What is the issue?
- The third draft on the Social Security code of 2019 aimed to amalgamate, simplify and rationalise the relevant provisions of existing central labour laws.
- The code has fallen short of this stated aim.
What are the flaws?
- It merely clubs together existing schemes in the organised sector.
- It has avoided the ambiguities over the basic criteria for availing social security benefits such as the minimum number of employees in an organisation and length of service.
- The basic structural and conceptual flaws in the code are,
- No uniform definition of “social security”.
- No central fund. The corpus is proposed to be split into numerous small funds creating a multiplicity of authorities and confusion.
- It is unclear how the proposed dismantling of the existing and functional structures, such as the Employees’ Provident Fund Organisation (EPFO) — is a better alternative.
- No clear definition for the crucial categories such as workers, wages, principal-agent in a contractual situation; and “organised-unorganised” sectors.
- This will continue to impede the extension of key social security benefits such as PF, gratuity, maternity benefits, and healthcare to all sections of workers.
- There is no commitment from the government to contribute to the listed social security measures, even as the Code is clear about employee and employer contributions.
What is unclear?
- It is heartening to welcome aboard large sections of the workforce such as those working in taxi aggregate companies.
- But how exactly the government proposes to facilitate their access to PF or medical care is not clear.
- In these cases, the nature of the relationship between the company and the working staff, and hence the obligations, is not defined.
- If employers in the unorganised sectors are expected to foot the bill for EPFO contributions, it will substantially hike the cost of doing business.
What is a failed examples?
- Existing benefits for unorganised workers have failed to materialise for similar reasons.
- For instance, the 22 years-old Building and Construction Workers’ Cess Fund’s failed to register the construction workers.
- So, they haven’t been able to avail of the fund effectively.
- The Fund has less than 3 crore workers registered, with all the State welfare boards put together.
- Official estimates - Over 5 crore construction workers.
- Unions’ estimate - Over 10 crore construction workers.
- It is a similar situation for almost all other welfare schemes run for the unorganised workers by the Central or State governments.
- Problem - The draft Code merely clubs the relevant sections of the existing statute without specifying how these issues are to be addressed.
- Solution - The government should address the long-pending structural issues and should actually simplify the existing labour laws.
Source: Business Line
