The central government has released a revised draft Code on Social Security (CSS) but the drafting process highlights the complexities inherent in combining a diverse set of labour laws and welfare schemes and points out the enormous challenges for implementing it after its enactment, which appears to be a far cry at this stage.
The complexities arise as the government has, though in right earnest, sought to make social security a statutory right for all the workers including gig workers. Codification of laws concerning industrial relations or wages is fine as they deal with most similarly placed aspects, unlike the CSS. If the government’s approach is to universalize the social security right (which is a long-term project) it is better to adopt the sectoral approaches by adding and strengthening laws and schemes. This idea gains credibility as the CSS 2019 has dropped several important exercises like distinguishing between ‘employees’ and ‘non-employees’, the ‘income threshold’, ‘the consolidated maximum social security contribution of 17.5%’ (including the imputed gratuity), ‘intermediate agencies’, etc.
Even the very arrangement and contents of the CSS 2019 expose the enormous amount of compromises made in it. For example, the CSS 2019 has the First Schedule according to which the clauses concerning the employees’ provident fund (EPF) will be applicable to establishments employing 20 or more, the employees’ state insurance (ESI) to those employing 10 or more people, gratuity to every factory, mine, etc. and shops and establishments employing 10 or more people (see Section 3 in the Payment of Gratuity Act, 1972), etc. So, the universal social security seems to have been done away save for inclusions here and there, like the gig workers. The code almost mirrors the existing applicability clauses in the relevant laws. Chapters III to IX reproduce in a broad sense the existing laws concerning subjects like EPF, ESI, gratuity, maternity benefit, etc. For example, let us compare Chapter IX which deals with the Social Security for unorganized workers with the existing law on it (2008). Save for minor suitable revisions and additional clauses for gig workers, the chapter is a virtual reproduction of the 2008 Act. Even with respect to the gig economy workers, it would have been better if these workers are included in the definition of the unorganized worker as the gig worker “performs work or participates in a work arrangement and earns from such activities outside the traditional employer-employee relationship".
The codification process has discarded concrete aspects like criteria for determination of minimum wages and working hours to the rule-making process,and this unhealthy trend continues with this code as well. For example, while the CSS prescribes the provident fund contribution by employers and employees at 12%, it leaves the ESI contributions to be determined by the Centre through probably a government order or in the rules framed under the code. Further, even in the case of EPF, there’s a flexibility clause empowering the government to notify a different contribute rate. Rules under the laws are made for administrative needs as the law prescribes the substantive aspects like the rates of contribution and leaves the processes to the rules. The draft code is a safe game, and not a game changer. It may be advisable for the government to avoid considerable legislative, economic and other costs if it could simply amend the existing laws to achieve consistency where necessary, say for gig workers rather than expending tremendous social energies and costs (in terms of even possible protests) that reforms may engender.
K.R. Shyam Sundar is a labour economist and professor at XLRI, Jamshedpur