NRI Dunia
Think Outside The Box

Parliamentary committee seeks statement on fund source for proposed labour reform bill

The parliamentary standing committee on labour has sought a clear statement on the source of funding for a proposed Social Security Fund for unorganised-sector workers in a draft labour reforms bill.

Headed by Biju Janata Dal member B. Mahtab, the committee examined the draft Code on Social Security Bill and sent in its report on Friday. The government will examine its recommendations before reintroducing the bill — one of four labour reform bills the Narendra Modi government has brought.

Under the Code on Social Security Bill, a Social Security Fund is to be set up to provide informal-sector workers with benefits such as provident fund, pension and insurance. Less than 10 per cent of the country’s workers now work in the formal sector and have social security cover.

The bill mandates the Centre and the state governments to frame schemes to provide unorganised-sector workers with life and disability cover, old-age protection, education and housing but does not spell out the source of funding.

Labour economists and workers’ organisations had told the panel that social security cannot be ensured without a clearly defined source of funding.

When the panel raised the matter, the government replied it would use the Corporate Social Responsibility contributions from industry for this purpose.

The government also castigated the workers’ unions for refusing to accept “universal social security”, covering formal and informal-sector workers. (The unions had feared that such an arrangement would allow the government to use employees’ and employers’ contributions from the organised sector to fund social security for unorganised-sector workers, instead of having to raise the funds separately for them.)

“Although the ministry have claimed that sources of funding for schemes have been expanded to include funds from CSR or any other such source, the committee feel that there is a lack of firm commitment on the part of the government to fund schemes meant for the unorganised sector,” the House panel’s report says.

“The committee, therefore, recommend that the funding pattern for the schemes meant for the unorganised sector workers be clearly spelt out in the law so as to ensure adequate accrual of funds for potent implementation of various schemes.”

The committee has recommended an unemployment insurance for unorganised-sector workers who have lost their jobs.

It has also recommended that the Centre maintain a national database of all unorganised-sector workers and migrant workers.

There is now little official data on the migrants, who faced acute hardship after the announcement of the coronavirus-induced lockdown in March left them jobless and stranded in their places of work.

A labour economist who did not wish to be quoted said the bill in its present form did not ensure social security for the unorganised-sector workers. He said the bill was similar to a 2008 law enacted by the then UPA government that was never implemented.

“If the standing committee’s recommendations are accepted by the government, the unorganised-sector workers can expect some social security. Pension, insurance and provident fund have become more important in the context of the pandemic,” he said.