A viable innovation in social security

A viable innovation in social security

The government has moved with speed to draft the rules for implementing the Social Security Code, 2020. The draft rules, available for public scrutiny and comment, will, in theory, make it possible for unorganised workers (migrants, farm workers, part-timers, gig and platform workers) to access social security. Given that 85% of the workforce is in the unorganised sector, this is a major step towards a just society.

One good measure is the use of Aadhaar for universalisation of coverage. Unorganised, gig and platform workers are required to register themselves using their Aadhaar number through a dedicated portal to avail of the social security benefits. Portability of benefits, particularly for construction workers, has been addressed: it is the responsibility of the dedicated board to ensure continued access even after workers leave the state.

For gig and platform workers, the rules set out the contribution that the aggregator/employer must provide. The rules are not explicit about a contribution by the worker to the fund, as is the case with workers in the organised sector. Why not deduct at source a portion of the gig worker’s earning, subject to a cap in absolute amount, for transfer to the retirement saving account? The focus is on funding post-retirement security. What of healthcare?

The Employees’ State Insurance (ESI) scheme prepays healthcare providers to keep subscribers healthy and treat them if they fall ill. Its deficiency is absence of competition. If more such healthcare providers come up and subscribers have the freedom to switch from one provider to another, these healthcare providers would vie to improve their reputations and the quality of service would go up. In fact, there is a strong case for shifting Ayushman Bharat from paying for insurance to paying ESI-like healthcare providers to take care of subscribers’ health. The efficacy of the rules will depend on the ease with which workers are able to register and the portability of registration, the timeline for universal coverage, and ensuring universal compliance.