A Comprative study on social security legislations for workmen: India and the USA

Introduction

The term “Social Security” has its origins in ancient India, as described in a text dealing with people’s protection. Hindu Joint Families are more familiar with the “Original Cell of Security.”

Furthermore, throughout the Vedic period, a group of merchants known as “Guilds” or artisans worked during disasters to protect the safety of life and property. Abraham Epstein popularised the notion in the United States through his organisation, the American Association for Social Security.

The concept originally incorporated the idea of key employees earning retirement benefits. The 100th anniversary of Abraham Epstein’s birth, who is largely recognised with popularising the term “social security” in this country and around the world, in April 20, 1992.

President Roosevelt signed the Social Security Act into law on August 14, 1935. In addition to many measures for general welfare, the new Act established a social insurance programme to provide a continued income to retired workers age 65 and older after retirement.

Social security under different instruments

 The Unorganized Workers’ Social Security Act, 2008

Recognizing the need to provide social security to unorganized workers, whether informal or formal, the government enacted the Unorganized Workers’ Social Security Act in 2008. According to the Unorganized Social Security Act of 2008, an unorganized worker is described as a “home-based worker, self-employed worker, or wage worker in the unorganized sector, as well as a person in the organized sector who is not covered by any of the Acts indicated in Schedule II to this Act.

Universal Declaration of Human Rights (UDHR)

1. Article 22 of UDHR ensures the right to social security.
2. b) Article 25 affirms everyone’s right to security in the event of unemployment, sickness, disability, widowhood, old age, or any inability to work due to circumstances beyond his or her control.

International Covenant on Economic, Social, and Cultural Rights (ICESCR)

1. a) Art 9 of ICESCR recognizes the right to social security for everyone.
2. b) Art 10 (2) recognizes the right of working mothers “to adequate social security benefits.”[1]
3. c) Art 10 (3) requires states parties to undertake special measures of protection and assistance for children and young persons.

Convention on the elimination of all kinds of discrimination against women

Art. 11(1)(e) of this convention obligates states parties to eliminate discrimination against women in the field of employment, and to ensure equal rights between men and women, in particular the right to social security, particularly in cases of retirement, unemployment, sickness, invalidity and old age and other incapacities to work, as well as the right to paid leave.

1. b) Art. 11(2)(b) requires state parties to adopt appropriate measures to introduce social benefits during maternity leave.

International labor standards on social security

In response to the universal need for protection from specific life dangers and social requirements, social security is a fundamental right. Effective social security systems ensure the health and financial stability, which helps to avoid and reduce poverty and inequality and to advance social inclusion and human dignity.[2]

They do this by providing benefits, whether monetary or in-kind, that are meant to guarantee access to healthcare and other services as well as ongoing financial security, particularly in the event of illness, unemployment, employment injury, maternity, family responsibilities, incapacity, or the death of the family breadwinner, as well as during retirement and old age.

Criteria of ILO to describe social security systems

Three criteria are used by the International Labour Organization (ILO) to describe social security systems. First, the system’s goal must be to provide curative or preventative medical treatment, to retain income in the event of an unintentional loss of wages or of a significant portion of earnings, or to provide supplemental income to those who are responsible for taking care of a family.

Second, a public, semipublic, or autonomous body must be subject to law that grants it certain individual rights or imposes certain duties on it. Third, the administration of the system needs to be in the hands of a public, semipublic, or autonomous body.

The Conventions and Recommendations that make up the ILO’s framework of standards for social security are distinctive in that they provide minimal protection requirements to direct the creation of benefit programs and national social security systems based on best practices from all around the[3] world.

As a result, they are founded on the idea that there is no one universal model of social security and that each nation must adopt the necessary safeguards.

Additionally, the Committee of Experts’ 2019 General Survey, which focuses on universal social security for life in dignity and health and will be discussed by ILO members at the International Labour Conference in 2019, includes this recommendation.

ILO instruments for social security

Social Security (Minimum Standards) Convention, 1952

The minimum standards for social security benefit levels and the terms under which they are provided are outlined in this convention. It includes benefits for medical care, illness, unemployment, old age, workplace injuries, family, maternity, invalidity, and survivors. These are the nine main social security sections.

Social Protection Floors Recommendation, 2012

According to the guidelines outlined in the ILO social security standards, this instrument offers guidance on introducing or maintaining social protection floors and on implementing social protection floors as part of strategies to extend higher levels of social security to as many people as possible.

Maintenance of Social Security Rights Convention, 1982

These laws provide some social security rights and benefits for migratory employees, who must deal with the issue of losing their eligibility for social security benefits they had in their home country.

Criticism against social security

The high expense of social security has been blamed for industrialized economies’ slow economic development after 1973, according to certain arguments. There are three versions of the argument.

First, it is said that receiving a lot of unemployment benefits makes taking paid job less appealing.

Second, refusal to pay taxes and contributions results in increased wage demands, inflation, and budget deficits.

Third, it is asserted that people are less likely to save since they are entitled to social security payments; this reduces investment and, consequently, economic development. [4]

For all of these reasons, social security is alleged to have caused or at least contributed to both sluggish growth and high unemployment rates.[5]

Social security in India

The need for social security exists at the roots of poverty. India is a one-of-a-kind example of a non-institutional form of social security that serves as the foundation of the current social security system.

As an example, consider the joint family culture, and the vulnerable and unhappy are safeguarded this includes family members who are unemployed, experiencing financial hardship, are elderly, are widowed, etc.

Thus, India has had its own social security system since antiquity in the shape of

(a) self-sufficient village economy

(b) caste structure

(c) joint family

(d) charitable organization.

Pre-Independence

With the introduction of the industrial system in India in 1850, employees were forced to labor in deplorable conditions.

The acts that were brought at the era of post-independence were –

• Indian Merchant Act Shipping Act 1860
• Employees And workmen dispute Act 1881
• Indian Factory act 1892
• Island Emigration Act 1901
• India Mines Act 1919

Post-Independence Era

The acts that were brought up during Post Independence era were –

• 1947 – Interim Government – included welfare plan for laborers in 5-year plans
• 1947 – Industrial Disputes Act including Gratuity as legal right.
• 1948 – Employers State Insurance Act
• 1948 – Coal Mines Provident Fund and Bonus Scheme Act
• 1948 – Employees State Insurance Act
• 1948 – Employees Provident Fund and Misc. Act
• 1949 – Payment of Gratuity Act
• 1952 – Employees provident fund Act was passed
• 1954 – India adopted a socialistic pattern of society
• 1961- Maternity Benefit Act.

Legal framework

The Preamble affirms that India will be a sovereign, socialist, secular democratic republic that guarantees justice, liberty, equality, and fraternity to all of its people.

Concurrent List- Social Security and labor welfare fall under the Concurrent list, which means both the union and state Government can make laws on these topics. (List III in the Seventh Schedule of the Constitution of India)

1. Item No. 23
2. Social Security and insurance,
3. Employment and unemployment.
4. Item No. 24
5. Welfare of Labor including conditions of work,
6. g) Provident funds
7. h) Employers’ liability
8. Workmen’s compensation
9. Invalidity and old age pension and maternity benefits

Part IV – DPSP

• Article 38 (i)- Directs the state to promote people’s welfare by guaranteeing and safeguarding as efficiently as possible a social order in which social, economic, and political fairness shall inform all institutions of national life.
• Article 38 (ii)- The 44rth amendment added clause (2) which directs the state to minimize the Irregularities in income and to endeavor to eliminate inequalities in status, facilities and opportunities not only amongst individuals but also group of people residing in Different vocations.
• Article 39- Lays down certain specific objectives clauses (a), (b) and (c) particularly lay down the Norms for an egalitarian operation of economic and social system of the country.
• 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- Just and humane working conditions, as well as maternity leave.

State shall make provisions for securing just and humane conditions of work and for maternity relief.

Social security laws in India

• Employees’ State Insurance Act, 1948 (ESI Act)
• Employees’ Provident Funds Act, 1952.
• Workmen’s Compensation Act, 1923 (WC Act).
• Maternity Benefit Act, 1961 (M.B. Act)
• Payment of Gratuity Act, 1972 (P.G. Act).

Schemes of social security in India

• Swarnjayanti Gram Swarojgar Yojana
• Swarna Jayanti Shahari Rojgar Yojana
• Prime Minister’s Employment Generation Programme
• Mahatma Gandhi National Rural Employment Guarantee Act, 2005
• Handloom Weavers’ comprehensive Welfare Schemes
• Handicraft Artisans’ comprehensive Welfare Schemes
• Pension to Master craft persons
• National Scheme for Welfare of Fishermen and Training and Extension
• Janani Surkasha Yojana
• National Family Benefits Scheme
• Janshree Bima Yojana New Pension Schemes (Swavalamban scheme) through various Ministries/Departments.

The Ministry of Labor & Employment has knowledgeable Rajya Sabha that extra than 28 crore unorganized workers have been registered on e-Sharm Portal and the authorities is formulating social security Schemes for unorganized people.

Social security in the USA

USA: Social security administration

SSA main slogan is Securing today and tomorrow.

The original mission for Social Security in US was to promote economic security for its nation’s people. Social Security is not only a retirement program, in addition to that providing financial benefits, information, and tools to help support workers and their families in every community across America.

Virtually all-American employees may access the cash benefits provided by Social Security. National Government. The majority of American employees rely on Social Security at some point in their life, benefits. If individuals become handicapped and are unable to work, it may be throughout their working life. It might also be when they retire and begin receiving Social Security retirement payments.

They may be qualified for Social Security survivors’ payments in the event that a worker dies while continuing to work (and collecting Social Security disability benefits).

The Social Security Administration is responsible for managing Social Security (SSA). They oversee the following three primary initiatives:

• Social security retirement benefits
• Social security Survivors’ benefits
• Social security Disability benefits

All three of these Social Security systems are financed by payroll tax deductions, which implies that every American worker. As soon as you enrol in the Social Security programme, you start accruing credits for future benefits. You can submit an application to the Social Security Administration to receive benefits once you are qualified.

• Millions of Americans rely on Social Security for economic security, including retirees, disabled people, and families of retired, disabled, or deceased workers.
• In order to enhance economic stability, President Franklin D. Roosevelt signed the Social Security Act into law 1974. The Act was part of his New Deal programmed to help the United States recover from the 1930s Great Depression. It established a social insurance programmed to compensate for retired workers above the age of 65 an income after retirement.
• In 1939, the program was expanded to include survivors’ insurance for the families of deceased workers, and in 1956, it was expanded again to include disability insurance for disabled workers and their family members.
• Medicare began offering health insurance to its enrollees in 1965. The Supplemental Security Income (SSI) programme has been administered by Social Security since 1972.
• It is a needs-based programme supported by the general fund of the United States rather by Social Security withholdings, and it provides payments to those with limited income and resources who are 65 or older, blind, or crippled.
• Children with disabilities are also eligible for SSI.
• Social Security is the most successful anti-poverty program in America’s history.

The following are the larger and more well-known Social Security Act programs

• Federal Old-Age (Retirement), Survivors, and Disability Insurance, OASDI
• Temporary Assistance for Needy Families, TANF
• Health Insurance for Aged and Disabled, Medicare
• Grants to States for Medical Assistance Programs for low-income citizens, Medicaid
• State Children’s Health Insurance Program for low-income citizens, SCHIP
• Supplemental Security Income, SSI

Two of these programmes are managed by the Social Security Administration (SSA) (OASDI and SSI).

India SSA agreement

• In order to avoid duplication of Social Security Schemes, it is also reported that India is negotiating Social Security Agreements (SSAs) with the United States and the United Kingdom.
• [6]A bilateral agreement called the SSA between India and a foreign nation was created to safeguard the rights of cross-border workers.
• The agreement prevents “double coverage” and guarantees that workers in both nations are treated equally in terms of social security.
• Employees moving on employment to any SSA country are exempt from making social security contributions in the host country for a specific period (specific to each SSA), so long as they continue to make social security contributions in their home countries. This is known as detachment or elimination of dual contribution.

Social security agreements with India

India has SSAs with Belgium, Germany, Switzerland, the Grand Duchy of   Luxembourg, France, Denmark, Korea, the Netherlands, Hungary, Finland, Sweden, Czech Republic, Norway, Austria, Canada, Australia, Japan, and Portugal.

Current informal workers

More than 74% of the workforce engaged is comprised of members of Scheduled Castes (SC), Scheduled Tribes (ST), and Other Backward Classes, and more than 94% of the 27.69 billion informal sector employees registered on the e-Sharm site have a monthly income of Rs 10,000 or less (OBC).

There are 25.56% of employees in the General Category. According to the report, 94.11% of registered informal workers earn less than Rs 10,000 per month, while 4.36% earn between Rs 10,001 and Rs 15,000 per month.

The Covid-19 Pandemic has been particularly devastating for informal laborers in rural and urban regions because of the seasonal nature of their job and the absence of a formal employer-employee relationship.

As per the Periodic Labor Force Survey (PLFS), 90% of workers are in the informal sector, which is 419 million of the 465 million workers.

Reasons why India is lagging?

• India has more young people than the majority of other nations since the country’s current population is fairly young and consequently in the working age range.
• There is a lack of financial expertise, diversification, and the idea that pension funds may also be seen as assets since historically, Indian policymakers have viewed the pension system as a welfare tool.
• The formally organized sector benefits from the provisions of many labor regulations, hence the Indian system is slanted in favor of this sector. Even still, India’s pension policies are behind significantly.
• Old age income continues to mostly consist of voluntary savings in the unorganized sector.
• Although the New Pension System treats the pension amount as an asset [7]for retirement, it says nothing about the social security benefits for the poor.
• Compared to most nations, the typical income earners are unable to replace their pre-retirement wages with pensions.
• Although India has a higher Potential Support Ratio (PSR) than most other nations, this demographic advantage also makes it necessary to have social security plans in place for the future. As life expectancies rise, the proportion of the population over 65 will rise and the ratio of possible support may decrease.

Suggestions

• While the increased benefits provided by these schemes to unorganized sector workers would be beneficial, there is a need to formalize and standardize minimum floor-level provisions for unorganized workers similar to those made for formal sector workers in the Social Security Code.
• The Labor Ministry should raise the problem of the PLFS’s prompt completion with the Statistics and Program Implementation Ministry.
• A comprehensive plan and roadmap are required to address the poor employment situation, which has been exacerbated by the epidemic, as well as the expanding inequities in the organized labor market.
• A national database of unorganized employees is needed.
• Furthermore, formalizing the industry, raising productivity, bolstering current livelihoods, establishing new opportunities, and strengthening social security measures are significant thrust areas for mitigating the impact of Covid-19.

Conclusion

Any social security measure’s goal is to give people and families the assurance that a social or economic calamity won’t lower their standard of living and quality of life. A worker works not only for financial gain but also for a sense of security and belonging at his place of employment.

Therefore, it is the employer’s responsibility to do everything in his power to give his employees the psychological gratification that comes from knowing that their lives and the lives of their families are taken care of and socially secure.

Indian legislation has done much to advance this cause, and as a result of this and many other causes, employee and employer interests are now on an equal footing in the realm of work and employment, with the combined interests and satisfaction of both parties receiving the majority of attention.

If both the employer and the employee work together to meet these requirements, the workplace will substantially resemble a home in this regard.

References:

[1] Harshit Shivani, “A Comparative study on social security between India, U.S. and China” JLSR  2018

[2] Harshit Shivani, “A Comparative study on social security between India, U.S. and China” JLSR  2018

https://www.britannica.com/topic/social-security-government-program

[3] https://www.ilo.org/global/standards/subjects-covered-by-international-labour-standards/social- security/lang–en/index.htm

[4] https://www.britannica.com/topic/social-security-government-program/Criticisms

[5] https://www.britannica.com/topic/social-security-government-program/Criticisms

[6] 03-BRICS_SSA.pdf (labour.gov.in)

https://labour.gov.in/social-security-agreement

[7] Harshit Shivani, “A Comparative study on social security between India, U.S. and China” JLSR  2018

This article has been authored by Nallam Laxman Geetha Devi, a student at Sastra University.