New Delhi: The Union government is reviving a plan to extend health insurance, life insurance and provident fund facilities to all workers.

“The aim is social security to all. If a segment of the 475 million workforce are already getting social security benefits, we are striving to cover the rest of the working community," said M. Sathiyavathy, secretary labour and employment in the Union government.

Accordingly, the labour ministry is proposing to roll out unique identity numbers—similar to those issued by the central provident fund organization—to all unorganized sector workers from April 2018 and seed them with Aadhaar.

Not only does the move extend a formal social safety net to the entire workforce, it could also accelerate the formalization of the economy. It could also generate political gains for the Bhartiya Janata Party (BJP)-led National Democratic Alliance as it readies for a re-election in 2019.

The move comes at a time when organized sector social security schemes have seen a big jump in recent months—25 million were added in 2017, because of two amnesty schemes that allowed employers to come clean on staff strength without being penalized.

“The unique unorganized sector identity numbers will hopefully be rolled out from the beginning of next financial year," Sathiyavathy said adding the standing finance committee of the central government has already approved the unique ID plan for unorganized sector workers comprising nearly 90% of the total workforce.

The secretary said that the central government is in favour of including the states in the social security plan and that the labour ministry has already met state governments twice—although details are yet to be finalized.

Once the unique unorganized sector identity numbers are rolled out they will be seeded with Aadhaar number to reduce leakage and duplication. It will subsequently be made part of the universal social security architecture under the broad social security code bill that the ministry is bringing to consolidate the existing social security acts like the EPF Act and Employee State Insurance Act.

Both the centre and states are expected to contribute to create a corpus to fund the insurance and PF benefits.

The government and states are now deliberating on a salary threshold, so that the contribution can be made from the corpus. Employees getting more salary than the threshold will be required to contribute a certain amount to avail of the benefits.

While social security for all is one of the key demands from trade unions, the move, once in place, will also help grow the size of the formal economy. “The initiative, for the first time, will have complete data on the Indian workforce, tell us about the job creation picture more reliably and offer retirement benefits to a large number of workers so far out of the social security net," the secretary said.

Pankaj Bansal, co-founder and chief executive of human resource and staffing firm PeopleStrong said, “The future of the social security net looks inclusive for the labour-intensive sectors like textiles, real estate, manufacturing, automobiles etc. Here most of the job creation will move from informal to formal."

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