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International Training Centre (Turin) 21-25 July 2003 Pong-Sul AHN

Social Security System in India. International Training Centre (Turin) 21-25 July 2003 Pong-Sul AHN Senior Specialist on Workers Activities ILO South Asia Sub-Regional Office-New Delhi. Contexts of Presentation. Statutory social security system Welfare fund and group insurance schemes

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International Training Centre (Turin) 21-25 July 2003 Pong-Sul AHN

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  1. Social Security System in India International Training Centre (Turin) 21-25 July 2003 Pong-Sul AHN Senior Specialist on Workers Activities ILO South Asia Sub-Regional Office-New Delhi

  2. Contexts of Presentation • Statutory social security system • Welfare fund and group insurance schemes • Social assistance schemes • Group insurance schemes • Self-financed social insurance schemes • Conclusions & suggestions Social Security System in India

  3. Statutory Social Security System • Employees’ State Insurance (ESI) Act 1948 • Employees’ Provident Fund (EPF) Act 1952 • Workers’ Compensation Act 1923 • Maternity Benefit Act 1961 • Payment of Gratuity Act 1972 Social Security System in India

  4. Three principal mechanisms • Legislation and statutory schemes have extended various social security benefits primarily to workers from the organised sector • Social assistance is extended through targeted programmes for the vulnerable and disadvantaged • Self-financing mechanisms have been established by different agencies and groups Social Security System in India

  5. 1. Employees’ State Insurance (ESI) • Contribution - Workers : 1.75% - Employers : 4.75% • Benefits - Full and comprehensive healthcare for insured workers and their families - Payment of the full average wage for 12 weeks during the maternity and temporary disabilities caused by injuries sustained during employment - Payment of funeral expenses Social Security System in India

  6. The extensive coverage of the scheme - 6.79 million workers (2.2% of Indian workers) in 170,000 companies - 30 million persons (less than 3% of the total population) as included family members - Maharashtra, West Bengal and Uttar Pradesh in the highest numbers of insured persons reaching over 1 million Social Security System in India

  7. Comprehensive medical care • - one-eighth of costs provided through the respective states • - cash benefits (reimbursements) are administered by the ESI corporation • - through the scheme’s own hospitals and dispensaries • - through reservation of beds in other hospitals • - staffed by competent professionals • - appreciated by non-regular workers such as causal & contract workers Social Security System in India

  8. Limitation and difficulties - level and quality of medical care - the dual administrative control of the state government and corporation - lack of good healthcare infrastructure - lower enrolment (150,000 additional workers per year) but higher requirement of setting up new infrastructure Social Security System in India

  9. 2. Employees’ Provident Fund (EPF) • Scheme - a family pension and a deposit-linked insurance - retirement pension benefits to the workers and his/her family - survival benefits in case of death during service [a maximum of Rs.25,000 is paid] - covering companies employing over 20 workers - the minimum service for eligibility is 10 years and pensionable service of 33 years [50% of the last wages are paid] - permitting withdrawal for purposes of life insurance policies, house building, medical treatment, marriage, higher education, etc Social Security System in India

  10. Contribution - Workers : 8.33 % of the wages - The family pension ranges from Rs.250 to Rs.1050 per month - Standing at an amount of over Rs.400,000 million Social Security System in India

  11. Coverage - some 20 million workers (6.4% of the working population) in about 264,000 establishments - enrolled by the different employment sector •51% of enrollees in the manufacturing industries • over 20% of enrollees in the mining and quarrying • 5.7% of subscribers in agricultural and allied fields • 10.4% of subscribers in the unorganised sector Social Security System in India

  12. - 42% of the total membership in the three states of Maharashtra, Tamil Nadu, and West Bengal - 70% in the 7 states of Gujarat, Andhra Pradesh, Uttar Pradesh and Karnataka, along with the above 3 states - in 1998, 425,000 beedi workers in Andhra Pradesh out of the 450,000 identity card holders have individual PF account - around 1.3 million, accounting for 30% of the 4.25 million beedi workers with identity cards, are covered Social Security System in India

  13. Benefits similar to those under the EPF Act - the Coal Mines Provident Fund Act 1948 - the Assam Tea Plantation Fund Act 1948 - the two Funds cover some 1.25 million Social Security System in India

  14. 3. Workmen’s Compensation • Scheme - covering workers in factories, mines, plantations, railways, and other scheduled employments - providing compensation to workmen or their survivors in case of injuries, death, and occupational diseases sustained during employment service - the compensation amounts are a factor of the wage and age indices, ranging from a minimum of Rs.50,000 to a maximum of Rs.200,000 Social Security System in India

  15. 4. Payment of Gratuity • Scheme - Applicable to various establishments employing over 10 workers - Eligible to those who have paid a minimum continuous service of 5 years Social Security System in India

  16. 5. Maternity Benefit • Scheme - providing payment of wages for up to 12 weeks for full-time - establishing at only 0.5% coverage of women workers nationwide 2.5% claims under the ESI scheme 12% under the Plantation Labour Act 8% under the Mines Act - some state introducing special schemes for extending maternity benefit to landless agricultural workers Social Security System in India

  17. Welfare funds and group insurance schemes • Construction • Agriculture • Mining • Beedi • Film industry Social Security System in India

  18. General Scheme - giving certain welfare and social protection benefits to unorganised (informal) workers employed in five specified occupational categories - contributed by both workers and employers - administrated through the Ministry of Labour - providing various facilities for the workers, including financial assistance for housing through subsidies and low interest loans, medical care, hospitals, and special grants for specific treatments - for example, around 18,000 houses in all in Andhra Predesh have been built under the welfare foundations Social Security System in India

  19. Group Insurance Scheme under welfare funds - a group insurance scheme for beedi workers introduced in 1993 - the premiums of the group insurance scheme is paid by the welfare fund, but not by workers - the life insurance Co. pays the insured amount of Rs.3000 to the family in case of natural death and Rs.25,000 for accidental death and disability Social Security System in India

  20. Social Assistance schemes • National Social Assistance Programme • (Subsidized) Group Insurance Schemes for Vulnerable Groups Social Security System in India

  21. 1. National Social Assistance Programme • National Old Age Pension Scheme since 1995 • National Maternity Benefit Scheme since 1996 • National Family Benefit Scheme Social Security System in India

  22. National Old Age Pension Scheme • Scheme - granting monthly pensions of Rs.75 to the aged over 65 years, those without subsistence income or family support - paid by the central government under the NSAP - widows are entitled to a pension for one year; during the period, skill development for self-employment is encouraged - In case of Gujarat State, an additional amount per child is payable for up to two children - physically disabled are eligible for the monthly pension if above the age of 45 years, along with receiving free education, lodging, and boarding facilities in state-run institutions Social Security System in India

  23. Limitations - the amount of pension is considered too low to ensure the minimum subsistence level - the number of beneficiaries is restricted by state budgetary limitations and central guidelines Social Security System in India

  24. National Maternity Benefit Scheme • Scheme - women in all households below the poverty line are eligible for maternity benefits, cashing an amount of Rs.300 for the first and second deliveries respectively - Stipulating a minimum age of 19 years [around 3% of babies born of girls aged between 15-19 years] - the maternity assistance amount is Andhra Pradesh is Rs.900, payable in four installments Social Security System in India

  25. National Family Benefit Scheme • Scheme - the surviving members are paid Rs.5000 or Rs.10.000 in cases of death of the primary breadwinner due to respectively natural and accidental causes Social Security System in India

  26. Subsidized Group Insurance Schemes In case of Gujarat State, 1995-96 Social Security System in India

  27. Numerous new schemes for the poor and low-income families are available, including - The Rural Group Insurance Scheme, available aged 20 to 60 years for an assured amount of Rs.5,000, the premium being around Rs.60 per annum - The Savings and Pension Scheme - The Janata Personal Accident and the Gramin Personal Accident Policies - The Jan Arogya Policy covering for hospitalisation to the extent of Rs.5000 for a premium of around Rs.70 per annum Social Security System in India

  28. Self-financed Social Insurance (as of 1996) Case One: The Self-employed Women’s Association (SEWA) • Focusing on employment and income-related issues in Gujarat State since 1970s • esbablished a women’s bank, being the central point for many of its programmes • offering an integral social security package by payment of Rs.60 per year • 12,000 women joined this protection scheme, covering illness, widowhood, maternity, accident, fire, floods, etc - up to Rs.1000 for sickness - up to Rs.10,000 for natural or accidental or disablement - Rs.300 for a maternity benefit - up to Rs.5,000 for a loss of working tools, house, and property • 1,529 claimants received a total of Rs.1.58 million as of life insurance, work security and maternity benefits Social Security System in India

  29. Case Two: The Action for Community Organisation rehabilitation and Development (ACCORD) • working among tribals of Gudalur in Tamil Nadu State • built its comprehensive tribal development programme based on a compaign for land rights • organised the tribals into small groups at hamlet level (Sangams), which have activated for employment generation, education, plantation, health, credit, etc Social Security System in India

  30. The main programme of Sangam • - a credit fund to meet emergency consumption needs and indebtedness, set up on a “1 rupee per week contribution” by members • - related to veterinary assistance and training, vocational skills and a health programme trained health workers • - a hospital was set up in 1990 from ACCORD’s fund and donations • A social insurance package was drawn up on a premium of Rs.60 per month • - up to Rs.1,500 for damage of their hut and belongings • - Rs.3,000 for death and permanent diability of the head of family • - Rs.1,500 for all illness requiring hospitalisation Social Security System in India

  31. Case Three: The Cooperative Development Foundation (CDF) • Strengthening cooperatives and working with thrift and credit groups in Andhra Pradesh, Tamil Nadu, Kanataka, and Kerala • A “Death Relief” covering 25,000 members - each member deposits an initial Rs.100 and can make between 5 and 20 times [the maximum admissible amound is Rs.20,000] - covering the risk of natural and accidental death up to age of 60 years • Security for the “thrift cooperatives loans”, giving total debt relieft for the surviving family and the guarantors • On reaching the age of 60 years or on withdrawing from the deposit amount is returned with a 2% bonus Social Security System in India

  32. Case Four: The Association for Sarva Seva Farms (ASSEFA) • encouraging the formation of people’s association and running various development programmes • based in Tamil Nadu, Andhra Pradesh, Hyderabad, etc • starting its own insurance scheme for payment of compensation on the death of the insured • running a comprehensive scheme for heath services for about 4,000 families at different health centres - paying a premium of Rs.50 per family per year - the balance of costs of medicines and hospitals is shared between ASSEFA (two-thirds) and the beneficiary (one-third) Social Security System in India

  33. Case Five: The Society for Promotion of Area Resource Centres (SPARC) • started its activities among slum dwellers and women pavement dwellers in Bombay and spreaded to other cities - making local governments responsible and accountable to the people - organising and empowering the people to demand the service • the women were organised into saving groups, know as “Mihila Milans” - small amounts of Rs.1 to 5 are saved daily and given to collectors - members can draw small amounts conveniently Social Security System in India

  34. Taken up an insurance policy with a professional company - apremium of Rs.30 - Rs.1,000 for hospitalisation - Rs.12,500 for partial disability - Rs.3,000 for a loss of home, household goods, and tools - Rs.25,000 for accidental death and disability for self- and husband Social Security System in India

  35. Lessons from self-help financial insurance - the strengths of the voluntary participatory approach - an easy accessibility of the benefit - professional help including designing, supervision, and monitoring - outside financial support institutional credit government subsidies foreign funding/ technological cooperation Social Security System in India

  36. Conclusions • About 13% of the working population are covered by the statutory social protection - Some 19.5 million government and public sector workers - Some 21 million private sector workers • These major social security laws do not distinguish between organised and unorganised sectors - very few informal economy workers are covered under the statutory schemes - because there are many difficulties in establishing workers-employer relationship and an effective system for the collection of contribution Social Security System in India

  37. The statutes explicitly exclude groups of workers such as • those working outside the scheduled industries and establishments • those in smaller enterprises • the very substantial category of the self-employed (comprising 54% of the workforce) • Lack of awareness and unity among the informal economy workers to enforce the laws Social Security System in India

  38. Suggestions • What are the merits and demerits of social security system being operated in the country concerned? • How to extend the social security to the excluded and vulnerable groups? • What are the best modality of social security schemes? • How to design, finance, and supervise the schemes? Social Security System in India

  39. Thank you for your attention! Social Security System in India

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