A Viable Innovation in Social Security

Context: Government has moved with speed to draft rules for implementing the Social Security Code, 2020.

Benefits of Social Security Code, 2020:

• Increases access to social security: to unorganized workers (migrants, farmworkers, part-timers, gig and platform workers); given that 85% of the workforce is in the unorganized sector.
• Universalization of coverage: Unorganized workers are required to register themselves using their Aadhaar number through a dedicated portal, to avail the social security benefits.
• Portability of benefits: It is the responsibility of the dedicated board to ensure continued access, even after workers leave the state.
• Post-retirement security: For gig and platform workers, the rules set out the contribution that the aggregator/employer must provide.
• Healthcare: The Employees’ State Insurance (ESI) registration has been made voluntary if the employer and majority employees agree to subscribe.

Way Forward:

• Deduction at the source of a portion of the gig worker’s earning, subject to a cap in absolute amount, for transfer to the retirement saving account.
• Shifting Ayushman Bharat from paying for insurance to paying ESI-like healthcare providers to take care of subscribers’ health.

Conclusion: The efficacy of the rules will depend on the ease with which workers are able to register and the portability of registration, the timeline for universal coverage, and ensuring universal compliance.