Concept note - Building a Social Protection Floor for India

Agenda | Kolkata, West Bengal, India | 27 October 2010



Draft Concept Note

Background and Context

The UN Social Protection Floor Initiative:

The United Nations Chief Executive Board (CEB), in April 2009, launched the Social Protection Floor Initiative as one of the nine key responses to the global economic and financial crisis

The CEB has fully recognized that the global crisis threatens to roll back and undermine decades of investment in favour of human and social development and in pursuit of internationally agreed development goals, such as the MDGs.

It also noted that the past economic crisis have usually resulted in significant reductions in aid flows and in national budgets to support needed social services, including education and health, and also across the whole spectrum of public services.

Against this backdrop, the CEB is of the opinion that the UN system should protect those fundamental elements of societal cohesion that make human and social development possible but which are often the first to be hit in a recession, such as social protection, education, health, the sciences and culture.

It calls upon countries to provide leadership by ensuring that their crisis response emphasizes the need to invest in exactly these areas: social protection, education, health, the sciences, culture, and other relevant social sectors.

The objective should be to spend in ways that will both kick-start economic growth and support more inclusive and sustainable development in the longer term – in other words, to invest out of the crisis.

The crisis offers an opportunity to note that in crisis conditions, social security benefits, public health programmes and social services act as social health and economic stabilizers thereby curtailing the potential social and economic depths of the recession, through avoiding poverty (and where this is not possible at least to alleviate poverty), through ensuring continuity in social services, and – very important – stabilizing aggregate demand.

That is why so many well k known experts, such as Joseph Stiglitz, call upon the international community not just to repair the problems identified by the crisis in global financial, monetary and economic systems, but also to advocate and support the development of a social protection floor, to protect people during the crisis, and thereafter.

To remain sustainable, social protection floor entitlements should:

- build on existing social protection measures/schemes/systems;

- avoid creating long-terms dependencies and moral hazards;

- be based on a clear definition of rights, that govern the relationship between the citizens and the state; and

- ensure continued and predictable funding.

It is important to note that within the framework of the Global Campaign for the Extension of Social Security for All, the ILO is already promoting the social transfer component of the social floor.

The generic model of the ILO for this component foresees four basic social security guarantees, namely:

- universal access to health care;

- access to bsic income security for all children;

- access to basic income support to the working-age poor who cannot earn sufficient income on the labour market;

- access to basic income security for the old, disabled and those who suffered from the loss of the main bread-winner.

The basic set of social security guarantees could be seen as a launching platform for further development of social security schemes as economies grow and more fiscal space is made available for social security.

The Global Jobs Pact:

The International Labour Conference in its 98th Session in June 2009 adopted “Recovering from the crisis: A Global Jobs Pact” This Pact encourages countries to reinforce existing systems where appropriate or to put in place new measures to assist the most vulnerable while building the foundation for more effective systems. Some of the Pact recommendations relevant to social protection include:

Introducing cash transfer schemes for the poor to meet their immediate needs and to alleviate poverty;

Building adequate social protection for all, drawing on a basic social protection floor including: access to health care, income security for the elderly and persons with disabilities, child benefits and income security combined with public employment guarantee schemes for the unemployed and working poor;

Extending the duration and coverage of unemployment benefits (hand in hand with relevant measures to create adequate work incentives recognizing the current realities of national labour markets);

Ensuring that the long-term unemployed stay connected to the labour market through, for example, skills development for employability;

Providing minimum benefit guarantees in countries where pension or health funds may no longer be adequately funded to ensure workers are adequately protected and considering how to better protect workers’ savings in future scheme design;

Providing adequate coverage for temporary and non-regular workers;

Reviewing and adapting minimum wages

Reinforcing existing social protection systems and building the foundation for effective

Relevance to India:

In recent years, the issue of social protection extension has gained strong momentum in discussions at all levels in the development agenda of India. The Government of India as well as the various state governments have demonstrated a wider awareness and stronger commitment to respond to the social protection needs of the presently excluded groups. As a direct result, numerous actors of civil society (community-based organisations, women's groups, trade, informal economy, trade unions, NGOs, microfinance institutions etc.) have already designed and set up in-house microinsurance schemes that were tailor-made to answer the priority needs and contributory capacity of their target groups.

However, India is still striving to extend basic human rights, including social protection, to all its citizens. The importance of the informal economy which consists today some 93% of the total labour force i.e. around 370 million workers, has been constantly growing over the last decades. Although contributing to some 63% to the GDP, these workers still cannot benefit from a fair redistribution of the wealth generated by their effort and remain excluded from formal social security mechanisms. It is estimated today that 90% of the entire population (some 950 million) is still deprived of any kind of social protection services, thus remaining exposed to the multiple risks affecting their daily lives and inhibiting their development initiatives. Among them, the most disadvantaged groups remain caught in a continuing cycle of poverty and vulnerability.

Over the last few years, the plight of the informal economy workers and their families has gained a huge momentum on the political agenda. The Government pledged to ensure, through social security, health insurance and other schemes, the welfare and well-being of workers, particularly in the informal economy. As a result, nowhere but in India, can one witness today so many initiatives taken at all levels to enhance the effectiveness and coverage of social security. Nowhere but in India can one see the prophecy to provide a global social protection floor coming so close to reality. Among the many recent initiatives taken by the Central Government, with regard to the social security needs of the workers belonging to the Below Poverty Line (BPL) group, the following may be mentioned:

Adoption of Social Security for the Unorganized Workers Act, 2009 and subsequent allocation of Rs.1000 crores (USD 215 million) for launching its implementation;

A National Rural Employment Guarantee scheme targeting the rural poor, presently being extended to all districts;

Various life/personal accident insurance products including an important subsidy component;

A maternity protection scheme relying on a conditional cash transfer mechanism to cover all BPL women across the country. A joint study by the ILO and the Ministry of Labour and Employment reviewing the Maternity Benefits Act, 1961 is currently underway to provide policy recommendations towards expanding the coverage of this Act;

The provision of an old age pension benefit of Rs. 200 per month to all BPL workers upon reaching the age of 65;

The launching of “Rastriya Swasthya Bima Yojana” (RSBY) - a new health insurance scheme fully subsidized by the Central and State Governments to provide hospitalization cover to all BPL workers and their families (about 300 million people)

Extension of RSBY to the construction workers. Also, currently the Ministry of Labour and Employment is working towards extending this scheme to the domestic workers, rickshaw pullers, rag pickers, auto-rickshaw/taxi drivers.

Establishment of a Task Force by the Ministry of Labour and Employment to explore the possibilities of expanding the National Pension Scheme for the unorganized workers;

Promoting accessibility of the hospitals of Employees State Insurance Corporation (Ministry of Labour and Employment) to informal economy workers (construction workers).

The 11th Five Year Plan (2007-12) have prioritized health Insurance for unorganized workers, maternity health insurance, National Rural Health Mission and safety in construction sector. In the Plan, the social security is treated as an inclusive concept that also covers housing, safe drinking water, sanitation, health, education besides the conventional concept of social security which is to provide safety mechanism for the stoppage or substantial reduction of earnings resulting from sickness, maternity, employment injury, occupational distress, unemployment, invalidity and old age.

The National Commission for Enterprises in the Unorganized Sector (NCEUS) recommended in its final report to the Government “to create a social floor and nobody is allowed to fall below that level as a matter of social priority and a bottom line of our developmental programmes.”. The Report went on to state that the three pillars of the social floor envisaged

by the Commission relate to universal minimum social security, setting a statutory National Minimum Wage and minimum conditions of work (for paid workers).

The Decent Work Country Programme (DWCP) for India jointly signed by the Government, Employers’ and Workers’ Organizations for ILO interventions towards contribution to the achievement of national goals in the field of labour has identified “Social Protection progressively extended particularly in the context of informalization” as a priority with an agreed outcome “Social protection policies/programmes formulated and progressively extended”. One of the outputs contributing to this outcome is to enable the constituents to have better access to knowledge/tools and mechanisms to address expansion of social security and achieving an Extended Social Floor for informal economy workers.

The Secretary, Ministry of Labour and Employment was invited to make a presentation in a Side Event on “Social Protection Floor Initiative” at the ILC 2010 in June this year.

The Mahatma Gandhi Rural Employment Guarantee Programme (MNREGA) and the Rashtriya Swasthya Bima Yojana (RSBY) have been selected as good practices from India. These and other case studies will be published at the end of the year by the UNDP Special Unit for South-South Cooperation (SU/SSC) as volume 17 of the series: Sharing Innovative Experiences.

Objectives of the Workshop

With the above background and to strengthen the capacity of the trade unions in India on the Social Protection Floor initiative, a two-day workshop is being organized. The main objectives of the workshop are:

To enhance the understanding of the trade unions on the concept of Social Protection Floor

To share experiences on social protection in South Africa and Brazil.

To share the existing policies/programmes of the Government on social security

To provide a forum for discussing the role of trade unions in promoting a Social Protection Floor building upon the existing policies/programmes

Identify specific areas for ILO’s assistance to the trade unions for their active participation in the future dialogues on building a social protection floor

Venue and Duration:

The Workshop is proposed to be held in a state capital where the environment for social protection issues is progressive in order to enable the participants to interact amongst themselves for information sharing. It is proposed to be held in Kolkata.

Duration – 1.5 days

Budget : US$ 20,000 (incl. contribution of US$ 2,000 from ACTRAV)

Dates: 15-16 November 2010