People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 25

June 24, 2007



Union Cabinet Dithers On Comprehensive Legislation


W R Varada Rajan


ON May 24, 2007, the union cabinet gave its approval for certain social security measures for the unorganised sector workers. The Press Information Bureau (PIB), announcing the cabinet decision in a release, stated, ‘A Bill will be introduced in the Parliament as early as possible’ for this purpose and that the Bill would provide for setting up a national advisory board. On the recommendations of the national advisory board, the central government will, from time to time, notify scheme or schemes for one or more sections of unorganised workers. Such welfare schemes for workers in the unorganised sector, to be introduced in a phased manner, were intended to fulfil the commitment made in the National Common Minimum Programme (NCMP).


The background note circulated by the PIB also noted: “According to the survey conducted by the National Sample Survey Organisation (NSSO) in 1999-2000, the total employment in both the organised and the unorganised sectors in the country was 39.7 crore, of which 2.8 crore are in the organised sector and 36.9 crore (about 93 percent) are in the unorganised sector. Of this, 23.7 crore workers are in the agricultural sector and 1.7 crore are engaged in construction sector. Remaining workers are engaged in mining, manufacturing and service sector. On account of their unorganised nature, these workers do not get adequate social security and welfare”. The PIB release referred to some welfare schemes being implemented by the central government for specific occupational groups of unorganised sector workers, but admitted that despite all these efforts, there is a deficit in the coverage of the unorganised sector workers in the matter of labour protection and social security measures.


This move by the union cabinet is too little and too late, even when compared to the commitments made in the NCMP.


Let us recall what commitment the UPA regime made in the NCMP towards the agricultural and unorganised sector workers. It was stated:


“The administration will ensure the fullest implementation of minimum wage laws for farm labour. A comprehensive protective legislation will be enacted for all agricultural workers.”


“The UPA government is firmly committed to ensuring the welfare and well-being of all workers, particularly those in the unorganised sector who constitute 93 per cent of our workforce. Social security, health insurance and other schemes for such workers … will be expanded.”




During the three years of the UPA governance, the first commitment relating to agricultural workers had never surfaced on its agenda even. A proposal to enact a comprehensive central legislation for the agricultural workers was under consideration of the ministry of Labour since 1975 to enact a uniform central legislation for the agricultural workers on the pattern of Kerala Agricultural Workers’ Act, 1974. A draft Bill on central legislation was prepared as early as in 1980. The National Commission on Rural Labour, in its report of 1991, recommended that a central legislation for agricultural labour providing security of employment, prescribed hours of work, payment of prescribed wages and machinery for dispute settlement was necessary. Registration and provision of identity cards was also to be included. There was yet another revised draft Bill of 1996, which is left lingering with no attempt to bring it up to the point of being legislated.


The central government had all along been keen to give up the proposal for a comprehensive legislation for agricultural workers, but instead preferred to bring in some nominal welfare scheme. One such is paying a lump sum exgratia amount to the family of the rural worker in the event of death due to accident. The NDA government replaced that scheme with its Krishi Samajik Suraksha Yojana, launched in July 2001 in fifty districts in the country. It required a contribution of Re. 1 per day by the agricultural workers matched by a contribution of Rs. 2 by the government of India to a scheme implemented by the Life Insurance Corporation of India. The ministry of Finance, at the fag end of the NDA regime, took a decision to close this scheme, due to paucity of funds, retaining the same for the workers registered till 24.02.2004.


The present UPA regime also did repeat a similar exercise. In his budget speech this year, the finance minister announced: “… in order to signal the UPA government's concern for the welfare of unorganised workers, I propose to make a beginning. I propose to extend death and disability insurance cover through Life Insurance Corporation of India (LIC) to rural landless households under a new scheme called 'Aam Admi Bima Yojana' (AABY). … The head of the family or one earning member in the family will be insured. The central government will bear 50 per cent of the premium of Rs.200 per year per person and I would urge the state governments to come forward to bear the other 50 per cent on behalf of the beneficiaries”. This also remains a non-starter as there is not much enthusiasm on the part of the state governments to share the contribution, given the fact that there are schemes operated at the state level in some states at least and the finances of the states are under much stress. One need not be surprised if the UPA version of 'Aam Admi Bima Yojana' were to meet the same fate as that of NDA’s ‘Krishi Samajik Suraksha Yojana’!




In the same budget speech, it was noted: “One of the commitments made in the NCMP is that government will introduce a social security scheme for unorganised workers. A committee chaired by Dr. Arjun Sengupta has given its report which is under consideration.” The prime minster in his ‘Report to the People’ released on May 22, 2007, on the occasion of the third anniversary of UPA government, also noted: “the National Commission on Enterprises on Unorganised Sector, set up in September 2004 had already presented its report on social security and is presently processing two bills on conditions of work and livelihood promotions for the agricultural and non-agricultural workers”. The ministry of Labour has also come out with periodical revisions of its draft bill on unorganised sector workers, the latest one being its 2007 version put up on the website. The now defunct National Advisory Council had also forwarded in July 2005 a detailed note with a draft law to the government on the same subject. This issue has been under tripartite dialogue ever since the Second National Commission presented its report in June 2002 and there are several unanimous conclusions arrived at during successive sessions of the Indian Labour Conference. The union cabinet apparently has chosen to push all these developments aside to opt for its own course of putting in place a vague and skeletal enabling law, which is bound to be not more than a cosmic relief to these huge segments of workers and worse still be a cruel mockery of social safety!


Can such welfare schemes serve the intended purpose of catering to social security needs of the unorganised sector workers? Experience in the none-too-distant past testifies to the contrary. The NDA government also similarly shelved the proposal of a comprehensive legislation but launched, just on the eve of the general elections in 2004, a social security scheme for workers of the unorganised sector, offering to provide them old age pension, health insurance and personal accidental insurance cover for a monthly contribution of Rs. 50 and Rs. 100, depending on the age of the beneficiary. The fate of this unorganised sector workers’ social security scheme in January 2004, flagged off on a pilot basis in 50 districts of the country, is revealing. In a reply to starred question No. 248 in Rajya Sabha on March 8, 2006, the government admitted, “The Employees provident Fund Organisation, under instructions from the ministry of Labour, administered this scheme. About 3500 workers were enrolled under the scheme and around Rs. 17.5 lakh was collected as contribution. The contributions received from workers were utilised towards making premium payments under the universal health insurance scheme and personal accident insurance scheme for the relevant period. This scheme has since been closed”.
The present cabinet decision also seeks to provide for ‘a) life and disability cover; health benefits; old age protection; or any other benefit that will be decided by the central government’. There is no word in the PIB release on how the government proposes to fund the social security for the unorganised sector workers. As the prime minister has on the last two occasions of the NDA anniversaries harped on the LIC having carried out actuarial analysis for providing the social security net, one can expect the proposed scheme under the envisaged law will also require these hapless workers to buy their insurance cover! As such, the scheme can only be a non-starter!




The talk of providing a social safety net for the most vulnerable section of the workers in this country had been in the air ever since the ushering in of the economic liberalisation policies since 1991. Rather, this has been flaunted as a quid pro quo to carrying out of the much-hyped labour market reforms, giving the employers the much sought after flexibility in their handling of labour related maters. The duality in the approach of the successive governments at the centre in relation to these two issues is striking. On the labour market reforms, well-formulated proposals accompanied by concrete amendments and drafts of new legislations are brought out for discussion, some of them already approved by the union cabinet or even introduced in parliament. But, on the issue of welfare of unorganised sector workers, benevolent platitudes are showered aplenty but when it comes to specifics, the outcome is half-hearted and miserly. The UPA government has chosen to pursue the same track, dithering on the issue of comprehensive legislation, which had been the unanimous demand of the trade unions.


As a matter of fact, the government constituted a tripartite working group, as per conclusions arrived at in the 2005 Indian Labour Conference, ‘to examine all draft bills on the unorganised sector towards finalising the draft of one single bill’. This group headed by the secretary, Labour, held one preliminary meeting in June 2006, but had unceremoniously been pigeonholed, for reasons best known to the government.


Subsequently, the government came out with an action taken report on the conclusions of the Indian Labour Conference, wherein a view was expressed against the concept of a comprehensive legislation. This report in December 2006 stated, “It is our considered view in the ministry of Labour and Employment that we should move sequentially in a phased manner, initially extending some benefits of life/accidental insurance and survival benefits to a segment of the unorganised sector. On the basis of experience gained, we can then consider increasing the benefits as well as the coverage depending on the availability of funds. We can also, subsequently decide whether there is a need for an exhaustive legislation”.


Regrettably, it is this view, which is in total deviation from the commitment made in the National Common Minimum Programme (NCMP) that is obviously at the root of the present decision by the union cabinet. The proposed bill, the details of which are yet to be made public, is just an enabling legislation and the unorganised sector workers will be left in the lurch without any meaningful social security even.


What then we expect this government to do, if its avowed aim of providing ‘a social safety net for workers in the unorganised sector’ is to translate into tangible action?


First, the government should legislate two separate but comprehensive bills covering both the conditions of work as well as social security for (1) agricultural workers and (2) unorganised sector workers. This alone will ensure that the issues in respect of these two segments of workers are correctly bifurcated and clearly demarcated.


Second, the proposed legislations should cover all aspects of conditions of work, employment regulation and protection and social security benefits; coverage of all basic labour laws to be extended to the workers of these sectors; correct formulation of statutory minimum wages, as per scientific and well laid out norms, and its strict enforcement; ensure equal remuneration for women workers.


Third, the floor level social security for these utterly destitute and poorest sections of workers must be state funded, benefit defined and enrolment of workers should be on the basis of a nominal registration and renewal fee.


Fourth, the social security expenditure of the government as a proportion of the GDP is just 1.6 per cent in India, the lowest even in comparison to our Asian neighbours. Hence the government should act on the unanimous conclusion of the Indian Labour Conference, which had suggested a minimum of 3 per cent of GDP to be allocated for this purpose. Here it is worth recalling the fact that the trade unions have not lagged behind on the issue of funding the schemes for welfare of the unorganised sector workers. They have put on board a proposal for a social security levy on all wageworkers and the salaried class in the organised sector, subject to two conditions. One, a similar levy based on turnover or profit before tax be imposed on the employer class, above a specified threshold to take care of the small and tiny sectors. Two, the government must ensure budgetary allocations of at least 3 per cent of the GDP as its contribution to the corpus.


Fifth, there should be a National Social Security Authority, and not just an Advisory Board, entrusted with the task of evolving a comprehensive national policy on social security covering all sections of workers and ensuring its fullest implementation.


Last but not the least, the government should evolve the proposed legislations, in a transparent manner, involving the central trade unions and organisations of the agricultural workers, holding steadfast on to the ethos of tripartism.