Editorials/Opinions Analysis For UPSC 25 August 2023

Providing India’s Workers with Comprehensive Social Security

Context

An effective social security system that covers all of India’s worker groups is urgently needed. Dispiriting data that show that a sizeable section of the workforce does not get social security benefits highlight the need to close this gap in order to guarantee a just and secure society.

Relevance: GS Paper 2 – Social Justice – Social security

Mains Question

Based on data and comparisons with other countries, how does the Periodic Labour Force Survey Annual Report 2021–22 illustrate the gap in social security coverage for India’s workforce? (150 Words)

Describe Social Security.

In India, social security refers to a collection of policies and activities created to shield people and their families from a range of threats. Age, incapacity, disease, unemployment, and poverty are only a few of these hazards and vulnerabilities.

What different Social Security-related initiatives is the Indian government working on?

• PM-SYM, or Pradhan Mantri Shram Yogi Maan-Dhan Yojana.
• The National Pension Scheme (NPS) for Independent Contractors.
• PMJJBY, or Pradhan Mantri Jeevan Jyoti Yojana.
• PMSBY, or Pradhan Mantri Suraksha Bima Yojana.
• National Safai Karamcharis Finance and Development Corporation (NSKFDC); Atal Pension Yojana.
• Self Employment Scheme for Manual Scavengers Rehabilitation.

Social Security Situation Currently

• Numerous publications highlight the depressing fact that, according to the Periodic Labour Force Survey Annual Report 2021–22, 53% of India’s salaried labour still lacks access to basic social security benefits. Because of this worrying condition, people are unable to receive important benefits including healthcare and disability insurance, pensions, and provident funds. Surprisingly, only 1.9% of the workforce’s poorest quintile receives any benefits, emphasising the system’s glaring inequity. Even gig workers, who make up only 1.3% of the working force, are still mostly not covered by social security. The poor condition of India’s social security is also reflected in international rankings, with Mercer CFS placing it at a bottom 40 out of 43 nations in 2021.
• The Historical Neglect and Misallocation of Resources Report berates policymakers for not paying enough attention to the creation of a thorough social security framework. The budgeted budgets have continually been insufficient, and the actual utilisation has been considerably worse, notwithstanding intermittent policy declarations. An example of this is the establishment of the National Social Security Fund in FY11, which had an initial allocation that was significantly less than what was actually needed. Audit reports, like one from the Comptroller and Auditor General of India (CAG) in FY17, make shocking revelations about how much money set aside for social security has gone unused, making various programmes ineffective.

Comparing Countries: A Snippet of the Possibilities

Various Reports compare the situation in India to that of Brazil’s General Social Security Scheme, emphasising the latter’s achievement in offering workers and their families contribution-based protection against a variety of calamities. Brazil’s all-encompassing strategy takes into account mishaps, sicknesses, impairments, family responsibilities, and even lost wages from incarceration. He stresses the significance of implementing successful global models while customising them for India’s particular situation.

Opportunities and Challenges

It highlights the importance of providing social security to this significant group by highlighting the dominance of the informal sector, where about 91% of India’s workforce works. He acknowledges that India’s population is ageing and contends that employees with low savings will confront catastrophic situations if there is inadequate social safety. It praises the Code on Social Security (2020) as a positive development but points out that it continues to place a strong emphasis on formal businesses while mainly ignoring the informal economy.

Proposed Social Security Reform Measures

It suggests a multifaceted approach that focuses on both formal and informal employees in order to attain universal social security coverage. It recommends increasing contributions through the Employees’ Provident Fund Organisation (EPFO) for formal employees and obtaining partial contributions from unpaid, high-earning informal labourers. Another crucial element is encouraging unofficial businesses to formalise their operations and pay into social security. Intervention from the government is crucial for individuals who are jobless. The cost of providing social assistance to the workforce’s poorest 20% is anticipated to be 1.37 trillion, or roughly 0.69% of GDP in FY20.

Enhancing Current Reforms and Systems

The Code on Social Security (2020), which aims to expand coverage to other worker groups, is one of the efforts lauded so far. It does, however, draw attention to implementation flaws, particularly the fact that informal employees are required to register rather than employers. It recommends working with companies to promote formalisation and make social security benefits required. A pan-Indian labour force card and the expansion of popular programmes like the Building and Other Construction Workers Schemes are also called for in order to expand coverage beyond gig and construction workers.

Including Vulnerable Workers in Your Approach

It emphasises how important it is to address the particular difficulties faced by migrant and domestic workers. While migrant workers need wider access to social services in new places, domestic employees—who are frequently female—need protection from abrupt terminations.

Adapting Current Programmes and Increasing Awareness

Through budgetary assistance and expanded coverage, it urges improving programmes including the Employees’ Provident Fund (EPF), Employees’ State Insurance Scheme (ESI), and the National Social Assistance Programme (NSAP). The importance of administrative streamlining emphasises the need to remove overlapping areas of power and clarify definitions.

Increasing Knowledge and Empowerment

The article emphasises the importance of awareness efforts in the effort to create a robust social safety net. Organisations like the Self-Employed Women’s Association could be extremely important in promoting social security rights and distributing information, particularly among women.

Conclusion

The importance of strengthening India’s social security policies and expanding universal coverage to the whole workforce is emphasised in the conclusion. It emphasises the significance of getting rid of outmoded beliefs and adopting measures that promote inclusive and fair growth. India can ensure that the rewards of prosperity are shared by all citizens and that employees may find stability and security in a changing labour market by developing a robust social security system.

The Population Issue in India

Context

The Prime Minister highlighted India’s status as a country with a sizable youth population during the Independence Day speech and emphasised the variety of opportunities accessible to the youthful generation of the nation. However, a study of India’s workforce using information from CMIE’s Economic Outlook suggests a divergent trend: despite the country’s substantial youthful population, the workforce is rapidly ageing.

Relevance –

• GS Paper 2 – Government Policies and Interventions
• GS Paper 3 – Indian Economy – Demographic Dividend

Mains Question

Describe the “demographic dividend” concept and its importance for India’s economic development. How is the realisation of this dividend affected by the changing makeup of the workforce? Identify important techniques for utilising the youth population’s potential for long-term economic growth. (250 words)

Describe CMIE

The Centre for Monitoring Indian Economy, or CMIE, is a well-known source of corporate information. It was established in 1976 as an independent think tank, which is when its history began. The scope of CMIE has grown to include all facets of the information domain over time. This includes the broad collecting of primary material, the development of educational goods, analytical skills, and predicative knowledge. Government agencies, educational institutions, financial markets, businesses, professionals, and media outlets are just a few of the diverse groups of customers that CMIE serves when they’re looking for business information.

Demographic Dividend: What Is It?

The term “demographic dividend” refers to the favourable economic potential that develops when the proportion of people in the working-age population (15 to 64 years) exceeds that of people outside of this age range. When a sizable portion of the population is in the labour force, this dividend becomes manifest. According to this scenario, there is a greater pool of potential workers who can actively contribute to the development and growth of the economy.

What does “India’s workforce is ageing” mean?

The phenomenon of an ageing workforce in India can be explained as a situation where there is a visible increase in the number of people who are close to 60 years old while there is a noticeable decrease in the proportion of younger people among the employed.

Analysis of Age-Based Workforce Composition

Data in Percentage

The term “youth” refers to people in the CMIE dataset who are between the ages of 15 and 25.

However, taking into account the Prime Minister’s description of people under 30 as young, the makeup can be divided into three groups:

1. People who are 15 years of age or older but under 30.

2. People who are at least 30 but under 45 years old.

3. People who are 45 years of age or older.

The proportion of young people in India has decreased, falling from 25% in 2016–17 to just 17% by the end of the most recent fiscal year in March. In a similar vein, the proportion of people who are middle-aged has decreased from 38% to 33% over the same time period. In contrast, the oldest age group has seen an increase in share from 37% to 49%. This effectively means that, in just seven years, there has been a significant ageing trend in the workforce, as the percentage of workers who are 45 years of age or older has increased from one-third to over half.

Data in Absolute Numbers

The report shows a decline in the total number of employed people, from 41.27 crore to 40.58 crore. The representation of India’s youth, however, has seen the worst decline. A total of 10.34 crore people under the age of 30 were employed in 2016–17. This amount had decreased by more than 3 crores by the end of 2022–2023, and it now stood at just 7.1 crore.

Despite the general drop in employment levels, the number of people aged 45 and older has increased concurrently.

Ageing of the workforce in India: Decline in Youth Employment Participation

• Despite rising population numbers, the younger demographic is seeing a decline in their representation in the labour market.Examining the “Employment Rate” metric is one useful strategy for keeping track of this phenomenon.

• The Employment Rate (ER) for a certain population or age group sheds light on the percentage of that population or age group that is employed.

•For instance, if 100 people between the ages of 15 and 29 exist, but only 10 of them are employed, the corresponding ER would be 10%.

Examination of Employment Rate by Age Group

Group of Ages: 15 to 30

• According to the Prime Minister, the youth demographic increased in size from 35.49 crore in 2016–17 to 38.13 crore in 2022–23.

• However, there was a reduction in the overall number of people in this age range who were employed.

•It’s interesting to note that the number of employed people fell by 3.24 crore despite the young population growing by 2.64 crore.

•In essence, over the past seven years, India’s young experienced a significant 31% decrease in employment prospects rather than preserving parity.The Employment Rate for this age group has significantly decreased, which is matched by this fall.This rate fell from 29% to just 19%. To put it another way, while 29 out of every 100 people in the 15 to 30 age group were employed seven years ago, only 19 out of 100 people are employed today.

Age group: 30 to 45 This age group’s employment rate has decreased as well, though to a lesser amount; also, this age group’s beginning employment rates were noticeably higher.

45 years of age and older

• Among the different age categories, people over the age of 45 have had the least noticeable fall in employment rates. It’s interesting to note that this is the only age group where the number of people who are actually employed has increased.It’s important to note that this group’s population as a whole has grown even more, which has helped to reduce ER to some level.

• The subgroup of those aged 55 to 59 in the 45 years and over category stands out.

• The employment rate increased in this particular age group (55–59), which also represented the most significant ER growth during the seven years prior.

A projection based on analysis of the employment rate’s apparent shift in India towards an ageing workforce

• However, a closer look at the absolute figures reveals that this upsurge in the ER isn’t caused by a higher number of people in this age group finding employment, but rather stems from a sharp decline in the overall population within this range. • The age bracket spanning 25 to 29 years exhibits a noticeable increase in the employment rate across the past seven years when five years of data are considered.

Challenges of Finding Employment for a Rapidly Growing Youth Population

The data unmistakably show that despite India’s rapidly growing young population, there hasn’t been a corresponding rise in the number of youth employment opportunities. This phenomenon results from young people having trouble making a name for themselves in the job market and signs that older segments of the Indian population are gradually challenging them for jobs.

Predominance of Unemployment Among Young People

• Even after taking into account the possibility that a significant portion of young people may be pursuing higher education, the trend is still startling enough to demand policymakers’ attention.

• For example, official surveys, aside from those carried out by CMIE, show that unemployment rates in India are most pronounced among young people.

Important Things Policy Planners Should Keep in Mind

The dynamic force of demographics: Only if policies and activities are in line with the changing demographic situation can India’s potential benefits from its demographic advantage be realised. It’s crucial to remember that demographic trends are not set in stone.

Fostering Socioeconomic Infrastructure and Essential Competencies

The predicted demographic boom might quickly become a negative demographic setback if an undereducated, unemployed, and disgruntled youthful population threatens social cohesion and economic advancement.

The working-age population’s readiness for employment, their access to high-quality healthcare and education, their ability to participate in vocational training, and their mastery of pertinent skills are all important variables in realising the demographic dividend’s promise. It also calls for adequate labour and land policies, together with strong governance procedures.

Conclusion

Compared to other developing nations, India has a sizable youth population. Nevertheless, not giving this group of people employment chances could make things worse.Without a change in these trends, India may continue to experience the paradoxical situation of maintaining a young national profile while having an ageing workforce.