting for group insurance with higher premiums and payment of ‘double insurance’ by employers due to a large number of establishments paying both ESI as well as private group insurance. To conclude, expanding operations and improving the efficiency of social security providing institutions such as ESIC would help in yielding better results of labour law reforms for both the employer as well as employee; organised sector and unorganised sector.

Leave a Reply

Your email address will not be published.