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Resistance within government to universal social security payments


NEW DELHI: Labour ministry’s proposal for universal social security payments is facing resistance from other government sections because such a programme would raise overall wage costs, a senior government official said.

That’s large because central ministries and the states have increasingly been hiring contract workers to save on costs as minimum wages are not mandatory in such cases. A social security programme would require the employers of contract workers to help pay for it.

“They had expressed reservation on the proposed code at the recent stakeholder consultation on the social security code,” the official said, adding that agreement of all stakeholders was crucial for a proposal that will have a significant cost implication for all employers, including the government.

The labour ministry has finalised the draft social security code under which mandatory coverage for pension, insurance
— both death and disability — and maternity will have to be given to all. The government will bear the cost for the bottom 20% of the population.

Resistance within government to universal social security payments

Those who are employed will have to share costs with the employer. Those who are self-employed will have pay a lump sum to participate. In the organised sector, currently, about 25% of basic salary, including employee and employer contributions, goes to the provident fund. Another 6% goes to insurance, taking the total contribution to more than 30%.

According to Seventh Pay Commission data, the union government is one of the biggest users of temporary staff or contract employees, including scheme workers, and spends around Rs 300 crore a year on their wages. The scheme workers refer to the six million who are employed in flagship social sector programmes.

They include 1.4 million aanganwadi workers, 1.2 million aanganwadi helpers, 1million ASHA (accredited social health activists) workers and over 2.5 million mid-day meal workers. The government appoints contract workers in three categories. First, for work of a routine nature such as housekeeping, maintenance and data entry that’s bundled and entrusted to staffing agencies. Second, contractual appointments for select posts, particularly those that need high professional skills. The third category comprises retired government employees whose skills and expertise acquired during their tenure in government are found useful.

India’s total workforce stands at 450 million, out of which a little over 10% is in the organised sector, enjoying social security of some sort.


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