Labour, Jobs and Employment – Harmonization of labour laws, gender gap, unemployment, etc.

Issues in Social Security Code 2020


From UPSC perspective, the following things are important :

Prelims level: Provision in Social Security Code 2020

Mains level: Paper 2- Issues with the Social Security Code 2020

Provisions in Social Security Code 2020

  • India’s Parliament in September 2020 passed a Social Security Code (SS Code 2020).
  • The SS Code 2020 merges existing social security laws and attempts to include informal workers within the ambit of social security administration.
  • The SS Code 2020 amalgamates and rationalises the provisions of eight existing central labour laws.
  • Of these acts, employees provident fund, employees state insurance (ESI), maternity benefit, gratuity are entirely for organised sector workers. 
  • Employee threshold removed: For employees’ state insurance, the existing employee threshold has been withdrawn.
  • Now the central government can extend ESI benefits to any organisation irrespective of the number of workers employed.

Key benefits not available to informal workers in Social Security Code 2020

  • Maternity benefit: Under the SS Code, the provision of maternity benefit has not been made universal.
  • Maternity benefit is presently applicable for establishments employing 10 workers or more.
  • The definition of ‘Establishment’ in the proposed code did not include the unorganised sector.
  • Hence, women engaged in the unorganised sector would remain outside the purview of maternity benefit.
  • Employees Provident Fund: The SS Code maintains that the Employees’ Provident Fund Scheme will remain applicable, as before, to every establishment in which 20 or more employees are employed.
  • Thus, for informal sector workers, access to employees’ provident fund remains unfulfilled too in the new code.
  • Payment of gratuity: Gratuity shall be payable to eligible employees by every shop or establishment in which 10 or more employees are employed, or were employed, on any day of the preceding 12 months.
  • But although payment of gratuity was expanded in the new Code, it still remains inaccessible for a vast majority of informal workers.

Challenges faced by informal workers in availing social security

  • Registration barrier: To avail social security, an informal worker must register herself on the specified online portal to be developed by the central government.
  • Absence of definition: The absence of definite and unambiguous provisions in the present code would further complicate achievement of universal registration.
  • Lack of awareness: Experience shows that there is an awful lack of awareness among informal workers regarding social security schemes.
  • Lack of digital literacy: Online registration places a further challenge as most informal workers lack digital literacy and connectivity.
  • Lack of documents: Informal workers also find it difficult to furnish all documentary papers required as part of the registration process.
  • Furnishing proof of livelihood and income details in the absence of tangible employer-employee relations is very difficult.
  • Such requirements deter informal workers from completing the registration and they continue to remain outside the social security ambit.

Way forward

The provision of social security could be used to formalise the workforce to a certain extent. Employers could have been made to own up to the responsibility of providing social security to their workers.

1) Inter-State cooperation

  • As unorganised workers are spread across the length and breadth of India, inter-State arrangement and cooperation becomes imperative.
  • The central government should conceptualise a basic structure, which if successful, should be adopted by States after necessary customisation.

2) Universal coverage

  • The unorganised workforce is all encompassing, minus the minuscule regular workers of organised sectors.
  • This identity should be primal and all unorganised workers should have basic social security coverage, irrespective of labour market classifications.
  • The code fails to undertake such inclusion in a meaningful way.


The Social Security Code fails to provide adequate protection to informal workers, who constitute 91% of the workforce. The pandemic and misery brought by it on these informal workers highligths the need for universal social security.

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