9/14/2015

MrunalSocialSecurity:Meaning,Laws&ConstitutionalProvisionsIndia

Mrunalhttp://mrunal.org

[Economy]SocialSecurity:MeaningandLawsinIndia
PostedByMrunalOn08/07/2012@6:40pmInEconomy|15Comments
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WhatisSocialSecurity?
HistoryofSocialsecurity
SocialSecurityinIndia
SocialSecurity:ConstitutionalProvisions
ConcurrentList
PartIVDirectivePrinciplesofStatePolicy
DifferencebetweenOrganizedandUnorganizedSectors
SOCIALSECURITYLAWSinIndia
EmployeesStateInsuranceAct,1948(ESIAct)
EmployeesProvidentFundsAct,1952
WorkmensCompensationAct,1923(WCAct)
MaternityBenefitAct,1961(M.B.Act)
PaymentofGratuityAct,1972(P.G.Act)
9. SocialSecurityInIndia:DifferentFromDevelopedNations
10. ProvidentFund
11. MockQuestionsforAPFC2012Exam

WhatisSocialSecurity?
anyofthemeasuresestablishedbylegislationtomaintainindividualorfamilyincomeortoprovide
incomewhensomeorallsourcesofincomearedisruptedorterminatedorwhenexceptionallyheavy
expenditureshavetobeincurred(e.g.,inbringingupchildrenorpayingforhealthcare)
socialsecuritymayprovidecashbenefitstopersonsfacedwithsicknessanddisability,unemployment,
cropfailure,lossofthemaritalpartner,maternity,responsibilityforthecareofyoungchildren,or
retirementfromwork
Socialsecuritybenefitsmaybeprovidedincashorkindformedicalneed,rehabilitation,domestichelp
duringillnessathome,legalaid,orfuneralexpenses
Itactsasafacilitatorithelpspeopletoplantheirownfuturethroughinsuranceandassistance.

HistoryofSocialsecurity
GermanywasthefirstcountrytointroduceSocialsecurityscheme(1883)
eachmemberofaparticulartrade(blacksmiths,painters,weaversetc)wasrequiredtocontributeat
regularintervals
Moneyfromthisfundwasusedforfood,lodging,hospitalandfeneralexpensesofagedanddisabled
members.
InUSA,SocialSecurityActcameintoexistencein1935.(yearsnotimportant,thisisonlyfodder
materialforEssay.)

SocialSecurityinIndia
IndiahasalwayshadaJointFamilysystemthattookcareofthesocialsecurityneeds.
Howeverwithriseofmigration,urbanization,nuclearfamiliesanddemographicchanges,Jointfamily
systemhasdeclined.Henceweneedaformalsystemofsocialsecurity.

SocialSecurity:ConstitutionalProvisions
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ConcurrentList
SocialSecurityandlabourwelfarefallsunderConcurrentlist,itmeansbothunionandstateGovernmentcan
makelawsregardingthesetopics.
(ListIIIintheSeventhScheduleoftheConstitutionofIndia)
ItemNo.23
SocialSecurityandinsurance,
employmentandunemployment.
ItemNo.24
WelfareofLabourincludingconditionsofwork,
providentfunds,
employersliability,
workmenscompensation,
invalidityandoldagepensionandmaternitybenefits.

PartIVDirectivePrinciplesofStatePolicy
Article41
Righttowork,toeducationandtopublicassistanceincertaincases
Stateshall,withinthelimitsofitseconomiccapacityanddevelopment,makeeffectiveprovisionfor
securingtherighttowork,toeducationandtopublicassistanceincasesofunemployment,oldage,
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sicknessanddisablement,andinothercasesofundeservedwant.
Article42
Provisionforjustandhumaneconditionsofworkandmaternityrelief
Stateshallmakeprovisionforsecuringjustandhumaneconditionsofworkandformaternityrelief.

DifferencebetweenOrganizedandUnorganizedSectors
Organizedsector
includesprimarilythoseestablishmentswhicharecoveredbytheFactoriesAct,1948,theShopsand
CommercialEstablishmentsActsofStateGovernments,theIndustrialEmploymentStandingOrdersAct,
1946etc.
Thissectoralreadyhassocialsecuritybenefitsunderabovelaws.
Examples:employeesofunionandstateGovernment,army,navy,airforce,Multinationalcompanies,
Infosys,TCSandsoon.
Unorganizedsector
ExamplesofUnorganizedsector
RuralAreas
UrbanAreas
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landlessagriculturallabourers
smallandmarginalfarmers
sharecroppers
personsengagedin
a. animalhusbandry
b. fishing
c. horticulture
d. beekeeping
e. toddytapping
5. forestworkers
6. ruralartisans

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streetvendors
hawkers
headloadworkers
cobblers
tinsmiths
garmentmakers
Constructionworkers

Unorganizedsectordoesnthavelabourlawcoverage.Theseareseasonalandtemporarynatureof
occupations.
Casualnatureofwork,labourmobilityishighhencebargainingpowerislow.

SOCIALSECURITYLAWSinIndia

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EmployeesStateInsuranceAct,1948(ESIAct)
coversfactoriesandestablishmentswith10ormoreemployees
Providesmedicalcaretoemployeesandtheirfamilies.
ProvidesCashbenefitsduringsicknessandmaternity
Monthlypensionafterdeathorpermanentdisability.
EmployeesProvidentFundsAct,1952
appliestospecificscheduledfactoriesandestablishmentsemploying20ormoreemployeesandensures
terminalbenefitstoprovidentfund,superannuationpension,andfamilypensionincaseofdeathduring
service.
WorkmensCompensationAct,1923(WCAct)
Requirespaymentofcompensationtotheworkmanorhisfamilyincasesofemploymentrelatedinjuries
resultingindeathordisability.
MaternityBenefitAct,1961(M.B.Act)
providesfor12weekswagesduringmaternityaswellaspaidleaveincertainotherrelatedcontingencies.
PaymentofGratuityAct,1972(P.G.Act)
provides15dayswagesforeachyearofservicetoemployeeswhohaveworkedforfiveyearsormorein
establishmentshavingaminimumof10workers.

SocialSecurityInIndia:DifferentFromDevelopedNations
Wedonothaveanexistinguniversalsocialsecuritysystem
92%oftheworkforceisintheinformalsectorwhichislargelyunrecorded
today1/8thoftheworldsolderpeopleliveinIndia.Theoverwhelmingmajorityofthesedependon
transfersfromtheirchildren.
Addressingsocialsecurityconcernswithparticularreferencetoretirementincomeforworker
InIndiathecoveragegapi.e.workerswhodonothaveaccesstoanyformalschemeforoldageincome
provisioningconstituteabout92%oftheestimatedworkforceof400millionpeople.

ProvidentFund
Heretheemployerstocontributetoaprovidentschemeprovidingalumpsumpaymentintheeventof
deathordisabilityoronretirement.

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3disadvantagesofProvidentFund
1. Moneyisinadequateforrisksoccurringearlyinworkinglife.
2. Providentfundsaregenerallyinvestedingovernmentsecurities,whichhaveverylowinterestrate(~8%)
comparedtootherinvestmentoptionssuchasmutualfundorevenBankfixeddeposits
3. Inflationerodestherealvalueofsavings.
ButFromthepointofviewofgovernment,ProvidentFundisattractivebecauseitgeneratesforcedsavingsthat
canbeusedtofinancenationaldevelopmentplans.

MockQuestionsforAPFC2012Exam
Q1Whichofthefollowingstatementsarecorrect?
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4.

SocialsecurityfallsunderthepurviewofUnionGovernmentonly.
SocialsecurityisafundamentalrightenshrinedintheConstitutionofIndia.
EmployeesStateinsuranceActappliestoanyestablishmentwith5ormoreworkers.
WorkmansCompensationActrequirespaymentofcompensationtotheworkerorhisfamilyincasesof
employmentrelateddeathonly.

Question:Matchthefollowing:
NameofAct
Year
PaymentofGratuity
1961
MaternityBenefit
1972
Workmenscompensation 1952
EmployeesProvidentFund 1923
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