Seied Beniamin Hosseini, Prof, Dr.Aisha. M. Sheriff ; Shima Azizi

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SJIF Impact Factor: 4.138 ISI Impact Factor (UAE): 0.815 Print ISSN: 2348 – 814X
EPRA International Journal of Environmental Economics, Commerce
& Educational Management (ECEM)
Volume: 4 March-April 2017-18
SOCIAL SECURITYIN INFORMALSECTOR: AMYTH OR
REALITY
Seied Beniamin Hosseini1
, Prof, Dr.Aisha. M. Sheriff2
& Shima Azizi3
1
PG Student in MBA, B.N. Bahadur Institute of Management Sciences (BIMS), University of Mysore,
Karnataka, India
2
Professor and Dean .B.N. Bahadur Institute of Management Sciences (BIMS), University of Mysore,
Karnataka, India
3
PhD Scholar in Law, Post-Graduate Department of Law & Research, University of Mysore,
Karnataka, India.
.
ABSTRACT
In the present study, the author is going to consider related constitutional rights and existing
regulations as well as roots and coverage of social security in unorganized sectors in India. In the
case of India, Social Security is a wide approach designed to prevent deprivation, assure the individual of
a basic minimum income for himself and his dependents and protecting individuals from any uncertainties.
The State bears a primary responsibility for developing an appropriate system to provide assistance and
protection to its workforce. Social Security is increasingly viewed as an integral part of development process.
Definitely, it will help the system to create a more positive attitude over the challenge of globalization and
technological changes. The objectives of the present study are to analyze the various constitutional rights and
existing regulations related to social security in India and specifically to examine the various problems belong
to India’s unorganized labours encounter to the pursuit of their life strategies. Furthermore, the researcher is
going to consider the state responsibility for the effective protection of unorganized labour’s welfare. This
study is based on secondary data. In this regard, various libraries were visited and some websites and online
journals were reviewed. The researcher through studying various regulations, and constitutional rights will
prove that this kind of change both the external and internal control method in Indian society such as,
stringent law and economic conditions as well as the independent economic status of unorganized labours and
existence of clear strategy to provide effective social security can reduce poverty among unorganized labours
in India.
KEYWORDS: Social Security, Unorganized Labour, Protection, Unorganized Sectors, Social Security
Act, Labour Law, ILO

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INTRODUCTION
The Indian Economy is characterized by
the existence of a vast majority of informal or
unorganized labour employment. As per the
Economic Survey 2015 to 2016, 90 percent of India’s
workforces include the self employed and
employed in unorganized sector. The Ministry of
Labour, Government of India has categorized the
unorganized labour force under four groups in
terms of first, occupation like Small and marginal
farmers, landless agricultural labourers, share
croppers, fishermen, those engaged in animal
husbandry, and etc, Secondly, Nature of
Employment like Attached agricultural labourers,
bonded labourers, migrant workers( Labourers
working on Salal Hydo Project Vs state of Jammu
& Kashmir and others, in this case , migrant
workmen employed in the project were being
denied the benefits of various labour laws), thirdly,
Distressed categories, Toddy tappers, Scavengers,
Carriers of head loads, Drivers of animal driven
vehicles, and finally Service categories like
Midwives, Domestic workers, Fishermen and
women, Barbers, Vegetable and fruit vendors,
News paper vendors etc. In addition to these four
categories, there exists a large section of
unorganized labour force such as cobblers,
Handicraft artisans, Handloom weavers, Lady
Tailors, Physically handicapped self employed
persons, Rikshaw pullers, Auto drivers and etc.
The underlying idea behind social security
measures is the responsibility of the society to
protect the working class that contributes to the
welfare of the society against hazards1
. It protects
entire family‘s health care and financial security
of a workman,. The social security can be provide
by institutional and non-institutional agencies. The
non-institutional agencies are the back bones of
the present social security programs which exists
from time of immemorial. India is a good example
of having non-institutional form of social security
measures in the world which are protected in joint
family set up and the caste system for the hardship
due to unemployment, economic difficulties, old
age and widowhood. This indicates that India had
its own social security system2
of self-sufficient
village economy; caste system; joint family system;
organizations of charity. The ideals of social
security ultimately became a social responsibility
which is largely depending on the resources and
needs of the country. India is a country where
economic needs are more resources and are less.
When independent India’s constitution was
drafted, social security was specially included in
List III to Schedule VII of the constitution and it
was made as the concurrent responsibility of the
Central and State Governments. A number of state
policies in respect of directive principles relating
to aspects of social security were incorporated in
the Indian Constitution. The initiatives in the form
of Acts such as the Workmen’s Compensation Act
(1923), the Industrial Disputes Act (1947), the
Employees State Insurance Act (1948), the
Minimum Wages Act (1948), etc. reveal attention
is given to the organized workers to attain different
kinds of welfare benefits such as social security.
Therefore, the above Acts are very negligible to
the unorganized workers. As the matter of fact,
providing social security to rural poor and
unorganized labour section is not as much as
expected and must be done. Both the Central and
State Governments have formulated certain
specific schemes to support an unorganized
worker which fails in meeting with the real needs
and requirements of the unorganized sector
labour force. Here The question is what constitutes
appropriate and adequate social security for the
vast mass of unorganized workers and their
dependents, what eligibility criteria, if any, ought
to be prescribed, what will be the scale of benefits
that the workers and their families are entitled to
receive. Aren’t the unorganized workers of this
country entitled to receive, in this 60th
year of the
Republic, minimum standards of social security
and labour rights? In fact a comprehensive Act
must be created cater to the security needs of the
unorganized sector such as Food, Nutrition, Health,
Housing, Employment, Income, Life and accident,
and old age in India.3

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OVERVIEW OF SOCIAL SECURITY
BACKGROUNDS IN INDIA
Today, most countries have some type of
social security system. the most common type of
program is for old-age, disability, and survivors’
pensions, followed by programs for benefits for
work injuries and occupational diseases, sickness
and maternity, family allowances and
unemployment. In international context,
International Labour Organization (ILO) founded
in year 1919 for promoting social justice and
improving the working and living conditions of
workers throughout the world. It made a
beginning in this field by emphasizing the
importance of comprehensive social security
measures in the preamble to its constitution, in
which it promised “protection of the worker against
sickness, disease and injury arising out of his
employment, the protection of children, young
persons and women, provision for old age and
injury 4
The recognition of social security as a basic
human right was enshrined in the 1948 Universal
Declaration of Human Rights in Article 22.
In Indian scenario, the Apprentices Act
1961, figures the first law relating to labour.5
It
was enacted for enabling children to learn crafts,
and trade to seek employment to gain a livelihood
when they come to the full age. Cotton and jute
mills have been established during 1850s it can
be marked as beginning of factory system in India.6
Fatal Accidents Act 1855, enacted for providing
compensation to legal heirs of these employees
where by an actionable wrong death occurred.7
Indian Merchant Shipping Act 1859 was passed to
regulate employment of seamen and provides
better health to them. In the same year Workmen’s
Breach of Contract Act 1859 was passed and
provides criminal penalties for workers for breach
of contract of service. Employers and Workmen
(Disputes) Act 1860, were provide speedy and
summary settlement of disputes between
employers and workmen.8
By 1881, factory system
clearly emerged in India, but workers did not
organize themselves simultaneously with the
industrialization and Indian Factories Act18819
was
passed in order to improve the conditions of
plantations labours. In order to secure safety and
health conditions of work in mines Indian Mines
Act 1991were passed. It is evident that, all these
early legislations were enacted in connection with
specified classes of industries and but did not
extend to the entire working class of workers.
India is a member of ILO since its
inception in year 1919. ILO has adopted many
recommendations and conventions casting
different types of liability on Government
industries, and labours.10
India passed a major
enactment called Workmen’s Compensation Act,
1923, with an object to eliminate hardship caused
to workmen injured, through providing prompt
payment of benefits regardless of fault from their
side and with minimum legal formalities. It
imposed many obligation upon employers to pay
compensation to workers for accidents arising in
the course of employment, death, and
disablement11
respectively Government of India in
year 1925 enacted another Act, Provident Fund Act
1925.12
Royal Commission on Labour was
appointed in 1929 which recommended a scheme
for health insurance to industrial workers on a
contributory basis and provisions against old age
and payment of gratuity to them. The Government
of India Fatal Accidents Act laid down the subjects
on which Federal Legislature could pass industrial
laws. During the period of 1919 to 1942, there was
a great progress in modifying old laws13
and in
enacting of new ones14
were passed for specifically
addressing certain industrial establishments15
.
These were not merely intended for regulating
employment in the industries but attempted to give
better conditions of employment like shorter
hours of work, weekly holidays, safety of premises
and payment for overtime, rest period and paid
holidays. All these changes16
were made mainly
due to the emergence of ILO. In 1943, ‘Standing
Labour Committee’ was appointed by the
Government of India. The Constitution of this
Committee and Indian Labour Conference effected
remarkable changes in the attitude of Government
in respect of labour were this committee
constituted for the purpose of formulating a
scheme for health insurance for individual
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workers. In 1947, India became independent and
interim government formed its cause greater to
worker’s legitimate ambitions and accelerated
harmony in the industrial relations. The interim
government formulated a five years plan for the
welfare of the labour. To organization of the health
insurance scheme, revision of the Workmen’s
Compensation Act, central law for maternity
benefit and extension to other classes of workers
the right within specific limits to leave with
allowances during sickness.17
Industrial Disputes
Act 1947 introduced an adjudicating system where
an industrial worker can raise an industrial
dispute. Gratuity it was considered as a cause of
industrial dispute and it recognized as a legal
right. Mica Mines Labour Welfare Fund Act, 1946
and Coal Mines Provident Fund and Bonus Scheme
Act, 1948 were enacted and these provided for levy
of access on the output of the industry to finance
housing and such other projects like nutrition,
provision for water supply, educational and
recreational facilities of workmen employed in that
sector. Employee’s State Insurance Act 1948
introduced benefits in the event of sickness,
scheme of compulsory health insurance, maternity
and employment injury to workmen. The
Employees’ Provident Funds & Miscellaneous
Provisions Act, 1952 which applies to specific
scheduled factories and establishments employing
20 or more employees and ensures terminal
benefits to provident fund, superannuation
pension, and family pension in case of death
during service. The Payment of Gratuity Act, 1972,
which provides 15 days wages for each year of
service to employees who have worked for five
years or more in establishments having a
minimum of 10 workers. Separate Provident fund
legislation exists for employee who employed in
Tea Plantations, Coal Mines, and seamen in the
State of Assam. The Maternity Benefit Act 1961
provides 12 weeks wages during maternity and
paid leave in certain other related contingencies.
Hence, the government made many efforts to
implement welfare provisions for the labour force
in India, but due to lack of interest of provincial
governments in its implementation and
supervision and lack of addressing the issues
related to needs of the unorganized sector such
as Food, Nutrition, Health, Housing, Employment,
Income, Life and accident and etc, did not yield
the intended result.
CONSTITUTIONAL RIGHTS AND
THE UNORGANIZED SECTOR
WORKERS’ SOCIAL SECURITY ACT,
2008
In the Constitution of India from 1950,
Articles 14-16, 19(1)(c), 23-24, 38, and 41-43A
directly concern about labour rights. Article 14
states that everyone should be equal before the
law; Article 15 specifically says that the state should
not discriminate against citizen, and Article 16
extends the right of “equality of opportunity” for
appointment or employment under the state.
Article 19(1)(c) gives every citizen a specific right
“to form unions or associations “. Article 23
prohibits all forced labour and trafficking, while
Article 24 prohibits child labour under 14 years
old in a factory, mine or any other hazardous
industry “. Articles 38-39, and 41-43A, however,
like all rights listed in Part IV of the Constitution
are not enforceable by courts, rather than creating
an inspirational “duty of the State to apply these
principles in making laws”.18
The original
justification for leaving such principles
unenforceable by the courts was that
democratically accountable institutions ought to
be left with discretion, given the demands they
could create on the state for funding from general
taxation, although such views have since become
controversial. Article 38(1) says that in general,
the state should “strive to promote the welfare of
the people” with a “social order in which justice,
social, economic and political, shall inform all the
institutions of national life. In Article 38(2) says
that state should “minimize the inequalities in
income” and based on all other statuses. Article
41 creates a “right to work”, which the National
Rural Employment Guarantee Act 2005 which
attempts to put it into practice. Article 42 requires
the state to “make provision for securing the
human conditions of work and maternity relief”.
Article 43 says that workers should have the right

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to a living wage and “conditions of work ensuring
a decent standard of life”. Article 43A, inserted by
the Forty-second Amendment of the Constitution
of India in 1976,19
creates a constitutional right to
codetermination by requiring the state to legislate
to “secure the participation of workers in the
management of undertakings”.
Moreover, the Unorganized Sector
Workers’ Social Security Act, 2008, primary aims
at providing social security and welfare of
unorganized sector workers. The Act envisages
that the state government may formulate suitable
welfare schemes including provident fund,
employment injury, benefit, housing, educational
schemes for children and which may be wholly
funded either by the central government or shared
by Central and State Government or along with
the contribution from employers. This Act also
lacks of fund allocation which is according to the
discretion of Central or State Government at the
present time. The fact is that the social security
provided by this Act does not recognize social
security as a right. Furthermore, the Act is only
neither advisory body and nor an empowered
body. Therefore this Act does not provide any
securities which were expected to unorganized
sector.
UNORGANIZED WORKERS
An Unorganized Sector is defined as the
sector where the elements of organized sector are
absent. In the absence of analytical definition, the
landscape of the unorganized sector becomes
synonymous with the kaleidoscope of unregulated,
low-paid poorly and skilled workers. The
unorganized sector consists of all private
enterprises having less than 10 workers in total,
operating in a partnership or proprietary basis.
The informal sector is not a closed and separate
circuit of work and labour. There are different
terminologies used to signify the unorganized
sector like informal sector, informal economy, and
even informal labour which often highlights the
most affected part of the sector, namely, the labour.
“Informal labour is a labour whose use is not
governed either by collective agreements or by
state regulations between employers and
workers.” India’s workforce comprises nearly 90
per cent in the unorganized segment, with the
entire farm sector falling under the informal
category, while only one-fifth of the non-farm
workers are found in the organized segment.
Around 487 million workers are available in India,
of which over 94 per cent work in unorganized,
unincorporated enterprises. The growth of formal
employment in the India has always been less than
total employment, indicating a faster growth of
employment in the informal sector which makes
it vulnerable to socio- economic hardships. The
major characteristics of the unorganized workers
are included; The workplace is scattered and
fragmented, in fact, there is no formal employer
– employee relationship, in rural areas, the
unorganized labour force is highly stratified on
caste and community considerations and in urban
areas while such considerations are much less, it
cannot be said that it is altogether absent as the
bulk of the unorganized workers in urban areas
are basically migrant workers from rural areas.
Usually, workers in the unorganized sector are
subject to indebtedness and bondage as their
meager income cannot meet with their livelihood
needs and they are subject to exploitation
significantly by the rest of the society. They receive
poor working conditions especially wages much
below that in the formal sector, even for closely
comparable jobs, Primitive production
technologies and feudal production relations are
rampant in the unorganized sector, and they do
not permit or encourage the workmen to imbibe
and assimilate higher technologies and better
production relations, The unorganized workers do
not receive sufficient attention from the trade
unions.20
In the case “Balaram Sahu and ORS Vs
State of Orissa and ORS”, the casual workers in
Rengali Power Project of state of Orissa in their
appeal claimed that they were entitled to equal
wages on the same basis as paid to regular
employees as they were discharging the same
duties and function. Therefore, it is recommended
that all organized workers including those who
go in and out of the formal and informal set up
must be brought under the ambit of law regarding
to effective protection of unorganized labourers.
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Problems of Unorganized Sector include;
90 per cent of workforce in vast informal sector,
little awareness of workplace hazards, living areas
close to work areas, extended work hours,
exploitation, no concept of occupational safety
services, lack of implementation of Health and
Safety legislation. Furthermore the women
workers may encounter desperately low wages,
disease causing environments and fraudulent
contractors.21
Moreover, according to 2001 Census, India
had 12.6 million children, aged 5–14, who work
either full-time or part-time. Poverty, lack of
schools, poor education infrastructure and growth
of unorganized economy are considered as the
most important causes of child labour in India
while Article 24 of India’s constitution prohibits
child labour, but only in factories, mines or
hazardous employment. Nevertheless, child labour
is observed in almost all unorganized, informal,
and small scale sectors of the Indian economy. 22
In this regard it can be mentioned here that the
case” Bandha Mukti Morcha Vs Union of India &
ORS” Article 32 of Indian Constitution stops
employment of children. But in carpet industry in
Uttar Pradesh State, were employed children below
14 years. The main contention of the petitioner
group is that employment of the children in any
industry or hazardous industry is violation of
Article 24 of Indian Constitution.
As the matter of fact that much has been
done in providing social security cover to the rural
poor and the unorganized labour force, the country
has made some beginning in that direction. Both
the central and state governments have formulated
certain specific schemes to support unorganized
workers which fail in meeting with the real needs
and requirements of the unorganized sector
labour force and comprehensive Act, catering to
the security needs of the unorganized sector such
as Food, Nutrition, Health, Housing, Employment,
Income, Life and accident, and old age remains a
dream in India.
CONCLUSION
In a nutshell, the present social security
system in India is under distress because of
multiplicity of laws, shortage of coverage, and lack
of policy and insecurity of implementation
mechanism. Further lack of employment
opportunities is the key concern, 90 percent of
the workforce is in the informal sector which is
largely unrecorded and the system of payroll
deduction is difficult to apply. Even today 12.5 per
cent of the world’s older people live in India. The
overwhelming majority of these depend on
transfers from their own children. The historical
overview of labour laws in India reveals the fact
that in India social security is not an alien concept.
Therefore, Understanding about how the legal
system works in other countries will definitely
help the government of India in granting
unorganized workers social protection and basic
rights. Moreover, the law has failed to endow social
security, welfare and Unorganized Sector Workers’
Social Security Act, 2008 suffers from a serious
lack of legislative policy and intent as well.
Unfortunately, standards and labour laws relating
to the unorganized sectors are ineffective and
inadequate.
Notes
1
Harry Calvert, Social Security Law, Sweet & Maxwell, London
(1978), p.38.
2
Mamuria & Doshi, Labour Problems and Social Welfare in India,
KitabMahal Pvt. Ltd., Allahabad (1966), p.339.
3
Tomy Jacob, The Unorganized sector in India, 2014.
4
Constitutionof ILOandStandingOrdersof theInternational l Labour
Conference (Geneva, ILO 1955), p.3.
5
S.R.Samanth, Industrial Jurisprudence, M/s.N.M.TripathiP.Ltd.,
Bombay, p.54.
6
Factory System (India) Report of the Commission, question by Mr
Anderson and replied by Lord George Hamilton, HC Deb. 10 April
1877 Vol. 233.Retrieved from:,http://hansard.millbanksystems. com.
commons, (accessedon 22/01/2017)
7
Compensation was given only if it is proved in the Court of law that
the accident was not due to obvious neglect of workers.
8
This Act was the forerunner of Industrial Disputes Act, 1947 which
played an important role in modern industrial life.
9
It was re-enacted in 1911.
10
Amongthem Indiaratified only 3 conventionsrelatingto workmen’s
compensation, on occupational diseases and equality of treatment in
accident compensation.
11
The Act was amended 7 times during this period.
12
This Act is enacted with a view to set up a fund which is to be
maintained by Government and Semi-government organizations.

7. 93 Print ISSN: 2348 – 814X
13
IndianMerchant ShippingAct, 1923;AssamLabour andEmigration
Act, 1893; Indian Mines Act, 1901; Factories Act, 1911 improved up
in their scope and object. Employers and Workmen (Disputes Act,
1860 and Indian Fatal Accidents Act, 1855 were reenacted as
Workmen’s compensation Act and Indian Trade Disputes Act.
14
Tea Districts Emigrant Labour Act, 1932; Indian Mines Act, 1923
and Indian Factories Act, 1934.
15
Mines Maternity Benefit Act, 1941; Indian Motor Vehicles Act,
1939; Indian DockLabourer’s Act, 1934
16
Children (Pledging of Labour) Act, 1933; Payment of Wages Act,
1936; Employees Liability Act, 1938; Employment of Children Act,
1938; Weekly Holidays Act, 1942 are some of the new enactments
passed during this period relating to labour. These new legislations
extend to the entire working class as distinguished from workers in
specific industry
17
Report of the National Commission on Labour I, at p.163, retrieved
from:
https://casi.sas.upenn.edu/sites/casi.sas.upenn.edu/files/iit/
National%20Commission%20on%20Labour%20Report.pdf,(accessed
on: 17 June, 2016).
18
Constitution of India, Article 37; Central Government Act , states
that,ApplicationoftheprinciplescontainedinthisPartTheprovisions
contained in this Part shall not be enforceable by any court, but the
principles therein laid down are nevertheless fundamental in the
governance of thecountry and it shall be the duty of theState to apply
these principles in making laws.
19
Constitution of India, Article 42, states that, Provision for just and
humane conditions of work and maternity relief TheState shall make
provision for securing just and humane conditions of work and for
maternity relief, Amendment Act1976.
20
Ministry of Labour and Employment, Unorganized labour force in
India,retrievedfrom:http://vikaspedia.in/social-welfare/unorganised-
sector-1/categories-of-unorganised-labour-force, (accessed on 22
January, 2017)
21
KeyLabourIssuesin the Unorganized Sector,retrievedfrom; http:/
/www.visva bharati.ac.in/InstitutionsCentresSchools/Contents/cjmc-
report-080413.pdf , (accessedon 22 January,2017)
22
Labour in india, retrieved from; https://en.wikipedia.org/wiki/
Labour_in_India (accessed on22 January, 2017)
REFERENCES
1. Children (Pledging of Labour) Act, 1933; Payment
ofWages Act, 1936; Employees Liability Act, 1938;
Employment of ChildrenAct,1938;Weekly Holidays
Act, 1942.
2. Constitution of ILO and Standing Orders of the
International l Labour Conference ,Geneva, ILO
1955, S.R.Samanth, Industrial Jurisprudence, M/
s.N.M.TripathiP. Ltd.,Bombay.
3. Constitution of India,Article 37.
4. Constitution of India 42AmendmentAct1976.From
http://indiacode.nic.in/coiweb/amend/
amend42.htm
5. Factory system (India) Report of the Commission,
question by MrAnderson and replied by Lord George
Hamilton, HC Deb. 10 April 1877Vol. 233, from
http://hansard.millbanksystems.com. commons,
1877,Accessed on 22 January, 2017
6. Indian Merchant ShippingAct,1923;Assam Labour
and EmigrationAct,1893;Indian Mines Act,1901;
Factories Act, 1911.
7. Harry Calvert,Social Security Law,Sweet & Maxwell,
London (1978).
8. Mamuria & Doshi, Labour Problems and Social
Welfare in India, KitabMahal Pvt. Ltd., Allahabad
(1966).
9. Mines Maternity Benefit Act, 1941; Indian Motor
Vehicles Act, 1939; Indian Dock Labourer’s Act,
1934.
10. Report of the National Commission on Labour I,from
http://www.prsindia.org/uploads/media/
1237548159/NLCII-report.pdf ,accessed on 22
January,2017
11. Ministry of Labour and Employment, Unorganized
labour force in India, retrieved from: http://
vikaspedia.in/social-welfare/unorganised-sector-
1/categories-of-unorganised-labour-force, Accessed
on 22 January,2017.
12. Key Labour Issues in the UnorganizedSector,retrieved
from;http://www.visva-bharati.ac.in/
InstitutionsCentresSchools/Contents/cjmc-report-
080413.pdf ,Accessed on 22 January,2017
13. Labour in india, retrieved from; https://
en.wikipedia.org/wiki/Labour_in_India ,Accessed
on 22 January,2017
Social Security in Informal Sector: A Myth or Reality Seied Beniamin Hosseini, Prof, Dr.Aisha. M. Sheriff & Shima Azizi