The COVID-19 pandemic not only
constitutes a monumental public health crisis for the world but also presents a
severe threat to the global economy. Mitigating measures like social distancing
are likely to result in a decline in consumer demand, a slowdown in investment
and disruption in production and supply chains. Cumulatively, these may result
in an economic shock not seen since the aftermath of the Great Depression in
the 1930s. Indeed, the International Labour Organization (ILO) has predicted
that as many as 24 million workers could be rendered unemployed by the economic
impact of the pandemic. Such massive
unemployment is also likely to be accompanied by significant income losses for
workers, especially in the unorganised sector.
With more than 90% of its
workforce engaged
in unorganised work and lacking adequate social security, paid leaves, and
wage security, the impact of COVID-19 in India is going to be particularly
devastating. Anecdotal
accounts suggest that initial attempts at social distancing through closing
down of educational institutions, government offices and advisories on work
from homes have resulted in a dramatic reduction of availability of work for
unorganised workers. Not surprisingly, many among the blue-collared
working-class view social distancing without welfare measures as discriminatory.
Paradoxically, the lack of any form of income support compels workers to
venture out in search of work and thereby also thwarts the purpose of social distancing.
Thus, welfare measures and social security for workers affected by the economic
impact of COVID-19 is an urgent imperative.
A few state governments,
including Kerala,
and Uttar
Pradesh have already announced financial packages that include measures on
pensions and payments to workers. Yet, they remain in the minority so far, and
the Central Government has also failed to announce any concrete initiative
towards social security for workers. The need for social security for workers
due to the COVID-19 pandemic, however, also calls for an interrogation of the
adequacy of the existing labour laws in extending social protection to workers
whose livelihood is affected.
India's social security regime
comprises of a multitude of fragmented schemes set-up through more than fifteen
central legislation and state legislations. Some of these, like the Employees'
State Insurance Act 1948 are of general application whereas a few like the
Building and Other Construction Workers Cess Act, 1996 are sector-specific. Apart from these, the
Industrial Disputes Act 1947, which deals with industrial relations, also
contains specific provisions on income-security.
Social Security Provisions
in the Industrial Disputes Act
Indeed, the Industrial Disputes
Act 1947 may be of particular relevance given the protracted shutdown of
workplaces. Section 25-C and Section 25-M provide that a workman in an
industrial establishment being laid-off shall be paid by the employer a
compensation of fifty per cent of his basic wages and dearness allowance for
all the days (except weekly holidays) during which he has been so laid off.
Pertinently, unlike its common parlance meaning, the term lay-off in the
Industrial Disputes Act does not connote termination of employment. Instead,
lay-off has been defined by Section 2 (kkk) as a temporary inability by an
employer to give work "on account of shortage of coal, power or raw
materials or the accumulation of stocks or the break-down of machinery or
natural calamity or for any other connected reason". The Supreme Court of
India had held in Management of
Kairbetta Estate v. Rajamanickam [(1960) 3 SCR 371] that the phrase "any
other reason" would mean a reason over which the employer has no control.
Thus even though there is no mention of a pandemic in the definition, the
inability of an employer to temporarily give work due to a pandemic-induced
shutdown would arguably constitute a lay-off. If that is so, the provisions on
lay-off compensation can provide a modicum of income protection for industrial
workmen. The Industrial Disputes Act may also be relevant for workers who lose
their jobs due to the impending economic slowdown. Section 25-F of the
Industrial Disputes Act provides for compensation amounting to fifteen days of
average pay for every year of continuous service for workers who are
retrenched.
Yet, there are severe limitations
to these protective provisions. They apply only to industrial workmen who have
had continuous service for 240 days. As a result, a vast swarth of workers
employed on a temporary basis or short-term contracts may not be entitled to
the compensation, especially since many industries consciously
engage workers for terms of less than 240 days. More significantly, the
provision on lay-off compensation applies only to workmen employed in factory,
mines and plantations that hire at least a fifty or a hundred employees
(depending on the applicable provision). In a country where
more than ninety per cent of the establishments in this country hire less than six
employees, a numerical threshold of fifty excludes most workmen from the
protective cover of layoff-compensation. The other hurdle that application of
Section 25-C and Section 25-F would run into is the limited capacity of the
employer to pay the statutory compensation in the face of a severe economic
downturn. Therefore, a sustained governmental intervention may indeed be
necessary.
Employees' State Insurance
Act 1948
The most significant social
security regime in the country is employment-based social insurance
legislation, the Employees' State Insurance Act 1948. The Act provides for
Medical Benefit, Sickness Benefit, Disablement Benefit, Dependents' Benefit,
Maternity Benefit and a host of other benefits like confinement expenses and
funeral expenses. The Act currently extends to more than thirteen crore
beneficiaries and therefore has the potential of reaching out to a vast pool of
workers and their families.
The provision of free medical
treatment through the Medical Benefit can ensure treatment for those suffering
from COVID-19. Sickness Benefit available under the Act also guarantees cash
compensation to eligible insured workers during certified sickness for a
maximum of 91 days in a year. These benefits can provide much-needed income
support to those directly afflicted by COVID-19.
Further, benefits directed at
unemployment security introduced under the Act can provide some form of income
support for those impacted by the loss of livelihood due to social
distancing. Rajiv Gandhi Shramik Kalyan
Yojana provides unemployment allowance and vocational training up to a maximum
term of two years to those insured for more than three years and rendered
unemployed to due to retrenchment or closure of their establishment. A more
recently introduced scheme, the Atal Beemit Vyakti Kalyan Yojana provides of
cash compensation up to 90 days after three months of unemployment.
It is also pertinent to note that
the existing schemes do not exhaust the power of the Employees' State Insurance
Corporation (ESIC) to introduce new welfare measures for insured employees.
Section 19 of the ESI Act states that "the Corporation may, in addition to
the scheme of benefits specified in this Act, promote measures for the
improvement of the health and welfare of insured persons and for the
rehabilitation and re-employment of insured persons." It is imperative in
the context of the catastrophic economic impact of this pandemic that the
Central Government and the ESIC use its statutory powers under Section 19 to
expand the scope of existing protection for welfares. Interestingly, the Parliamentary
Standing Committee on Labour and Employment had chastised the ESIC for
spending a meagre sum on the welfare of the insured employees. The Committee
had noted that the ESIC had a standing corpus of more than Rs. 73,000 crores
and termed the transfer of massive sums into the so-called corpus fund instead
of providing facilities to workers' immoral and illegal.' In view of this, it
can be surmised that the ESIC has the resources to sustain a welfare scheme
that can meet the pressing need of workers affected by the pandemic. Given that
it is the workers who have significantly contributed to the accumulation in the
ESIC's corpus, financing of unemployment security and related welfare schemes
to meet the imminent crisis is both a legal and a moral imperative.
The
Building and Other Construction Workers Act, 1996
The
Building and Other Construction Workers (Regulation of Employment and
Conditions of Service) Act, 1996 (BOCWA) creates a statutory framework for
safety, health and welfare measures for the building and other construction
workers. For this purpose, a Welfare Fund under the aegis of the State
Welfare Boards, has been created under Section 24 of the Act and this Fund is
financed through a cess levied at the rate of 1% of
the cost of construction by the State Governments under the Building and Other
Construction Workers' Welfare Cess Act, 1996. While Section 22 of the
BOCWA lists specific measures like accident insurance, old-age pension, loans
for housing, group insurance, educational loans, maternity benefit and medical
reimbursements, it also enables the government to make provisions and
improvement of other welfare measures and facilities. Thus, there is ample
scope for the state governments and the state welfare boards to introduce
welfare schemes for construction workers to cope with the imminent loss of
livelihood and income.
Interestingly,
the Central Government had noted that
the states and union territories had collected more
than Rs 45,473.1 crore and spent a mere Rs. 17,591.592 crore – less than half
the amount collected - up to September 2018 under the BOCWA. Even the Supreme
Court in National Campaign
Committee for Central Legislation on Construction Labour v Union of India had
expressed its shock at the underutilisation of the funds collected under the
Act. The fact of underutilisation of the BOCWA funds had been highlighted
by the Parliamentary Standing Committee on Labour and Employment as well. As
such, these unutilised funds could be used by devising schemes for construction
workers.
Unorganised
Workers' Social Security Act, 2008
The Unorganised
Workers' Social Security Act, 2008 (UWSSA) was enacted specifically to meet the
social security needs of unorganised workers. Even though it has been a particularly
poorly implemented
legislation, the UWSSA provides a framework for the introduction of schemes
for all categories of unorganised workers. Section 2 (m) defines an "unorganised
worker" to include not just wage workers un unorganised sector but also home-based
workers, self-employed workers and workers in the organised sector who are not
covered by any of the labour laws listed in the schedule to the Act.
Significantly, the UWSSA does not provide for a closed list of welfare schemes
but empowers the Central Government as well as the State Governments to formulate
suitable welfare schemes from time to time. Given its wide amplitude, the UWSSA
does provide an available framework for extending social security to the unorganised
workers who constitute more than 90% of the workforce in India and are likely
to be the worst affected by the economic slowdown caused by COVID-19.
Conclusion
This
glance at various labour laws on social security suggests that there are
options available within existing social security legislation and schemes for
providing a modicum of income support for workers likely to suffer from loss of
income or employment due to the COVID-19 pandemic. While many of the schemes
and statutes are indeed limited and piecemeal in their scope, there is ample
scope for expanding and utilising them to guarantee social security for the
affected workers. Further, available information on non-utilisation of funds collected
under the ESI Act and the BOCWA suggest that there may be resources available
for financing welfare measures for the working poor. In view of the fact that
there are more than thirteen crores beneficiaries registered with the ESIC, schemes
under the ESI Act can indeed reach out to a significant number of workers and
their families. Similarly, Central and State governments must utilise the
statutory framework and the mandate under the BOCWA and the UWSSA to devise new schemes. Challenges remain
formidable. The constrained institutional capacity of the state also would be further
shackled due to the general lockdowns. The extent of registration in many of
these legislations have traditionally remained poor. Therefore, creative
designs have to be formulated for implementation of schemes, especially for self-employed
and other unorganised workers. Most importantly, such measures have to supported
by the expansion and universalisation of existing welfare schemes like the
Public Distribution System and the Old Age Pension schemes.
Nonetheless,
if social security has to have any meaning as a fundamental right as part of
the right to life, state institutions must tap into these existing legislative
frameworks and schemes to protect the workers in face of the grave crisis confronting
the country. In words
of the British journalist Martin Wolf, "[I]n war, governments spend freely.
Now, too, they must mobilise their resources to prevent a disaster."
