Labour Code Analysis for Unorganised Sector – UPSC GS3

Union government has enacted four labour codes with aim of achieving universal social security and universal basic minimum wages for all labourers among other things.
Will they provide Universal Social Security?
Mandates of the Codes:
  • Benefits of Employees’ State Insurance (ESI) and Provident Fund (PF) only for workers belonging to establishments employing 10 workers or more.
  • Informal workers may also be allowed access to underutilised Employees’ State Insurance Corporation hospitals only on payment of a usage charge.
Issues associated:
  • No coverage for Informal sector employees: It covers only formal sector workers leaving informal sector workers outside its ambit who constitute 80% of India’s workforce. For example Domestic help workers, street vendors, newspaper boy, etc
  • Lack of resources in ESIC:
    • In 2016, the ESI covered 2.1 crore workers; this increased to 3.6 crores by March 2019.
    • The ESI employed around six doctors per one lakh beneficiaries in 2016, as against the World Health Organization norm of 100 doctors.
    • The employer plus employee contribution to the ESI was reduced from 6.5% to 4% from July 2019.
    • With the new codes seeking to cover 20% of all workers, beneficiaries are expected to rise at least thrice of membership in 2019.
    • Regional disparity: Industrialised States like Karnataka and Tamil Nadu, the ESI covered around 20% of the population as beneficiaries in 2016; the corresponding figure was just 0.7% for Bihar.
    • Other issues: While introducing the new codes, the government also did away with a number of existing cess-based welfare schemes. For example: The Beedi Workers Welfare Board, covering an estimated five lakh home-based women workers.
What are the issues with Universal Basic Minimum Wages?
  • At present only around 30% of all workers get covered under the various minimum wage schedules (Labour ministry)
  • Labour Minister announced a floor wage of Rs.178 per day in 2019; and Finance Minister recently announced a floor wage of Rs.202.
  • The Labour Ministry’s Expert Committee on Wage in 2019 recommended a floor wage of rupees 375/day for all workers.
  • Issues associated:
    • Very low floor wages announced by the government, even lower than poverty line family expenditure estimated by the government-appointed Rangarajan Committee in 2011, corrected for inflation.
    • Poor coverage and implementation of the existing wage laws.
    • The codes serve to improve the ‘ease of doing business’ ranking instead of improving the conditions of employment. As it restricts the unions’ right to strike and relaxes the norms for factory closure.
Conclusion: Government should ensure a decent floor rate for minimum wages adjusted with inflation along with comprehensive policy and implementation mechanism to ensure Universalization of quality social security benefits for all employees.
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