This document discusses social security in India. It begins by defining social security and explaining why it is needed. It then describes how social security works, providing cash or in-kind benefits for needs like healthcare. The document notes that Germany started the first social security scheme in 1883. In India, the joint family system traditionally provided social security, but this has declined with urbanization. The document outlines key social security laws in India like ESI, EPF, and maternity benefits acts. However, coverage remains low as 92% of Indian workers are in the informal sector without these protections. It concludes by noting India's social security system differs significantly from developed nations due to its large informal workforce.

1. RAJEEV KUMAR
MSW (TISS, MUMBAI)
M.PHIL (CIP, RANCHI)
DOCTORAL FELLOW, IIT KHARAGPUR
Social Security

2. What is Social Security?
Any of the measures established by legislation to
maintain individual or family income or to provide
income when some or all sources of income are
disrupted or terminated or when exceptionally heavy
expenditures have to be incurred (e.g., in bringing up
children or paying for health care)

3. Why Social Security?
Social security may provide cash benefits to persons
faced with sickness and disability, unemployment,
crop failure, loss of the marital partner, maternity,
responsibility for the care of young children, or
retirement from work

4. How Social Security works?
 Social security benefits may be provided in cash or
kind for medical need, rehabilitation, domestic help
during illness at home, legal aid, or funeral expenses
 It acts as a facilitator – it helps people to plan their
own future through insurance and assistance.

5. When it was started?
 Germany was the first country to introduce Social
security scheme (1883)
 each member of a particular trade (blacksmiths,
painters, weavers etc) was required to contribute at
regular intervals;
 Money from this fund was used for food, lodging,
hospital and funeral expenses of aged and disabled
members.
 In USA, Social Security Act came into existence in
1935.

6. Social Security in India
 India has always had a Joint Family system that took
care of the social security needs.
 However with rise of migration, urbanization,
nuclear families and demographic changes, Joint
family system has declined. Hence we need a formal
system of social security.

7. Laws in India
 Social Security and labour welfare falls under Concurrent list,
it means both union and state Government can make laws
regarding these topics.
 (List III in the Seventh Schedule of the Constitution of India)
 Item No. 23
 Social Security and insurance,
 employment and unemployment.
 Item No. 24
 Welfare of Labour including conditions of work,
 provident funds,
 employers’ liability,
 workmen’s compensation,
 invalidity and old age pension and maternity benefits.

8. Part IV Directive Principles of State Policy
Article 41
 Right to work, to education and to public assistance in
certain cases
 State shall, within the limits of its economic capacity and
development, make effective provision for securing the
right to work, to education and to public assistance in
cases of unemployment, old age, sickness and
disablement, and in other cases of undeserved want.
Article 42
 Provision for just and humane conditions of work and
maternity relief
 State shall make provision for securing just and humane
conditions of work and for maternity relief.

9. Difference between Organized and Unorganized
Sectors
Organized sector
 includes primarily those establishments which are
covered by the Factories Act, 1948, the Shops and
Commercial Establishments Acts of State
Governments, the Industrial Employment Standing
Orders Act, 1946 etc.
 This sector already has social security benefits under
above laws.
 Examples: employees of union and state
Government, army, navy, airforce, Multinational
companies, Infosys, TCS and so on.

10. Difference of unorganized sectors in urban and
rural areas

11. Unorganized sector in rural area
 landless agricultural
labourers
 small and marginal farmers
 share croppers
 persons engaged in
 animal husbandry
 fishing
 horticulture
 bee-keeping
 forest workers
 rural artisans

12. Unorganized sectors in urban India
 street vendors
 hawkers
 head load workers
 cobblers
 tin smiths
 garment makers
 Construction workers

13. Plight of unorganized sector
 Unorganized sector doesn’t have labour law
coverage. These are seasonal and temporary nature
of occupations.
 Casual nature of work, labour mobility is high hence
bargaining power is low.

14. Social security laws in India

15. Employees’ State Insurance Act,
1948 (ESI Act)
 covers factories and establishments with 10 or more
employees
 Provides medical care to employees and their
families.
 Provides Cash benefits during sickness and
maternity
 Monthly pension after death or permanent disability.

16. Employees’ Provident Funds Act,
1952
 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.

17. Workmen’s Compensation Act, 1923
(WC Act)
 Requires payment of compensation to the workman
or his family in cases of employment related injuries
resulting in death or disability.

18. Maternity Benefit Act, 1961 (M.B. Act)
 provides for 12 weeks wages during maternity as well
as paid leave in certain other related contingencies.

19. Payment of Gratuity Act, 1972 (P.G. Act)
 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.

20. How far we are equal to developed countries ?

21. Social Security In India : How Different
From Developed Nations
 We do not have an existing universal social security
system
 92% of the workforce is in the informal sector which is
largely unrecorded
 today 1/8th of the world’s older people live in India. The
overwhelming majority of these depend on transfers
from their children.
 Addressing social security concerns with particular
reference to retirement income for worker
 In India the coverage gap i.e. workers who do not have
access to any formal scheme for old-age income
provisioning constitute about 92% of the estimated
workforce of 400 million people.

22. Then?
What is left with us?

23. Provident Fund
Here the employers to contribute to a provident
scheme providing a lump-sum payment in the event
of death or disability or on retirement.

24. Disadvantages of Provident Fund
 Money is inadequate for risks occurring early in
working life.
 Provident funds are generally invested in
government securities, which have very low interest
rate (~8%) compared to other investment options
such as mutual fund or even Bank fixed deposits
 Inflation erodes the real value of savings.
 But From the point of view of government, Provident
Fund is attractive because it generates forced savings
that can be used to finance national development
plans.

25. Suggestive reading
 Yojna, July 2017 (Special issue on Social Security)
 How effective are social security and welfare in
India? By Anumeha Yadav: Article Published in “The
Hindu” on JANUARY 26, 2015

26. K E E P L E A R N I N G
Thank you