Social Security and the Unorganized Sector in India: A Comprehensive
Study
Synopsis:
F
Introduction,
F Social Security:
Fundamental Principles,
Ø Core Principles
F History and Development
of Social Security,
Ø Ancient Period,
Ø Medieval Period,
Ø Early Modern Period,
Ø Industrial Revolution and Modern Period
(18th–19th Century),
Ø Pre-Independence Era,
Ø Post-Independence,
Ø International Developments and ILO’s
Role
F Social Security: ILO
and Minimum Conditions of Work,
Ø ILO Instruments
F Constitutional
Safeguards,
Ø Relevant Constitutional Provisions
F Concept and
Characteristics of the Unorganized Sector,
Ø Characteristics
F Unorganised Labour
Force in India,
Ø Profile of the Unorganised Workforce
F Economic Contribution
of Unorganised Workers,
Ø Major Contributions
F Causes and Problems
of Unorganized Workers,
F Different Categories
of Unorganized Workers,
F Social Security
Related Statutes,
F Conclusion
Introduction
Social
security is a
system where the government or society provides financial and social support to
individuals during times like illness, unemployment, old age, or disability. It
aims to reduce poverty, ensure a minimum standard of living, and protect human
dignity. Guided by global standards set by bodies like the International
Labour Organization (ILO), social security reflects the values of equality,
solidarity, and state responsibility. In India, various laws and schemes have
been introduced to support this goal, though challenges remain in reaching the
unorganised workforce effectively.
Social Security: Fundamental Principles
Social security means a system of protection provided
by the state or society to ensure individuals have economic support during
times of hardship such as sickness, unemployment, disability, old age, or
death. It is recognized as a basic human right and an essential feature of a
welfare state.
The objective of social security is to ensure a
minimum standard of living, reduce poverty and vulnerability, and promote human
dignity and social justice. Globally, institutions like the International
Labour Organization (ILO) have established a set of guiding principles that
underpin social security systems.
In the Indian context, although several schemes such
as the Employees’ State Insurance Act (1948), Employees’ Provident Fund Act
(1952), and the Code on Social Security (2020) exist to reflect these principles,
the challenge remains in effectively covering workers in the vast unorganized
sector. Implementation gaps, lack of awareness, and administrative hurdles
hinder the realization of these ideals. Therefore, ensuring the fundamental
principles of social security in practice is key to achieving inclusive growth
and protecting the rights and dignity of all citizens, especially the most
vulnerable.
F Core
Principles:
1) Universality:
Social protection should be available to all citizens, especially the most vulnerable.
2) Comprehensiveness:
It should cover various contingencies such as sickness, maternity, employment
injury, unemployment, invalidity, old age, and death.
3) Solidarity
and Equity: Contributions from workers, employers, and the state
are pooled to support those in need.
4) State
Responsibility: The state plays a leading role in
ensuring access to social security for all, particularly in sectors where
market mechanisms fail.
5) Dignity
and Human Rights: Social security promotes human dignity
and a decent standard of life.
History and Development of Social Security
F Ancient Period:
In ancient civilizations, the concept of social
security existed informally through family support, religious charity,
and community-based welfare. In societies like Ancient Egypt, Mesopotamia,
China, India, and Greece, support was primarily offered through
families and temples.
In India, the concept of Dana
(charity) encouraged the rich to help the poor. In China,
Confucian ethics emphasized family duty and care for the elderly. Greek
city-states often provided food and pensions to war veterans and poor
citizens. There was no organized state-sponsored system welfare was based on
moral obligations and religious values.
F Medieval
Period:
During the medieval
period, religious groups and local communities primarily helped the poor. In
Christian countries, churches and monasteries cared for orphans, sick
individuals, and the elderly. In Islam, the concept of zakat, which involves
giving money to the poor, was very important.
In Europe, trade groups
known as guilds provided assistance to their members during illness, death, or
job loss. However, there were no official government laws or systems for social
security. Most aid was offered voluntarily and was rooted in religious and
community values, rather than being organized by the state.
F Early Modern Period:
In the 16th and 17th centuries,
governments began to take some responsibility for helping the poor. In England,
the Elizabethan Poor Law 1601 made local villages
(parishes) help the poor using local tax money.
It separated the poor into two groups: the "deserving"
poor (like the elderly and sick) who got help, and the "undeserving"
poor (those who could work) who were expected to find jobs. This was
one of the first government welfare laws and became a model
for other European countries.
F Industrial Revolution and Modern
Period (18th–19th Century):
During the Industrial Revolution,
many people moved to cities for factory jobs. Traditional family and community
help systems began to disappear, and workers faced poor conditions, low
wages, and no support during illness or old age.
To solve this, Germany became the
first country to start government-backed social insurance
under Chancellor Bismarck in the 1880s. It included health
insurance, accident insurance, old age and
disability insurance. Both employers and workers paid
for these benefits.
Other countries like the UK (National Insurance
Act, 1911), France, Austria, and Scandinavian
nations also created similar systems. At first, these covered only
factory workers but later extended to more people.
F Pre-Independence Era:
Toward the end of British rule, awareness about labour welfare grew. Indian nationalists and social reformers advocated for better working conditions and state responsibility for social protection. The Royal Commission on Labour in India (1929–31) emphasized the need for a systematic approach to labour welfare and social insurance. This period saw the emergence of the idea that the state must take responsibility for social security, beyond just regulating employment.
F Post-Independence:
After independence in 1947, India became a welfare state and introduced many laws to protect workers, guided by the Constitution's Directive Principles of State Policy which stress the importance of the right to work, education, public assistance, and fair working conditions.
Key laws included the ESI Act (1948) for healthcare, the EPF Act (1952) for retirement savings, and the Maternity Benefit Act (1961) and Gratuity Act (1972) for worker benefits. The Unorganised Workers’ Social Security Act (2008) aimed to support informal workers, while the NSAP (1995) provided pensions to the poor. The Code on Social Security (2020) brought these laws together and extended benefits to all platform workers.
F International Developments
and ILO’s Role:
In Global, the International Labour
Organization (ILO), founded in 1919, has played a key
role in promoting social security and workers' rights across
the world. The ILO created important global standards, such as Convention
No. 102 (1952), which sets minimum standards for social
security, including health care, pensions, maternity, unemployment,
and more.
In 2012, the ILO also adopted Recommendation
No. 202, which urged countries to create national social
protection floors basic levels of income and services for all people.
Through its Decent Work Agenda, the ILO promotes fair
employment, social protection, and social dialogue. Many countries
have developed and improved their social security systems based on ILO
guidelines, especially to include informal and vulnerable workers. The ILO
continues to support global efforts to make social security a universal
right.
Social Security: ILO and Minimum
Conditions of Work
The International Labour Organization (ILO)
plays an important role in shaping social security laws and setting minimum
conditions of work worldwide. It was established in 1919
with the aim of promoting social justice and improving working
conditions for all.
One of its most important contributions is ILO
Convention No. 102 (1952), which defines the minimum standards
for social security including medical care, sickness, unemployment,
old age, employment injury, maternity, disability, and family benefits. The ILO
believes that all workers, regardless of their job type, should have access to
basic protection and fair working conditions. It also encourages governments to
ensure safe workplaces, reasonable working hours, equal pay, and
protection against unfair dismissal.
The ILO's Recommendation No. 202 (2012)
further promotes the idea of social protection floors, which
are basic levels of income and services that every person should receive. These
global standards have influenced many countries, including India, to improve
their social security systems and ensure fair treatment of workers.
F Key
ILO Instruments:
Ø Convention
No. 102 (1952): Sets minimum standards for social
security, including nine branches such as medical care, sickness, unemployment,
old age, employment injury, family, maternity, invalidity, and survivors’
benefits.
Ø Recommendation
No. 202 (2012): Emphasizes national social protection
floors.
Ø Decent
Work Agenda: A framework promoting productive
employment, rights at work, social protection, and social dialogue.
Ø Minimum
Conditions of Work:
1) Fair
wages and equal remuneration.
2) Safe
and healthy working conditions.
3) Reasonable
working hours and rest.
4) Social
protection including maternity and sickness benefits.
5) Freedom
of association and the right to collective bargaining.
6) India
has incorporated many of these principles in its labour codes and welfare
schemes.
Constitutional Safeguards
In India, the Constitution provides important
safeguards for social security, especially through the Directive
Principles of State Policy in Part IV. Although these
principles are not legally enforceable, they guide the government in making
laws and policies to protect the welfare of the people. The Indian Constitution
supports social security through key Directive Principles. Article
38 ensures social and economic justice. Article 39
promotes equal livelihood and fair working conditions. Article 41
talks about the right to work, education, and help during old age, sickness, or
unemployment. Article 42 ensures humane work conditions and
maternity benefits, and Article 43 promotes a living wage and
a decent life for workers. Together, these constitutional provisions form the
foundation for India’s social security laws and schemes, aiming to create a welfare
state that supports all its citizens, especially the poor and
vulnerable.
F Relevant
Constitutional Provisions:
Ø Article
14:
Equality before law and equal protection of the law.
Ø Article
21:
Right to life includes the right to live with dignity.
Ø Article
23:
Prohibits forced labour and human trafficking.
Ø Article
38:
State shall strive to promote the welfare of the people.
Ø Article
39:
Ensures adequate means of livelihood, fair distribution of wealth, and equal
pay.
Ø Article
41:
Right to work, education, and public assistance.
Ø Article
42:
Provision for just and humane conditions of work and maternity relief.
Ø Article
43:
Right to a living wage and decent standard of life.
Ø Article
47:
Duty of the State to raise the standard of living and improve public health.
These provisions guide the formation of welfare
schemes and labour protections in India.
Concept and Characteristics of the
Unorganized Sector
Definition:
The unorganized
sector includes enterprises that are not formally registered under legal
frameworks and do not follow organized labour practices. These units are often
small-scale, family-run, and do not comply with labour regulations. Examples: street vendors, farm workers, and
domestic helpers. This sector is informal, low-paid, and often unprotected
by the government.
F Characteristics:
Ø Lack of Job Security: Workers can be hired or fired anytime without notice.
Ø No Formal Contracts: Most jobs are based on verbal agreements, not written ones.
Ø Low Wages: Workers are often underpaid and do not get minimum wages.
Ø No Social Security: No benefits like PF, ESI, paid leave, or pension.
Ø Poor Working Conditions: Long hours, unsafe environments, and no proper facilities.
Ø Irregular Employment: Work is seasonal or uncertain, especially in agriculture or construction.
Ø Lack of Legal Protection: Labour laws are not applied or enforced properly.
Ø Self-Employment or Small Units: Includes vendors, artisans, or workers in small shops and homes.
Unorganised Labour Force in India
The unorganised labour force in India
consists of workers who are not covered by formal labour laws or social
security benefits. These workers are usually employed in informal
sectors such as agriculture, construction, street vending, domestic
work, small shops, and home-based work. They do not have job contracts,
fixed salaries, or access to benefits like provident fund, medical care, or
paid leave. More than 90% of India’s total workforce is in the
unorganised sector, making it the backbone of the Indian economy.
F Profile
of the Unorganised Workforce:
The unorganised labour force includes casual workers,
self-employed people, street vendors, construction and agricultural labourers.
Most belong to marginalized groups minorities, and include many women and
children.
They work in low-income jobs without job security or
social benefits. Although they contribute significantly to the economy, they
are often ignored in policies and protections.
Economic Contribution of Unorganised
Workers
The unorganised workers play a vital role in India's economy. They make
up over 90% of the workforce and
contribute to more than 50% of the
country's GDP. These workers are involved in major sectors like agriculture, construction, manufacturing,
transport, and services.
They
support the daily functioning of cities and rural areas through activities such
as farming, selling goods, building infrastructure, and providing essential
services. Despite their low wages and lack
of recognition, their continuous efforts drive economic growth and employment in India. However,
their contribution often goes unnoticed and
under-valued in official planning and policy-making.
F Major
Contributions:
Ø Agriculture: A large part of food production
depends on unorganised farm labour.
Ø Construction: They build roads, bridges,
homes, and other infrastructure.
Ø Manufacturing & Small
Industries: Work in
handlooms, textile, leather, and cottage industries.
Ø Street Vending & Retail: Provide affordable goods and
services to the public daily.
Ø Transport & Delivery: Includes rickshaw pullers,
loaders, and gig workers like delivery agents.
Ø Domestic & Care Work: Cleaners, cooks, and caretakers
in households.
Ø Self-Employment: Many run small businesses,
shops, or work as artisans and hawkers.
Ø Economic Backbone: Contribute to over 50% of
India’s GDP and 90% of employment.
Causes and Problems of Unorganized Workers
F Causes
for Unorganized Employment:
Ø
Lack of education and skills
Ø
Poverty forcing people into
low-paying informal jobs
Ø
Migration from rural to urban
areas in search of work
Ø
Rapid urbanization creating
informal job markets
Ø
Small employers avoiding formal
registration to escape labour laws
Ø
Low awareness about rights and
legal protections
Ø
Weak enforcement of labour laws
in informal sectors
F Problems
Faced:
Ø Job
Insecurity: Employment is mostly seasonal and without contracts.
Ø Exploitation:
Workers face long hours, low wages, and harassment.
Ø Lack
of Social Security: No pensions, health insurance, or paid
leave.
Ø Unsafe
Working Conditions: Construction, mining, and factory work
is often dangerous.
Ø Gender
Disparities: Women workers are paid less and often
harassed.
Ø Lack
of Voice: No unions or bargaining power.
These challenges make unorganized workers highly
vulnerable to economic shocks and exploitation.
Different Categories of Unorganized
Workers
The unorganized sector includes various categories of
workers, each facing distinct challenges:
Ø Agricultural
Labourers
Work on land owned by others, with daily wages and no
formal contracts. Vulnerable to climate change, market fluctuations, and
landlord exploitation.
Ø Construction
Workers
Often migrants, working on daily wages without safety
equipment or job security. Prone to accidents and occupational diseases.
Ø Domestic
Workers
Primarily women, working in homes for cleaning,
cooking, and caregiving. Subject to long hours, low pay, and abuse.
Ø Street
Vendors and Hawkers
Earn through petty trade in public spaces without
licenses. Frequently harassed by police and municipal authorities.
Ø Home-Based
Workers
Engage in handicrafts, beedi rolling,
and garment stitching from home. Paid per piece with no benefits or worker
recognition.
Ø Self-Employed
Workers
Include rickshaw pullers, tailors, cobblers,
mechanics, etc. Operate independently but with unstable income.
Ø Transport
and Delivery Workers
Includes auto drivers, truckers, and other workers
(e.g., Swiggy, Zomato). Often outside the purview of labour laws.
Ø Beedi,
Mine, and Quarry Workers
Work in dangerous environments with little to no
health benefits.
Each of these groups requires targeted policies
and legal protections to improve their living and working conditions.
Social
Security Related Statutes
1) Employees’
State Insurance Act, 1948 (ESI Act)
2) Employees’
Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act)
3) Maternity
Benefit Act, 1961
4) Payment
of Gratuity Act, 1972
5) Unorganised
Workers’ Social Security Act, 2008
6) Building
and Other Construction Workers (Regulation of Employment and Conditions of
Service) Act, 1996
7) Street
Vendors (Protection of Livelihood and Regulation of Street Vending) Act, 2014
8) National
Social Assistance Programme (NSAP), 1995 (a scheme, not an Act)
9) The
Code on Social Security, 2020
Conclusion
Social security is a fundamental right and a key
element of social justice in any welfare state. It aims to protect individuals
during life’s uncertainties like sickness, old age, or unemployment. While
India has taken significant steps through laws and welfare schemes, a major
challenge remains in covering the vast unorganised sector, which forms the
backbone of the economy. Strengthening implementation, increasing awareness,
and extending coverage to all workers especially the vulnerable is essential
for achieving inclusive and equitable growth. A robust social security system
not only uplifts individuals but also strengthens the nation as a whole.