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Social Security

Social Security. By Dr. Rakesh Kumar Moderator- Dr. Sanam Anwar. Framework. Background & History Definition Promotional Vs protective social security Approaches to social security Social security for workers Social security for organized sector

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Social Security

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  1. Social Security By Dr. Rakesh Kumar Moderator- Dr. Sanam Anwar

  2. Framework • Background & History • Definition • Promotional Vs protective social security • Approaches to social security • Social security for workers • Social security for organized sector • Social security for unorganized sector • Social security for Old age, Disability and survivors • Social security for Maternity and Sickness • Social Security coverage in India • New Initiative • Social security in developed countries • Publicly managed social security schemes Vs privately managed schemes • References

  3. Introduction • Over one third of the world population lives under extreme conditions of poverty and deprivation • Characteristics like illiteracy, poor health, unemployment and inadequate access to productive assets make the poor more vulnerable • In agrarian culture joint family system took care of the social security needs of all the members • Increasing migration, urbanization and demographic changes are making nuclear family system more common

  4. History • 1883 -1889- First broad system of social insurance established by German Chancellor Bismarck • 1919- International LabourOrganisation (ILO) established • 1923 - Workmen's compensation act • 1935- Social Security Act introduced in USA • 1942-Social security programme implemented in the UK, based on Beveridge Report (two- tier system of social security) • 1948 - Employees' state insurance act • 1952 - Employees' provident funds, with amendments • 1964- Department of Social Security created in India under ministry of labour • 1972- Payment of gratuity • 1976-Employees' deposit-linked insurance • 1995- Employees' pension scheme • 1995-National social assistance program • 2007-National Social Security Bill under process

  5. What is Social Security • Definition- • The protection which society provides for its members through a series of public measure, against the economic and social distress that otherwise would be caused by the stoppage or substantial reduction of earning resulting from sickness, maternity, employment injury, unemployment, invalidity, old age and death (ILO,1984) • Objective: • To protect the poor and vulnerable groups or individuals from adversechanges in living standards though public action i.e, It is a comprehensive approach designed to prevent deprivation, assure the individual of a basic minimum income for himself and his dependents and to protect the individual from any uncertainties

  6. Who needs social security? Survivors Old Age Disablity Informal sector workers Formal sector worker Unemployed Maternity Sickness Employment Injury

  7. Promotional Vs protective social security schemes • Promotional social security: • Implies provision of food, housing, education and heath securities • Example- Targeted Public Distribution System, ICDS, Sarva ShikshaAbhiyan, Indira Gandhi AwasYozana, Employment guarantee schemes • Protective social security: • Implies protection against contingencies ( identified by ILO) that result in reduction or stoppage of income. • Example- Various social assistance and social insurance programme

  8. Basic principles of social security schemes: • Universality- should cover whole of population • Comprehensiveness- should cover maximum contingencies •  Benefit should be adequate and appropriate • Benefits should be secure and non-discriminatory • Transparent and sound administration • A strong role for the social partners. • Tripartite Administration

  9. Approaches to social security

  10. Social Assistance Programmes • Entitlement Feeding Programmes • Integrated Child Development Services • Mid Day Meal Scheme • Food Subsidy Programmes • Targeted Public Distribution System • Antodaya Anna Yojana • Annapurna Yojana • Employment Programmes • SampoornaGraminRojgarYojana • National Rural Employment Guarantee scheme (2005) • National Social Assistance Programme (1995)

  11. Social Insurance Schemes

  12. Social Security in India • Directive Principles of State Policy 1. Article 41- Right to work, to education and to public assistance in certain cases like unemployment, old age, sickness and disablement, and in other cases of undeserved want. 2. Article 42- Provision for just and humane conditions of work and for maternity relief

  13. Workforce in India Source NSS,2004

  14. Social security for workers (Organized sector) • Organized sector includes establishments covered by the Factories Act, 1948, the Shops and Establishments Acts of the States, Industrial Employment Standing Orders Act, 1946, etc. • It has a structure through which social security benefits are extended to workers • Provided through five acts The Employees’ State Insurance Act, 1948 (ESI Act) • Covers factories and establishments with 10 or more employees • Provides for comprehensive medical care to the employees and their families as well as cash benefits during sickness and maternity, and monthly payments in case of death or disablement. The Employees’ Provident Funds & Miscellaneous Provisions Act, 1952 (EPF & MP Act) • Covers specific scheduled factories and establishments employing 20 or more employees • Ensures terminal benefits to provident fund, superannuation pension, and family pension in case of death during service.

  15. Social security for workers (Organized sector) The 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 The Maternity Benefit Act, 1961 (M.B. Act), • provides for 12 weeks wages during maternity as well as paid leave in certain other related contingencies. The 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. • Others, like welfare funds for certain specified segments of workers such as beedi workers, cine workers, construction workers etc.

  16. Social security for workers (Unorganized sector) • Rural areas- landless agricultural labourers, farmers, engaged in animal husbandry, fishing, horticulture, bee-keeping, forest workers, rural artisans, etc. • Urban areas- Manual labourers in construction, carpentry, trade, transport, communication , street vendors, hawkers. • No formal system of social security • Majority face the problem of ‘deficiency’ of basic needs as well as the problem of ‘adversity’ arising out of such contingencies as sickness and accidents • National Commission for Enterprises in the Unorganized Sector (NCEUS) has recommended provision of a statutory package of National Minimum Social Security to all unorganized workers

  17. Social security for workers (Unorganized sector) • Employment is the best form of social protection • Schemes: • Varishtha Pension BimaYojana(VPBY) • Sanjay Gandhi NiradharAnudhanYojana, 1980 • Sanjay Gandhi SwawavlambanYojana 1980 • Unorganised sector worker’s social security scheme • National rural employment guarantee scheme • RashtriyaSwasthyaBimaYojana • Provides smart card based cashless health insurance cover of Rs. 30,000/- to the BPL workers and their families ( a unit of five)

  18. Social security for workers (Unorganized sector)

  19. Social security schemes for Old age, Disability & survivors

  20. Social security schemes for Old age, Disability & survivors

  21. Social security Benefits for Old age • Provident fund: • A lump sum is paid equal to total employee and employer contributions plus interest. • Drawdown payment: the value of the minimum payment varies from 1 month of wages to total employee and employer contributions plus accrued interest. • Pension scheme: • With 10 or more years of coverage, a monthly pension is paid based on a member’s pensionable service and earnings, subject to a minimum pension; • With less than 10 years, a lump sum is paid equal to total employee and employer contributions plus interest. • Optionally, one-third of the pension can be taken as a lump sum. • There is no minimum or maximum pension. • Early pension: The basic pension is reduced by 3% for each year that retirement is taken before age 58. • Pension adjustment: The pension is adjusted annually by the central government according to an actuarial evaluation.

  22. Social security Benefits for Old age • Gratuity scheme: • Based on the insured’s final salary, a lump sum is paid equal to 15 days of wages for each year of continuous service (a reduced amount is paid for part years in excess of 6 months). • Maximum benefit is 350,000 rupees. • For seasonal employees, employers pay the gratuity at the rate of 7 days’ wages for each season worked. • National Old Age Pension Scheme • Eligibility criteria • Age of the applicant (male or female) is 65 years or above. • Applicant is destitute i.e having little or no regular means of subsistence from his/her own sources of income or through support from family members or other sources • Pension amount- Rs. 75/-per month per beneficiary (enhanced to Rs 200 per month from the year 2006–07 some states give additional Rs 200)

  23. Social security Benefits for Disability Permanent Disability Benefits • Provident fund: • Lump sum is paid equal to total employee and employer contributions plus interest. • Pension scheme: • Monthly pension -min Rs 250 rupees or a lump sum is paid equal to total employee and employer contributions plus interest. • Gratuity scheme: • a lump sum equal to 15 days of wages for each year of continuous service • Maximum benefit is Rs 350,000  • Seasonal employees are paid at the rate of 7 days of wages for each season worked.

  24. Social security Benefits for Survivors • Provident fund: • A lump sum is paid equal to total employee and employer contributions plus interest. • Death grant: Up to Rs 2,000 rupees • Survivor (deposit-linked) insurance scheme: • A lump sum is paid equal to the average balance of the deceased’s provident fund account during the 12 months before death • Maximum benefit is Rs 60,000  • Widow’s pension (pension scheme): • 50% of the deceased’s pension . • Minimum monthly pension -450 rupees. • Orphan’s pension (pension scheme): • Paid for one or two orphans up to age 25 (no limit if totally and permanently disabled). • Pension is equal to 25% of the widow’ s pension(min Rs 150 per month0). • Full orphans or dependent parent receive 75% of the widow pension (min Rs 250 per month).

  25. Social security for Survivors • Gratuity scheme: • a lump sum is paid equal to 15 days of wages for each year of continuous service • Maximum benefit is Rs 350,000  • Seasonal employees are paid at the rate of 7 days of wages for each season worked • Funeral grant:Lump sum up to 3,000 rupees. • Survivor grant (National Family Benefit Scheme) • Eligibility criteria: • Death of primary breadwinner aged between 18 to 65 years • Earnings of primary breadwinner should contribute substantially to the household income • Bereaved household should qualifies as below the poverty line • Benefit amount - Rs. 10,000/- in the case of death of primary breadwinner due to natural or accidental cause

  26. Social security for Maternity ,Sickness, Unemployment & employment injuries

  27. Social security for Sickness and Maternity

  28. Social security Benefit for Maternity • National Maternity Benefit Scheme (2001) (merged into “JananiSurakshaYojana” in 2005 under NRHM) • Eligible for women of 19 years and above. • Upto first two live births • Below poverty line families • Benefit amount- Rs. 500 per pregnancy to women • Maternity benefit (ESI): • Benefit is equal to 100% of average earnings, according to wage class, and is paid for up to 12 weeks (increased to six month ). • Minimum daily benefit is 20 rupees. • Cash maternity grant (social assistance): A lump sum of 1,000 rupees is paid. • Family planning (sterilization) (ESI): • Cash sickness benefit is paid at double rate for 7 days (men) or 14 days (women); may be extended in case of complications.

  29. Social security Benefit for Sickness (ESI) • Sickness benefit: • Benefit varies but is around 60% of the average daily wage. • Benefit is paid up to 91 days in any two consecutive 6-month periods • Workers’ & their dependents Medical Benefits • Benefits include outpatient treatment, specialist consultations, hospitalization, surgery and obstetric care, imaging and laboratory services, transportation, and the free supply of drugs, dressings, artificial limbs, aids, and appliances. • Duration of benefits is from 3 months to 1 year, according to the insured’s contribution record • Eligible dependents - Spouse, children under age 18 (age 21 if a student, no limit if disabled or an unmarried daughter), widowed mother, and dependent parents • Funeral grant : • Lump sum up to 3,000 rupees.

  30. Social security Benefit for Worker’s Injury (ESI) • Temporary Disability Benefits • Around 75% of the average daily wage. • Paid for the entire duration of the disability, ( min of 3 days). • Permanent Disability Benefits • Permanent disability pension: Separate medical boards assess the loss of earning capacity resulting from a work injury or an occupational disease. • Maximum daily rate -around 75% of the average daily wage • May be paid as a lump sum not exceeding 30,000 rupees (If the daily value of the pension is equal to 5 rupees or less) • Partial disability: • A percentage of the full pension is paid according to the assessed loss of earning capacity

  31. Social security Benefit for Worker’s Injury (ESI) • Survivor Benefits • Survivor pension (widow’s pension): • 60% of the deceased’s total disability pension • Orphan’s pension: • 40% of the deceased’s pension to orphan younger than age 18 (no limit if disabled or an unmarried daughter). • Maximum total survivor pension - 100% of the deceased’s pension. • Minimum daily benefit is 14 rupees. • Maximum total pension for other eligible survivors is 50% of the deceased’s pension.

  32. Social security Benefit during Unemployment (ESI) • Qualifying Conditions • Must be involuntarily unemployed as the result of retrenchment or a nonwork-related permanent disability. • Must have at least 5 years of contributions. • Unemployment Benefits • Unemployment allowance: Benefit equal to 50% of the insured’s average wages and is paid for up to 6 months. • Access to medical care is also provided to beneficiaries and their dependents.

  33. Social security coverage in India In Millions

  34. New Initiatives: • Unorganized Sector Workers Social Security Bill, 2007 • AamAdmiBimaYojana (AABY), 2007 • Health Insurance Scheme for Unorganized Sector BPL Workers, 2007 (RashtriyaSwasthayaBimaYojana) • JanashreeBimaYojana • Micro-credit Programmes • Re-Inventing Employees Provident Fund

  35. Unorganized Sector Workers Social Security Bill, 2007 • Establishment of National Social Security Advisory Board and State Social Security Advisory Boards • Benefits shall be admissible to all persons above 14 years of age • Persons are provided with an identity card in the form of a smart card. • 11 schemes including the AABY and the Health Insurance Scheme for Unorganized Sector BPL workers. • Benefits: • life and disability cover, • health and maternity benefits, • old age protection, provident fund, • employment injury benefits, • Provision of housing, educational schemes for children, skill upgradation of workers, funeral assistance, and old age homes.

  36. AamAdmiBimaYojana, 2007 • Replaced ‘Group Insurance Schemes’ as • It do not provide the annuity in the cases of survivor members. • Lack of awareness about schemes amongst rural population • Poor delivery mechanism at the village level • State Government will be the Nodal Agency. • Members of All Rural Landless Households, in the age group of 18–59 years will be eligible. • Premium of Rs 200 per member will be borne by the Centre and States equally. • A sum of Rs 30000 in case of natural death and Rs 75000 in case of accidental death will be payable. • A compensation of Rs 75000 will be payable in case of total permanent disability and of Rs 37500 in case of partial permanent disability. • Provision for the payment of a scholarship of Rs 300 per quarter per child for two children of the beneficiaries studying in 9th to 12th standard for its beneficiaries.

  37. RashtriyaSwasthayaBimaYojana • A transparent scheme that lists the entitlements, administered through a smart card obviating the need for out of pocket expenses • Covers all BPL unorganized sector workers and their families (of five members), • a smart card will be issued • Beneficiary will be required to pay Rs 30 per annum as registration/ renewal fee. • Prescribed premium of Rs 750 per member-family will be borne by the Central and State Governments in the ratio of 75:25. • Benefits • cashless attendance to all covered ailments; • Hospitalization expenses, taking care of most common illnesses, • all pre-existing diseases to be covered, • transportation costs subject to prescribed limits payable to the beneficiary.

  38. JanashreeBimaYojana • Earlier Social Security Group Insurance Scheme was available for persons in the age group of 18 to 60 years belonging to the 24 approved occupation groups in unorganized sectory • JanashreeBimaYojana provides insurance cover of Rs 20000 in case of natural death, Rs 50000 in case of death or total permanent disability due to an accident, and Rs 25000 in case of partial disability • Premium is Rs 200 per beneficiary ( 50% of the from the ‘Social Security Fund’ and 50% contributed by the beneficiary/State Government/nodal agency) • Eligibility criteria: • Persons in the age group of 18 to 60 years • Living below or marginally above the poverty line • Scheme is extended to a group of 25 members or more

  39. Micro credit Programmes • A way of enabling those at risk of poverty and social exclusion to participate in the economic and political processes of society through self-employment • Addresses income and economic security • Pre-dominantly focused on women • Mostly delivered through group based approach • Best suited for delivery of basic social security for poor • Enhances local accountability and transparency • Government and public sector banks play major role • Involvement private sector like NGOs • No regulation and comprehensive legislation available • District Rural Development Agency (DRDA) - principal organ at the District level to over-see the implementation of different anti-poverty programmes

  40. Re-Inventing Employees Provident Fund • Launched since June, 2001. • a effort towards solving the problem of providing social protection to migrant labour & nomads • Objective: • To provide the subscribers better and efficient services, to help the employers by reducing the cost of compliance and to benefit the organization to register geometric growth in all fields. • Initiatives: • Allotment of the Unique Identification Number-the Social Security Number to the EPF subscribers • Issuing of “Buisness Numbers” to the employers • Business Process Re-engineering

  41. Legislative Measures • Fixing minimum wages • Abolishing or penalizing discrimination in wages based on gender and age • Recovery of minimum wages would be simplified and be equated with recovery due of land revenue. • Establishing an information network to promote awareness, to educate employers and to prevent malpractices with the help of the media, NGOs, and PRIs.

  42. Social security in developed country • In developed countries most social security systems are linked to wage employment. Characteristics: i)Existance of universal social security system ii)Most of the workforce is in the organized sector hence a system of pay roll deduction is applied. iv)Main approach for social security is social insurance

  43. Publicly managed Vs Privately managed social security scheme • In Indian context, privately managed schemes can best act as supplementary schemes • Only publicly managed scheme can extend to all the sectors of the workforce

  44. Issues • Extension of coverage of social security • Ageing and its impact on social security • Governance and administration of social security systems • Equality, with an emphasis on gender and disability • Financing of social security • HIV/AIDS and its impact on social security • Should be extended to persons with severe/multiple disabilities and widowed women maintenance of orphans, street children, and other sections of the poor in distress are needed • Scope of the NFBS needs to be extended to cover instances of death of any adult member of the family without limiting to the death of breadwinner

  45. References • Park K. Park’s Textbook of Preventive and social medicine. 19th edition. Bannout publication; Jabalpur: 2006. p.658-9. • Detel R, McEwan J, Beaglehole R, Tanaka H. Oxford Textbook of Public Health. 4th edition. Oxford university press; Newyork:2004. p.343-44. • Last JM, Wallace RB. Public Health and Preventive Medicine. 13th edition. Appelton & Lange; USA: 1992. p.982-84 • Social Security Online . The Official Website of The U.S Social Security Administration [Online]. [cited 2009 Apr 8]; Available from: URL: http://www.socialsecurity.gov/ • International Social Security Administeration [Online]. [cited 2009 Apr 9]; Available from: URL:http://www.issa.net • International Labour Organization [Online]. [cited 2009 Apr 9]; Available from: URL:http:// www.ilo.org/ • Government of India. Ministry of Labour [Online]. [cited 2009 Apr 6]; Available from: URL:http://www.labour.nic.in • Ministry of Rural Development (GOI) [Online]. [cited 2009 Apr 11]; Available from: URL:http://www.rural.nic.in • Microcredit Foundation of India [Online]. [cited 2009 Apr 18]; Available from: URL:http://www.microcreditindia.org • National Commission for Enterprises in the Unorganized Sector (GOI) [Online]. [cited 2009 Apr 13]; Available from: URL:http://nceus.gov.in/

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