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LATEST NEWS UPDATES | Draft social security code: Will it help informal workers? -Sharmila Kantha

Draft social security code: Will it help informal workers? -Sharmila Kantha

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published Published on Sep 23, 2017   modified Modified on Sep 23, 2017
-Ideas for India

Labour law reform is considered as a key requirement for creation of new jobs as well as greater formalisation of existing jobs in India. In March this year, the Ministry of Labour and Employment brought out the draft social security code to amalgamate several Central labour laws and extend employment security to all workers. In this article, Sharmila Kantha discusses the positive features and practical aspects of the legislation.

India’s labour regulations have been cited as a key deterrent to job creation in the formal sector (Pachouri 2014). Of the country’s 473 million workers as of 2011-12, over 90% are informal workers, without recourse to social security such as pension, medical care, or other benefits (International Labour Organization (ILO), 2016).

There are as many as 44 Central laws and numerous State laws governing employment. Many of them are outdated, and confusion prevails over issues such as definitions of common terms like ‘worker’ and ‘wages’. Moreover, this plethora of laws and regulations relates mostly to formal sector enterprises − that is, manufacturing enterprises employing 10 or more workers and using electricity, or employing 20 or more workers and not using electricity − registered under the Factories Act, 1948.

Reform of labour regulations has been considered to be a key requirement for creation of new jobs as well as greater formalisation of existing jobs. As per the Economic Survey 2015-16, medium-sized manufacturing firms in the formal sector identify labour regulations as a significant barrier to growth. The Economic Survey for 2016-17 suggests that labour law reforms related to workers’ social security could create more jobs in the formal sector.

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Ideas for India, 21 September, 2017, http://ideasforindia.in/article.aspx?article=Draft-social-security-code%3A-Will-it-help-informal-workers


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