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Can the Best Be the Enemy of Good, If the Good Is Not Good Enough?

A number of official and non-official bodies have been working on issues relating to security of unorganised workers. The NCEUS has, however, gone ahead with making its recommendations without waiting for these processes to be completed. The commission has also separated the legislation for conditions of work from social security, when the two should have been dealt with in an integrated manner. One is surprised as well at the timidity even in the matter of providing social security.

Can the Best Be the Enemy of Good, If theGood Is Not Good Enough?

A number of official and non-official bodies have been working on issues relating to security of unorganised workers. The NCEUS has, however, gone ahead with making its recommendations without waiting for these processes to be completed. The commission has also separated the legislation for conditions of work from social security, when the two should have been dealt with in an integrated manner. One is surprised as well at the timidity even in the matter of providing social security.


he National Commission for Enterprises in the Unorganised Sector (NCEUS) in its report has also submitted the Unorganised Workers Social Security Bill, 2006 (hereinafter referred to as the Bill) which is the subject matter of this paper. This Bill is in modification of the earlier Unorganised Sector Workers Social Security Bill, 2005. In the words of the report, the significant changes made in the Bill are:

  • (a) The monthly limit for qualifying to be anunorganised worker has been revised fromRs 5,000 per month to Rs 6,500 per monthin sections 2 (j) and 2(m) of the draft Bill.
  • (b) National Minimum Social SecurityBenefits proposed for the unorganisedworkers has been revised in section 4 (i).Old Age Pension is recommended for BPLworkers above 60 years and ProvidentFund cum unemployment relief for others.
  • (c) This draft Bill would cover theunorganised/informal workers in theunorganised sector as well as those in theorganised sector having no social security cover.
  • When in August 2005, NCEUS had prepared the Unorganised Sector Workers Social Security Bill 2005, it had also proposed another bill on conditions of work and livelihood promotion for workers in the unorganised sector. The NCEUS has promised to submit another report to justify the draft Bill dealing with the conditions of work and livelihood promotion for unorganised workers.

    Keeping the above in mind, this paper attempts to look at the subject in three parts. Part I will deal with the composition of the NCEUS, its advisory board and task force, as well as its methodology of work. Part II will deal with the desirability or otherwise of having a separate law on social security instead of a comprehensive integrated law, and Part III will, subject to what has been stated in Part II, deal with the Unorganised Workers Social Security Bill, 2006 in some detail.

    I Work of NCEUS

    The proximate cause for the setting up of the NCEUS is the implementation of the commitment in the common minimum programme (CMP) of the UPA government which recognises as one of the basic principles of governance the need to “enhance the welfare and well-being of farmers, farm labour and workers, particularly those in the unorganised sector and assure a secure future for their families in every respect”. The CMP further states:

    The UPA government is firmly committed to ensure the welfare and well-being of all workers, particularly those in the unorganised sector which constitute 93 per cent of our workforce. Social security, health insurance and other schemes for such workers like weavers, handloom workers, fishermen and fisherwomen, toddy tappers, leather workers, plantation labour, beedi workers, etc, will be expanded (emphasis added).

    If NCEUS had been set up with a view to implement the above commitment, one would have expected the government resolution to be issued by some other

    Economic and Political Weekly August 12, 2006 ministry, such as the ministry of agriculture or ministry of rural development, or ministry of labour and employment or ministry of social justice and empowerment, and surely not by the ministry of small-scale industries, as is the case now. The very terms of reference containing nine terms of which the last is the one relating to social security, as well as the title of the commission which is for establishments in the unorganised sector reveal the emphasis that must have prompted the government to set up this commission.

    Besides, the very composition of the NCEUS, which currently has, besides the chairman, two full time members and a member secretary and two part-time members and whose original composition consisted of the chairman, three full-time members and three part-time members besides the member secretary calls for some remarks. The NCEUS consists and consisted essentially of academically inclined persons and this is also reflected in the composition of its advisory board and even the task force on social security. That each one of these persons is a person of eminence in his or her field of work, and I am proud to have personally known quite a few of them over the years, does not detract from the fact that the composition of the commission and its advisory board and task force could have been more broadbased and included representatives at the vast mass of unorganised sector workers. My long association with the ministry of labour, even though more than two and a half decades back, prompts me to look for a tripartite composition, while setting up such bodies. I leave it at that.

    On hindsight, one is doubtful of the methodology adopted by the NCEUS in dealing with social security issues. After all, the 2005 Bill, presented in August 2005, had itself attracted a lot of attention including some criticism. The present author recalls the detailed discussions that took place on that bill at a consultation organised by the National Centre for Labour (NCL), which was attended amongst others by K Jayashankar, who was then a full time member of NCEUS. The conclusions of these discussions do not seem to have been considered by the NCEUS in its subsequent deliberations, judging from the final shape of the Bill. In fact, after the consultations, I had written to K Jayashankar giving my views as also that of the National Campaign Committee for Unorganised Sector Workers (NCCUSW) on the 2005 Bill and pleading for a comprehensive law. There must have been, likewise, feedbacks to the commission from others also. In fact, the Indian Labour Conference (ILC), meeting in December 2005, had discussed the issue of social security for unorganised workers as a separate subject and reached some conclusions. The ILC recognised the existence then of four bills, one prepared by the ministry of labour, another from the National Advisory Council, and two others from NCEUS. (The exercises done by NCL and NCCUSW for a comprehensive law for the unorganised workers including social security but giving primacy to employment and its regulation did not figure in the deliberations.) The ILC, however, constituted a tripartite working committee “to examine all four draft bills and prepare one draft bill taking into account the recommendations from all stakeholders”. The tripartite working group, I take it, is still at the task, as I see that a meeting was held on June 23, 2006; I have no knowledge of what transpired there. However, the main point is why, with all this happening, the NCEUS thought it fit, in May 2006, to present to the prime minister its report and the Bill at the time it did. If the attempt or the intention is to get as large a measure of support for its recommendations, then the consultations should have been wider and deeper than what has been the case. If one were to see the views of NCEUS in Appendices 9, 10 and 12 of its report on the views of various bodies, it is predominantly “noted” or “decision taken after consultation with stakeholders”. Perhaps the NCEUS could have organised a small round table where the draft bill could have been discussed in-depth; The invitees to the round table could have been the real stakeholders, viz, the representatives of the vast mass of the unorganised workers. After the report and the Bill have been submitted, we now start hearing reservations and suggestions.

    II Need for an Integrated Law

    One cannot fault the NCEUS for preparing a bill only for social security for the unorganised workers as that was a specific term of reference. Even so, considering that the NCEUS thought it fit to submit in 2005, another bill on conditions of work and livelihood promotion, and has promised to submit “another report to justify the draft Bill dealing with conditions of work and livelihood promotion for unorganised workers”, the question can legitimately be raised as to why the Commission did not go in for an integrated law. In extenuation, it may be argued that the National Advisory Council which had prepared a draft bill on social security had also stated that matters relating to conditions of work and livelihood issues will have to be dealt with in another law. But this is good enough only for arguments sake. Once a law on social security is enacted and put on the statute book, it is anybody’s guess as to when the companion law on conditions of work and livelihood issues will see the light of day. One is tempted to draw an analogy with the 1982 amendment to the Industrial Disputes Act 1947, which redefined the term “Industry” and which amended definition could not be brought into force till this day, nearly 25 years later, because the companion law relating to educational institutions, hospitals, etc, could not be enacted.

    Further, a combined law will have the advantage of common definitions and common implementation machinery. The arrangements envisaged for implementation in the Bill, doubtful of success even in respect of social security, will definitely be inadequate for an integrated law. It is not without significance that the NCEUS in respect of the Unorganised Workers (Conditions of Work and Livelihood Promotion) Bill 2005, skirted the issue of implementation, as it were, and sought recourse to a Dispute Resolution Council to be set up in each district. This is, in essence, an adjudication mechanism rather than an enforcement one. An integrated law, were one to be attempted, would immediately have shown up the inadequacies.

    While talking of the need for an integrated law, I cannot refrain from referring to the exercises carried out in this direction by NCCUSW and NCL. I have been closely associated with these exercises and am naturally partial to an integrated law. This partiality is strengthened by the needs and aspirations of these millions of workers, as revealed in the massive rally organised by NCCUSW in New Delhi in May 2005. The main thrust of the demand for an integrated law is:

    (a) The workers do not want to be treated as beneficiaries in any system of law but demand to be recognised as partners and participants in the entire process of formulation of the law and schemes and in their implementation, through tripartite

    Economic and Political Weekly August 12, 2006

    bodies and various levels right down to the panchayats.

  • (b) Employment is the basic need and therefore there must be provision for regulation of employment and this can be done only if there are bodies or boards for each group of allied employments, instead of a monolithic board at the state level which can neither have the representative capacity nor the detailed knowledge of the needs and problems of each group of employment such as the allied aspects of wages including fixation of appropriate piece rates for the diverse activities, other matters relating to safety and health, welfare and social security, etc, and
  • (c) A commitment in the law to set apart at least 3 per cent of the GDP or of the combined revenue budgets of the central and state governments for the benefit of these workers, this percentage going up by half or one per cent annually until a satisfactory level of social protection is reached; this will/can be in addition to such levies as may be imposed on specified occupations.
  • These may be dismissed as being starryeyed or utopian, and described as the best being the enemy of good; the approach should be gradual and must be in terms of what can be afforded. Have we not heard all this with sickening regularity over the last six decades, particularly when the needs of the poor and the disadvantaged are discussed. All considerations of affordability, financial prudence and administrative feasibility are trotted out as “realistic” arguments. Apart from not approaching the issues in a holistic manner and recommending an integrated comprehensive law, one is surprised at the timidity shown by the NCEUS even in the matter of providing social security to these long deprived millions of our country men and women. We shall discuss this in the last part of the paper.

    III Analysis of Proposed Bill

    NCEUS in para 8.15 of its Report has taken that “it is of the view that the time has come to initiate a protective social security system that is inclusive of all workers in the informal economy. There would be several limitations, including that of identification and implementation, if the intended initiative is not an inclusive one”. So far so good, but one is tempted to ask why the system is to be restricted to protective social security; India, particularly in the context of the unorganised sector is in need of both protective and promotional social security. The various promotional measures initiated and implemented by central and state governments and a voluntary sector have been referred to in the report, including the National Rural Employment Guarantee Act. Most of these schemes are not “inclusive” or universal. Addressing the 40th session of the Indian Labour Conference in December 2005, prime minister Manmohan Singh stated, while referring to the NREG Act that “it is the single most important social security benefit being extended to the rural labour since independence”. Whether employment including security of employment is promotional or protective social security, there is no gainsaying that work and its concomitant outcome, namely, livelihood, is the starting point for everything to everyone in the unorganised sector, be they wage employed or selfemployed. One cannot help coming back again and again to an integrated law.

    Even restricting oneself to protective social security, the NCEUS coverage is inadequate. An ILO convention adopted more than 50 years ago, namely, Convention No: 102 on Minimum Standards of Social Security, lists nine contingencies against which social security protection is needed. The Bill restricts itself only to three contingencies – health and maternity benefit, life insurance and old age protection. I think that a good opportunity to go in for ratification of Convention 102 has been lost, and in that process the unorganised workers denied even the minimum standards, 50 or more years after the convention was adopted and nearly 60 years after we became free. Have not our people waited long enough? Are we still going to advance arguments of “affordability” and “administrative inadequacies” to deny these minimum standards. Article 41 of the Constitution gave us the mandate. Every case of “undeserved want” calls for state assistance.

    Coming down from the failure to go in for an integrated law and from the failure to provide for minimum standards of social security, even of the protective type, let us now look at what the NCEUS has recommended. The first thing that strikes one is the timidity with which the NCEUS has approached the question. The total contribution by the central government for the first year will be Rs 6,674 crore including administrative expenses, this figure going up to Rs 20,582 crore in the fifth year, i e, from 0.17 per cent of the GDP in the 1st year to 0.39 per cent in the fifth year. In the per capita terms this works out in the fifth year to about Rs 690 per year or less than Rs 2 per day. Even if the entire unorganised workforce were not to make any contribution be they self-employed or wage-employed or be they above or below the poverty line, the per capita outlay will not be more than Rs 3 per day. Therefore, it is that workers and their organisations argue that the workers should not be asked to make any contributions apart from the fee for registration and for periodic renewal. This demand gets further strengthened by NCEUS’ own observations in para 8.17 of its report where it says:

    Given the low earnings of the workers in the informal economy, there is a strong case for providing social security to the informal workers without contributions from the latter. Moreover, the absence of identifiable employers in many cases (as in the case of the self-employed poor), or the difficulties inherent in the collection of contributions from a large number of employers of small establishments makes it infeasible to have a system based on contributions from the “employers” either.

    Does not this boil down to what Article 41 of the Constitution says, namely, “public assistance in cases of unemployment, old age, sickness and disablement and in other cases of underserved want”. The enormous amount of administrative work, the risks attendant on accounting for collections made from millions upon millions of workers and “employers” and so on can and should be avoided by providing for complete state assistance for social security to these workers.

    Such a step also obviates the need for identifying, as the Bill envisages, workers who are below the poverty line (BPL). The very concept and measurement of poverty line, its changes from time to time and from state to state, the undesired loopholes in their identification now under which the eligible get left out and the ineligible (and even the unworthy) get included, all these make the poverty line divide unreliable and suspect.

    Naturally, this brings us to the distinction that the NCEUS has, on second thoughts as it were, introduced, in the matter of old age protection between the BPL and the APL workers. Whereas the BPL workers will be entitled to a old age pension on attaining the age of 60 years, others will be eligible for the provident fund-cum-unemployment benefit. For the latter, NCEUS recommends a minimum guaranteed return of 10 per cent to the

    Economic and Political Weekly August 12, 2006 workers under the proposed provident fund. This is to ensure that “ the informal workers who are much poorer than the workers in the organised sector get a higher return than the Employees Provident Fund”. I must confess that I do not have either the knowledge or the experience in commenting on this recommendation for APL workers. That these have been worked out in consultation with actuarial experts and found feasible by wiser heads than mine forbids me from making any comments on this. However, I am quite firm that the distinction between the BPL and the APL workers must be done away with and consequently would like to see a pattern of uniform old age pension for all these workers, at a level much higher than the Rs 200 or Rs 300 per month; a figure of Rs 500 per month, with indexation, is in my opinion, reasonable. After all, the National Old Age Pension Scheme provides for a pension of Rs 200 per month for destitutes and even this amount is suggested to be augmented. Surely, the unorganised worker after a long and weary working life deserves better than destitutes! While on the subject, I wish that the NCEUS had not stuck to a uniform age of 60 years for eligibility. There are occupations in which workers, more particularly women workers, will find it difficult if not impossible to get employment and to the extent that these employments normally operate on piece rate basis, the earnings based on output will be very meagre after a certain age. Therefore, a flexibility in the matter of “retirement” age is called for and this is best done through schemes formulated for that group of employments. Again, a throwback to an integrated law with provision for separate schemes and Boards for each group of employment!

    As regards provident fund-cum-unemployment benefit, I think this can be an optional benefit which the worker can voluntarily join and for this purpose, the existing EPF scheme and if necessary the act may be suitably amended. After all, the demand for extending EPF Act to smaller establishments has been an issue for nearly 40 years right from the time the first NCL referred to it. I must, however, caution that the provision of a guaranteed return of 10 per cent may create problems, given the dissatisfaction among the EPF members that the rate of return on their accumulations is steadily reducing.

    Of the other two benefits under the National Social Security Scheme suggested by the NCEUS, one relates to health benefits in the form of health insurance for self, spouse and children below the age of 18 years, sickness allowance and maternity benefits for women workers or spouses of men workers. The inclusion of “spouses of men workers”, for being eligible to maternity benefits is a thoughtful measure and is welcome, though given the nature of the unorganised sector, the spouses of men workers will more often than not be eligible in their own right. However, considering that the term “unorganised worker” in the Bill includes wage workers in the organised sector without any social security cover, this is perhaps meant eventually to cover the spouses of such men workers. Be that as it may, this is welcome. Only the quantum of assistance is negligible and needs to be stepped up, providing for three months wages as also a lump sum amount of Rs 2,000 for maternity-related expenses. In providing this, let us realise that we are providing for


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    Economic and Political Weekly August 12, 2006

    the nation’s future in the shape of healthy mothers and healthy babies.

    In fact, the recommendations relating to maternity benefits should be coupled with provisions for child care centres throughout the country where children of the age 0 to 6 years can be left to be taken care of while the mother can go to work without worry. After six years, compulsory education will take care of such children and it may be a good idea if the child care centres for 0 to 6-year-olds are also located in or near the schools which the elder children will be attending.

    As regards health benefits, one is included to ask whether it should be only through health insurance; can it not be through a public healthcare system which should be strengthened and expanded for this purpose. I am for the latter. If it should be through the insurance route, then let a public sector insurance corporation be set up separately for this. Here again I find myself not competent to deal with the details of the health benefits and cause which NCEUS has worked out with the help of experts and the commission’s own expertise. I only wish that the health and maternity benefits that are recommended will result in a sea change in the attitude and approach we now have to rural areas and rural populations.

    As regards life insurance also, I am bothered about its adequacy.

    One last word about coverage. One cannot disagree with the attempt made by NCEUS to extend social security to such of those workers in the organised sector who do not have any social security cover. These would include contract labour, casual labour, and what not whose numbers are on the increase consequent on globalisation, liberalisation and privatisation. However, the need will arise for defining the term “social security” and this is not an easy matter. Do we interpret the term to mean only the benefits included in the National Social Security Scheme or will it be interpreted more widely or more narrowly. This may call for clarification.

    At a recent two-day consultation in New Delhi on July 10 and 11, organised by the NCL, the Bill was discussed. At the end of the consultation, unanimous conclusions were reached. I am broadly in agreement with these. Let us not dismiss them as the best being the enemy of good. Let us not also raise the futile question as to who will pay for all this. The answer is that we as a nation will pay for these and more in the coming years; otherwise the term “social” for we happen to be society itself given our in social security has no merit or signifi-large numbers and the larger numbers of cance. As NCCUSW said in its petition to our dependents”. Parliament, after the rally in New Delhi in May 2005, “we are not a burden on society, Email:


    Economic and Political Weekly August 12, 2006

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