ESS Paper Series No. 18

The Welfare Fund for Construction Workers in Tamil Nadu

Although there are some social security schemes of national application in India, such as the Employees Provident Fund Scheme, they focus on the organized sector, whereas there is a need for a national social security policy. Some states, however, have given greater priority to social security through the establishment of non-contributory social assistance schemes, and the national government has in recent years tried to reinforce these efforts through the National Social Assistance programme. Some states such as Tamil Nadu and Kerala have also given priority to providing social security to unorganized workers through the development of welfare funds based on occupational groups.

This study examines the Tamil Nadu experience in this respect with some comparative reference to Kerala. State legislation enacted in 1982 provided the basis for welfare schemes to be set up in Tamil Nadu for specified categories of workers and eight welfare boards have been established with worker, employer and government representatives. The study focuses on the Welfare Fund for Construction Workers (the Welfare Fund), which commenced in November 1994 and provides a range of welfare measures such as benefits for fatal and non-fatal accidents as well as grants for education, marriage and funerals. Manual workers over the age of 15 can register with the Board and pay Rs.25/- as an insurance premium to cover accidental death or disability. In practice, however, workers are registered through their trade unions but the level of registration is low, 18 per cent of two million workers in the sector. Of the 90,000 members identified in a survey conducted under the study, only 200 had received any monetary benefit from their membership. Employers pay 0.3 per cent of each construction contract to the Welfare Fund but compliance is a problem and the benefits are too small to make a difference to living conditions. The study recommends that the contribution rate can be increased to 1 per cent if the following two conditions are met: (i) there is in-depth study done on the reasons for the large current surplus of the fund, and (ii) there is a clear plan about how the current surplus and the increased future resources will be used for greater coverage and improved benefits. Moreover the Welfare Board should take direct responsibility for providing compensation for accidents, such as is done in Kerala. It concludes that there is a need for the various welfare funds to operate on a more uniform basis and that consideration should be given to achieving a greater degree of integration under one single board.