The code also proposes partial payment of gratuity and maternity benefit
India has 44 central, 387 state labour laws, 67 central and 1,333 state labour filings and 674 central and 26,484 labour compliances. Multiplicity of laws, multiple enforcement authorities and multiple licenses, registrations and returns have created an environment which breeds non-compliance and lowers the guard on the very section we intend to protect and safeguard, pushing millions of citizens to informal employment.
What is needed is simplification, rationalization, digitisation of labour laws to make them comprehensive, effective, easy to comply. Subsuming our labour laws based on relevance into four labour codes is our first step in that direction. Post approval of the Code on Wages Bill, all attention is on the Social Security code.
Upto 45% wage confiscation due to mandatory social security deductions has led to a large section of the workforce choosing to be informal. I have always believed that the only social security India can afford is more formal jobs, hence, this code is of particular interest to me.
Just to summarise the positives of this code for me. To begin with, it subsumes Payment of Gratuity Act, Maternity Benefit Act, Employee Compensation Act, Unorganised Workers Social Security Act, Existing Labour Welfare Funds Acts, Cess Acts—BOCW, Beedi Workers, Cine Workers, Mine Workers into one thereby reducing multiplicity. It also proposes partial payment of gratuity and maternity benefit by the government albeit more beneficial for those in the informal sector. It is also appreciable that the government is recognizing the advent of gig . While provision of health and life cover seems genuine for gig workers, proposal to extend such benefits even for their old age looks tough to implement. The code also says that EPFO and ESIC would be body corporates.
The code contains provisions relevant to changing these two autonomous bodies to body corporates. We are aware that these social security bodies maintain huge corpus and to manage the funds, the code states that financial adviser and CAO chief accounts officer shall be appointed. In addition, the government is also proposing to make amendments to ESIC and PF Laws simultaneously. At this stage, it is not clear whether these two Acts would get subsumed with the code. After making amendments through notification, there are chances (and one hopes so) that these two Acts and Schemes may get subsumed into the codes.
My concerns include the potential increase of burden on employers towards the proposed social security funds. Above all, I am forced to wonder our ability as a nation to afford social security for the large section of the informal sector from the perspective of creation of corpus as well as our ability and bandwidth to implement and supervise an ambitious attempt of this nature. A structural solution towards massive formal job creation is probably the only way forward for a young population like ours.
I am glad that they are acknowledging the evolution of the gig economy and companies in the space who are pulling out low-paid informal workers to earn more and have dignity of labour and life. The policy, however, is premature and overambitious. The IT sector in India grew well because it had the freedom to flourish. The case is similar with gig economy players. They need to have freedom to flourish without a lot of regulations. As the government cannot track workers, it will track and task employers. It means the cost will go up and companies will pass on the cost to gig workers, reducing their take home income.
Rituparna Chakraborty is co-founder and executive vice president of TeamLease Services.
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