Keywords: Unorganized Sector, ILO, Social Security, Labor, Target Groups
1. Introduction
Ever since the legislative framework in 2008 namely the Unorganised Workers' Social Security Act, 2008, India has shown to be all-providing in terms of health security, food security, employment security and other conventional forms of income security in the form of maternity benefit, invalidity benefit, and old age benefit. But despites various such frameworks, we continue to lag behind as although the act legislates security for about 94% of the workforce, it is criticised for not being assertive in how it is worded, as it confers an ‘discretionary’ power to the government to introduce welfare schemes and does not make it mandatory. Moreover, in a shocking manner the act remains non-committal on a ‘national minimum wage’, improving the conditions of workers in workplace and the conditions for the female sector, as it still largely remains poorly guarded from sexual harassment and discriminatory pay cheques.
Over the past 20 years, it has been evident that India's informal economy has grown faster than its organised economy, which has also experienced widespread layoffs and job losses. This is because of globalisation. On a much earlier report on the Conditions Of Work And Promotion Of Livelihoods In The Unorganised Sector by the National commission for Enterprises in the Unorganised Sector, the report puts forward that
"The net growth of employment in the quinquennium (1999-00 to 2004-05) has been largely of an informal kind implying that these workers are vulnerable in significant ways. This is true of both formal and informal sectors, which means that even the increase in employment in the formal sector is entirely that of informal employment and informalization of the formal sector as far as employment is concerned”
An even bigger concern stems from the fact that many of the activities they engage in typically go unnoticed by the government apparatus that is in charge of enforcing labour rules and regulations and even administering social security. Thus, making unorganised labourers susceptible to the schemes of dishonest individuals, such as public officials, who want to take advantage of them.
It is with a notion to discard these evils that we need to revamp our entire framework into one that’s all providing and ensure that this massive workforce in the form of unorganised sector is marked with a regularity in employment, numerous social security benefits and dignified wages with the best possible working conditions. For this an beginning step would be unionization, which is lacking hugely among most of the informal workforces present in India, and in some cases even if present, is plagued by problems such as lack of employment security, refusal of employers to bargain with informal sector unions and so on.
2. Literature review
A. Kar, S. (2015). History of Social Security of Unorganized Workers -- With Special Reference to India. SSRN
Kar (2015) in this journal article elaborates on how India's social security status is marked by ambiguity in policy and accountability. There are numerous schemes, however they are unable to confirm a consistent policy or direction because they were developed at different eras. The authors drawing on this have investigated what social security programs and methods to apply in the unorganised sector can guarantee the best outcome in the Indian setting, based on this journal article of his.
B. Jhabvala, R., & Subrahmanya, R. K. A. (2000). The unorganised sector: work security and social protection. SAGE Publications
This book became the primary reference for understanding the crucial topic of providing social security to employees can be implemented to benefit the unorganised sector—which currently employs 92% of India's labour force—is covered in this book. These people don't have access to social security benefits, have unstable jobs, and make little money. The authors have emphasised how theory is not the focus of this book—practice is and drawed henceforth numerous ways to facilitate social security
C. Parliament of India. (2008). Unorganised Workers' Social Security Act, 2008.
This legislation of government of India is opined by the authors as being on faulty lines, despite being one with a good intent in the minds of legislators. The Unorganised Workers' Social Security Act, 2008 represents a significant legislative effort aimed at providing social security to the vast unorganised workforce in India, which constitutes approximately 94% of the country's total workforce (Rangarajan, 2012). The Act, though widely welcomed as a pioneering attempt to address the social security needs of this segment, has been critiqued for its limited scope and lack of mandatory welfare provisions.
3. Statement of research problem
This research seeks to examine the gaps in the current legislative and policy framework, with a focus on the inadequacies in providing employment security, social protections, and fair wages to unorganised workers. It will also explore the role of unionisation as a potential solution to address these challenges and propose a comprehensive reform to secure social and economic rights for India's unorganised workforce.
4. Methodology
This research paper employs a qualitative approach, which is best suited for our topic. We have extensively examined primary sources like working papers and statutes, conducting critical analysis. Additionally, we have drawn on secondary sources such as books, journals, and case studies to analyze the implications of and solutions to the ill-implemented social security schemes for the welfare of the unorganised sector.
A. Objectives
To identify and analyse the key determinants and traditional/modern constituents of social security in the context of the unorganised sector.
To critically assess the current social security schemes in India for unorganised workers, focusing on their adequacy, accessibility, and limitations.
To examine the challenges faced by unorganised sector workers, such as wage instability, informal employment, and lack of access to social security benefits.
To explore potential reforms, including the role of unionisation, that can enhance social security provisions and improve the working conditions of unorganised workers in India.
B. Research questions
What are the key determinants and constituents of social security in India, particularly in the context of unorganised sector workers?
How effective are the existing social security schemes in addressing the needs of the unorganised sector, and what gaps exist in their coverage and implementation?
What are the specific challenges faced by unorganised workers, including issues of low and unstable wages, casual employment, and lack of formal employer-employee linkages?
How can unionisation and other reforms contribute to improving social security provisions for unorganised workers in India?
5. Data Collection
5.A. Evolution of Social Security: Traditional Foundations and Modern Adaptations in India
To grasp the current landscape of social security schemes in India, it is essential to first conceptualize social security itself and its evolving nature. Social security is an inherently dynamic and fluid concept, continually shaped by socioeconomic conditions, technological advancements, and policy shifts. Rather than being a static framework, it is a flexible mechanism that adapts over time, varying across regions and contexts.
At its core, social security embodies a broad commitment to ensuring the welfare of individuals who are rendered unable to sustain themselves due to factors such as age, illness, or disability. It serves as a societal safety net, aimed at providing income security and basic provisions for those who are unable to engage in productive labour due to circumstances beyond their control.
In an Indian Context, the National Commission on Labours has endorsed the International Labour Organisation’s definition, according to the International Labour Organisation, Social security is the:
“Protection that a society provides to individuals and households to ensure access to health care and to guarantee income security, particularly in cases of old age, unemployment, sickness, invalidity, work injury, maternity or loss of a breadwinner.”
Now that the definitional understanding of Social Security has been established it is important to look at the constituents of Social Security. The constituents of Social Security can be divided into 2 sub categories, i.e. the traditional constituents and the Modern Constituents. The traditional constituents of Social Security; Social Security as a concept emerged in the late 1930’s and at that time social security was referred to a set of measures designed to provide medical care and income security to the members of the society. In actual practice there are 2 traditional constituents of social security; (1) Social Insurance (2) Social Assistance.
5.A.1. Social Insurance: A Collective Shield for Economic Security
Social insurance, as defined by the International Labour Organization (ILO), represents a structured system of protection designed to provide financial and social security to individuals with limited earnings. It operates through a collective mechanism, where benefits are extended to individuals as a matter of entitlement, not charity. This system is characterized by the pooling of contributions from multiple sources—namely the insured individuals, employers, and the state.
Rather than functioning purely as a state-sponsored welfare initiative, social insurance reflects a partnership model, where the responsibility of securing an individual's financial well-being is shared across society. By integrating personal contributions with state subsidies and employer participation, social insurance ensures that even those with modest incomes are protected against vulnerabilities such as illness, unemployment, or retirement. This framework not only provides immediate financial relief but also fosters long-term socioeconomic stability by embedding the principles of collective responsibility and shared risk into the fabric of social protection.
5.A.2. Social Assistance: The State’s Lifeline for Vulnerable Populations
Social assistance is a state-organized mechanism aimed at providing targeted financial aid and essential services, such as medical relief, to individuals and groups who are unable to meet their basic needs through personal or external resources. Unlike contributory systems like social insurance, social assistance is non-contributory, meaning that individuals receive support based on their need rather than their prior contributions. It acts as a critical safety net for the most vulnerable sections of society, ensuring that those facing economic distress, health crises, or social marginalization are not left without basic provisions for survival.
In the broader framework of welfare, social assistance reflects the state's commitment to equity and social justice, recognizing that certain individuals, due to circumstances such as sickness, unemployment, old age, or occupational risks, may lack the capacity to secure their livelihoods independently. In the Indian context, social assistance programs often cover areas such as maternity benefits, unemployment aid, medical care, and support for the elderly, thereby addressing a range of life contingencies. This model represents the state's role as a guarantor of social protection, ensuring that even those on the economic margins are afforded a basic level of security, dignity, and well-being. Through direct interventions such as cash transfers and subsidized services, social assistance plays a key role in bridging gaps in societal inequality, fostering inclusion, and promoting human development.
5.B. Revamping Social Security: Addressing the Gaps for India's Unorganised Workforce
Social security represents a fundamental necessity for individuals, transcending the specifics of their employment or living conditions. It constitutes a vital form of social protection essential for safeguarding the welfare of all workers. In India, where approximately 92% of the workforce operates within the unorganised sector—including a significant portion in agriculture—there is a marked lack of comprehensive social security coverage. This sector, encompassing small and marginal farmers, landless agricultural labourers, and others, remains largely unprotected by existing social legislations.
The imperative for social security in the unorganised sector is both profound and multifaceted, given the limited financial resources available. The needs of these workers, which include income security, access to basic necessities such as food, water, healthcare, childcare, shelter, and education, mirror those of their counterparts in the organised sector. Despite lacking formal protection, the unorganised sector significantly contributes to the economy through labour, skill, and entrepreneurship. Ensuring these workers receive essential entitlements could not only enhance their quality of life but also bolster the nation's overall economic growth. On the other hand, if their economic contribution is not recognised and enhanced, i.e. if they continue to be only the recipients of the safety net policies, they will continue to be mere beneficiaries.
Hence, the recognition of the social security for the unorganised sector is becoming more urgent and central to success the structural advancements of the country. Social Security for the Unorganised sector must at least include healthcare (Maternity, Injury, etc), Childcare, Sheter and Healthcare.
5.B.1. Navigating Social Security Challenges for India's Unorganised Sector In Reference To Various Schemes In India
The current social security status in India calls for an urgent need of change that has to be made to ensure that the unorganised sector of workers can survive and contribute to the nations growth. There have been several obstacles that have made it difficult for the government to implement schemes for the unorganised sector workers. For instance, the main obstacle in the coverage of wage earners in small establishments is that the identification and registration of such establishments is s very hard task. It can also be observed that due to the increasing globalisation and liberalisation policies, the number of workers in the unorganised sectors in India is increasing.
The Social Security measures for the unorganised sector of labours is constrained due to factors that include;
Lack of permanent or stable linkage between employer and employee that precludes the schemes based on employer’s contributions.
As mentioned earlier a large population of Indias workforce is in the informal sector and hence the problem of a stable linkage arises. Also, due to this the traditional schemes launched by the government such as the Employees Provident Fund (EPF) and the Employees State Insurance (ESI) face challenges. These schemes are fundamentally designed for the formal sector, i.e. for employees that have a stable and a formal employment where the employers make regular contributions to the employee’s benefits. EPF and ESI are based on the assumption that the employers will make regular contributions on behalf of the employees. However, in the informal sector, where employment is often transient, this linkage is weak. Employers may not consistently contribute to these schemes because they might not have formal contracts with their workers. The lack of such a stable coverage means that many employees of the unorganised sector do not derive benefits for such schemes. To overcome these challenges the government came up with measures such as the Pradhan Mantri Shram Yogi Maan-Dhan (PM-SYM). The PM-SYM is basically a voluntary and contributory pension scheme, under which the subscriber would receive a minimum assured pension of Rs 3000/- per month after attaining the age of 60 years and if the subscriber dies, the spouse of the beneficiary shall be entitled to receive 50% of the pension as family pension. This scheme even though not as comprehensive as the EPF or ESI provides for a pension scheme for the workers in the unorganised sector. Also, recent initiatives such as the use of digital and online platforms aim to ensure the contributions from the informal sector employers. For instance, the e-Shram portal was launched to create a national database of unorganized workers and facilitate their access to social security benefits.
Low and unstable wages and lack of round the year employment which precludes schemes based on employee’s contribution.
Many workers in India, especially those in the informal sector, earn low wages. The National Sample Survey Office (NSSO) reports that a significant portion of India's workforce earns below the minimum wage threshold, which affects their ability to make regular contributions to social security schemes. This also indicates towards the income instability which is in the unorganised sector. For instance, agricultural workers, daily wage labourers, and those in construction often face fluctuations in their earnings depending on the season or availability of work. Also, many Indian workers are engaged in seasonal occupations, such as agriculture, where employment is not continuous throughout the year. This irregular employment pattern means that these workers often experience periods without income, making it challenging to maintain regular contributions to schemes like the Employees' Provident Fund (EPF) or the Employees' State Insurance (ESI). Social security schemes such as EPF and ESI require regular contributions from employees, which is challenging when wages are low or unstable. For example, if a worker's income fluctuates or is below the contribution threshold, they may not be able to contribute consistently to these schemes. Due to these challenges, many workers are excluded from formal social security schemes. This gap in coverage leaves them without crucial benefits such as retirement savings, health insurance, and other forms of financial security which in turn leads them to not contributing much to the nations growth and they tend to stay as mere beneficiaries.
Purely Casual nature of employment which precludes benefits such as sick leaves, maternity leaves etc.
The casual nature of employment here implies that the irregular and temporary nature of the work that the persons of the unorganised sector get. These jobs are often without formal contracts and most of them are for short-term engagements and no commitment from the employers to provide for long term job security and benefits. These workers are often hired whenever a need arises and hence lack a formal employment contract. Due to the nature of the employment these workers are not generally entitled to sick leaves, this means that due to the temporary nature of their work these workers cannot take time off such temporary engagement as this would further increase the financial burden as they don’t get paid for the days work. Also, such workers also do not enjoy the maternity leaves which are typically available to the employees of the formal sector, i.e. the employees who have a formal contract of work. While there are some legal frameworks such as the Maternity Benefit Act 1961, and various state specific labour laws they often fail to reach casual workers due to their informal employment of work, as these provisions are majorly for people who have a formal contracted employment and often fail to reach the workers in the unorganised sectors.
5.C. Critical Gaps in India's Social Security Schemes for the Unorganised Sector: A Comprehensive Review
The existing social security schemes for the unorganised sector are not perfectly designed to adapt to the existing state of the unorganised labour sector of India. The current schemes can be challenged on 4 major grounds.
The eligibility criterion for mostly all the state or government sponsored schemes is the BPL (Below Poverty Line) criterion, this criterion is grossly inadequate as in a survey conducted it showed that nearly 70% of the households were found to have incomes above the poverty line. This however does not mean that such households do not social securities, they also face some major deprivations in respect to livelihood, human development and poor lifestyles. As these families have incomes above the poverty-line they are not eligible to benefit from the existing schemes.
The existing schemes do not cover for all the social security needs of the workers of the unorganized schemes. For instance, the National Social Assistance Programme (NSAP) of the central government largely provides only for, old age pension, maternity benefits and family benefit and they do not provide for the health and employment contingencies of the workers of these sectors. Also, programmes such as the Sampoorna Grameen Rozgar Yojna (SGRY) and the Swarnajayanti Gram Swarojgar Yojana (SGSY) have not been properly implemented and haven’t been proven much effective.
The existing social security schemes are specific-purpose schemes and do not combine contingencies. The schemes have to be designed in a form that combines contingencies so that the benefits derived out of the schemes are utilised to the fullest by the workers of the unorganised sectors.
6. Data Analysis
6.A. Evolving Social Security in India: Addressing Challenges and Adapting Traditional Frameworks
Despite the foundational strengths of these traditional constituents, the evolving nature of social security in India faces significant challenges. The informal and unorganised sector, which constitutes a large portion of the workforce, often lacks access to comprehensive social security benefits. Issues such as inadequate eligibility criteria, limited coverage of essential needs, and the specific-purpose nature of existing schemes hinder effective protection for these workers.
Addressing these challenges requires adapting traditional frameworks to better align with contemporary needs. Modern adaptations, such as digital platforms and targeted schemes, are steps towards bridging gaps and ensuring more inclusive coverage. However, the dynamic nature of social security necessitates ongoing adjustments to meet the diverse needs of all individuals, particularly those in vulnerable and unorganised sectors.
In conclusion, while the traditional constituents of social security—social insurance and social assistance—provide a foundation for protection, the modern landscape demands continuous evolution and adaptation to ensure comprehensive coverage and support for all segments of society.
6.B. Addressing Social Security Gaps: Innovations and Challenges in India's Unorganised Sector
The current social security landscape in India reveals a stark disparity between the protections afforded to workers in the formal sector and those in the vast unorganised sector. Despite the foundational role of traditional social security schemes, these frameworks fall short in addressing the complex and unique challenges encountered by workers in the unorganised sector. This sector, encompassing approximately 92% of the workforce—including significant numbers in agriculture—faces critical gaps in coverage that undermine workers' economic stability and well-being.
Workers in the unorganised sector often engage in transient, informal employment without formal contracts or stable employer-employee relationships. Traditional social security schemes such as the Employees' Provident Fund (EPF) and Employees' State Insurance (ESI) are designed around stable, formal employment where employers make regular contributions. The informal nature of unorganised sector employment creates significant barriers to enrolling in and benefiting from these schemes. Workers' inconsistent engagement with formal employers prevents systematic contributions and undermines the effectiveness of existing social security measures.
The economic instability experienced by unorganised sector workers is another formidable challenge. Many of these workers, including those in agriculture and daily wage labour, earn wages that fall below the minimum threshold and face significant income fluctuations and finally the casual and temporary nature of employment in the unorganised sector further complicates access to essential social security benefits, including sick leave and maternity leave. Without formal contracts, workers lack job security and are typically not entitled to benefits that are standard in the formal sector.
The challenges faced by India's unorganised sector underscore the necessity for a transformative approach to social security. While traditional schemes have laid the groundwork, evolving the social security landscape to meet contemporary needs is crucial. The integration of innovative solutions and ongoing policy adjustments are imperative to ensure comprehensive coverage and support for all workers. By addressing the unique challenges of the unorganised sector, India can enhance worker welfare and foster sustained economic growth, ensuring that all segments of the workforce are protected and empowered.
6.C. Unveiling the Cracks: The Crisis of Social Security in India's Unorganised Sector
The current social security schemes for India's unorganised sector exhibit several critical weaknesses, largely stemming from their inadequate design and implementation. Firstly, the use of the Below Poverty Line (BPL) criterion for eligibility is highly problematic, as it excludes a significant portion of the workforce that, while above the poverty line, still faces severe economic and social challenges. This exclusion overlooks the nuanced financial vulnerabilities of workers who are not classified as impoverished but nonetheless struggle with basic needs. Secondly, existing schemes such as the National Social Assistance Programme (NSAP) offer limited and fragmented coverage, addressing only specific needs like old-age pensions and maternity benefits, while failing to encompass other crucial areas such as health care and job security. Furthermore, the schemes' specific-purpose nature results in a lack of comprehensive protection, as they do not integrate various contingencies into a cohesive support system. This fragmented approach undermines the effectiveness of social security for unorganised sector workers, necessitating a more inclusive, holistic, and adaptive framework to address their diverse and evolving needs.
7. Conclusion and Recommendations
In conclusion, it can be observed that the vulnerabilities of the unorganised sector have changed as the society has progressed, for instance, earlier the constituents of social vulnerability only included medical care and income security, whereas the modern labourers face many more problems such as old age, maternity and so on. It can be further observed that the current social security schemes provided by the central government or state governments of India are highly inadequate and ineffective for the labourers of the unorganised sector. Also, the current schemes merely provide for an informal natured employment to the workers of the unorganised sector or they provide for benefits such as maternity benefits or injury coverages only when the nature of the employment is formal and contracted in nature, hence, the unorganised sectors merely benefit from such schemes and tend to stay within the lower brackets of prosperity. The labourers of the unorganised sector of India face many challenges such as wage instability, informal employment contracts due to which many schemes and programmes launched by the government of India have been proved ineffective. It can also be concluded that the unorganised sector in India doesn’t work in very humane conditions and they also don’t get nay extra benefits for such jobs such as working in a bidi factory wherein the labourer is exposed to tobacco for long working hours which may later cause him/her health problems. The authors humbly put a few suggestions and recommendations for countering the same;
Workers in the unorganised sector should favour Unionization as it enables them to come together and negotiate with employers collectively, giving them a stronger bargaining power to demand better wages, benefits, and working conditions. This can help reduce exploitation and improve their overall quality of life.
The current schemes and programmes launched by either the state governments or the central governments are too inadequate in nature and they merely provide for employment of the workers, whereas most of the schemes of the government are aimed at the workers who have a formal employment and hence, the government should launch schemes that actually benefit the workers of the unorganised sector.
As mentioned earlier, one of the major problems of the unorganised sectors in India is that they lack a formal nature of employment, the governments should take steps and actions towards formalising the nature of the employment of the workers of the unorganised sector.
The unorganised sector workers of India face many hardships and challenges such as low income, which in turn leads them to not being able to provide for their basic needs such as, the incomes of the labourers in unorganised sectors are so low that they can merely provide for their own resources and even if they are able to do that they cannot provide for in case of medical and health emergencies which is an issue that the government can fix by either providing them with benefits that are enjoyed by the organised sector workers or by fixing a much more practical minimum wage level that is developed after taking all these factors into consideration.