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State Of Social Security In India UPSC NOTE


  • Considering the importance of the availability of labour force data at more frequent time intervals, the National Statistical Office (NSO) launched the Periodic Labour Force Survey (PLFS) in April 2017.

  • The objective of PLFS is primarily two fold:

  • To estimate the key employment and unemployment indicators (viz. Worker Population Ratio, Labour Force Participation Rate, Unemployment Rate) in the short time interval of three months for the urban areas only in the CWS.

  • To estimate employment and unemployment indicators in both usual Status and CWS in both rural and urban areas annually.

Current State of Social Security in India:

  • Around 53% of salaried workers lack social security benefits in India, as per the Periodic Labour Force Survey Annual Report 2021-22.

  • This absence of benefits includes provident funds, pensions, health care, and disability insurance.

  • Only 1.9% of the poorest 20% of India's workforce has access to any benefits.

  • Approximately 1.3% of India's active labor force, consisting of gig workers, have limited access to social security benefits.

  • Mercer CFS Global pension index ranked India's social security system at 40 out of 43 countries in 2021.

Issues with India's Social Security Policies:

  • Despite policy announcements, budget allocation for social security has been limited, leading to underutilization.

  • The National Social Security Fund allocated ₹1,000 crore for unorganized sector workers, which was inadequate compared to the estimated need.

  • A Comptroller and Auditor General of India (CAG) audit found significant amounts of allocated funds going unused in various social security schemes.

  • Old-age pension schemes have stagnated, and the allocation for social security has been poorly managed in certain cases.

  • Budget cuts affect the implementation of important social security schemes like the Mahatma Gandhi National Rural Employment Guarantee Act.

Informal Workforce in India:

  • About 91% of India's workforce operates in the informal sector, lacking social security coverage.

  • As India's population ages, workers in the informal sector will lack social protection.

  • The Code on Social Security (2020) aimed at formal enterprises and missed addressing informal ones.

Proposed Steps for India:

  • The expansion of the Employees' Provident Fund Organisation (EPFO) system for formal workers is recommended.

  • Informal workers with meaningful income could contribute partially, promoting formalization of informal enterprises.

  • The government should step in to support those unemployed or with inadequate earnings.

  • Providing social protection to the poorest 20% of the workforce is estimated to cost ₹1.37 trillion.

  • The Code on Social Security (2020) made strides but still needs improvements in coverage and employer involvement.

Challenges and Reforms:

  • The e-Shram platform could burden informal workers for registration, lacking employer responsibility.

  • Financing social security for various worker categories requires expansion of existing schemes and benefit portability.

  • Special focus is needed on domestic and migrant workers for expanded coverage and support.

  • Existing schemes like the Employees' Provident Fund (EPF), Employees' State Insurance Scheme (ESI), and National Social Assistance Programme (NSAP) need budgetary support and coverage expansion.

  • Administrative complexity and overlapping definitions should be addressed.

Raising Awareness and Future Directions:

  • A stronger effort is needed to raise awareness about available social security benefits among workers.

  • Organizations like the Self-Employed Women's Association can play a role in informing workers about their rights and government schemes.

  • India must consolidate and expand its social security schemes to provide universal coverage for its labor force, considering changing job dynamics.



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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: State Of Social Security In India UPSC NOTE
State Of Social Security In India UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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