Mapping Social Security Financing System in India

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G20/L20 Conclave, BilaspurMapping Social
Security Financing System in India
Dr. Otojit Kshetrimayum Fellow, VVGNLI
otojit.vvgnli_at_gov.in 11 June 2023
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Build up from previous G20 Presidencies
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UN Sustainable Goals
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SDG Targets related to Social Protection Floor 1.3
Implement nationally appropriate social
protection systems and measures for all,
including floors, and by 2030 achieve
substantial coverage of the poor and the
vulnerable
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SDG Targets related to Social Protection Floor
3.8 Achieve universal health coverage (UHC),
including financial risk protection, access to
quality essential health care services, and
access to safe, effective, quality, and
affordable essential medicines and vaccines for
all
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SDG Targets related to Social Protection Floor
8.b By 2020 develop and operationalize a global
strategy for youth employment and implement the
ILO Global Jobs Pact
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What is social security?
Social security is a Human Right (Article 22,
Universal Declaration of human rights) Flagship
Convention 102 (1952) -Recommendation 202
(2012) Reaffirms universal right to social
security

• Social security is the protection that a society
  provides to individuals and households to ensure
  access to health care and to guarantee income
  security, particularly in cases of old age,
  unemployment, sickness, invalidity, work injury,
  maternity or loss of a breadwinner.
• Concerned with preventing, managing, and
  overcoming situations that adversely affect
  peoples well being.
• Set of guarantees that help people deal with the
  risks they face in life (ILO, 2012).
• As defined in the Social Security Code, 2020
• "social security" means the measures of
  protection afforded to employees, unorganised
  workers, gig workers and platform workers to
  ensure access to health care and to provide
  income security, particularly in cases of old
  age, unemployment, sickness, invalidity, work
  injury, maternity or loss of a breadwinner by
  means of rights conferred on them and schemes
  framed, under this Code.

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(No Transcript)
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Building National Social Protection Floor

• According to ILOs R-202 (2012), National Social
  Protection Floor comprises
• four social security guarantees
• Access to essential health care, including
  maternity care
• Basic income security for children, providing
  access to nutrition, education, care and any
  other necessary goods and services
• Basic income security for persons in active age
  who are unable to earn sufficient income, in
  particular in cases of sickness, unemployment,
  maternity and disability
• Basic income security for older persons.

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ILOs norms for implementing the right to Social
Security
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ILO Social Security Conventions Ratified by India
Sl. No. Social Security Branch Conventions Ratified by India
1. Medical care C.102 C.130 C.118 C.118 (1964)
2. Sickness C.102 C.130 C.118 C.118 (1964)
3. Unemployment C.102 C.168 C.118
4. Old age C.102 C.128 C.118
5. Employment injury C.102 C.121 C.118
6. Family C.102 C.118
7. Maternity C.102 C.183 C.118 C.118 (1964)
8. Invalidity C.102 C.128 C.118
9. Survivors C.102 C.128 C.118
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Social Security providing Institutions
State Market Member- based Organisation Private Households
Instruments Social insurance, social assistance, transfers, provident funds Insurance policy or contract Mutual arrangements, voluntary work Gift exchange, state contingent loans, remittances, transfers
Mode of operation Top-down Individualistic Mainly bottom-up Bottom-up
Incentives Rule of law, regulations Maximisation of profit and/or utility, price signals and quantity adjustment Balanced reciprocity, self-interest, voluntarism, solidarity social norms and values, altruistic behaviour, charity, self-interest
Sanctions Exclusion of people from programmes withdrawal of programmes Level of premium, limit supply of insurance Social pressure, exclusion from the organisation Social pressure, inherent family contract
Classification Central local Profit oriented firms private contractors NPOs cooperatives mutuals religious groups Family kinship neighbourhood
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SOCIAL SECURITY SYSTEM IN INDIA
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Social Protection Floor In India
Programmatic framework to improve the living
standards of the poor
Social security measures for workers in the
formal economy
Targeted social security programmes for the
very poor
Social Security Schemes
Social security measures for workers in the
informal economy
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People (in percentage) protected by social
protection systems including floors India (as
per ILOs World Social Protection Report)
S. No. Index ILO figures (exact) as per report, 2017-19 ILO figures (exact) as per report, 2020-22 Figures as per data from various schemes in India
1. Old Age (Percentage of labour force aged 15 years covered by pension scheme (active contributors) -- 15.5
1. Percentage of persons above 60 years receiving an old-age pension 24.1 42.5
2. Medical Care -- 55
3. Maternity 41.0 41.5
4. Invalidity 5.4 5.6
5. Employment injury -- 3.7
6. Unemployment 3 0.0
7. Sickness -- --
8. Family -- 24.1
9. Survivors -- --
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Old Age Benefit

• Types of Old Age Pensions
• Old Age Pension Schemes sponsored by Centre
• Central Government Pensioners
• National Pension System
• Employees Pension Scheme under EPF
• Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM)
• Pradhan Mantri Kisan Maandhan Yojana (PMKMY)
• Atal Pension Yojana
• National Pension Scheme for Traders and
  Self-Employed Persons
• Pradhan Mantri Vaya Vandana Yojana
• Varishtha Pension Bima Yojana
• Indira Gandhi National Old Age Pension Scheme
  (IGNOAPS)
• Old Age Pension Schemes sponsored by States
• Old Age Pension Schemes for specific sectors

• Building Workers

• Handloom Weave

rs

• Artisans
• Farmers/Agricultural Labourers

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Medical Care Benefits

• In India, medical care benefits can be
  categorized as
• Government Subsidized Schemes
• AB-PMJAY (w/o State Extension Schemes) and
• AB-PMJAY State Extension Schemes
• Social Health Insurance Schemes
• Employees State Insurance Scheme (ESIS) and
• Central Government Health Scheme
• Private Voluntary Health Insurance (PVHI)
• As per NITI-Ayog Report
• ESIS provides comprehensive coverage
  including in-patient and out-patient benefits
• to private establishment workers and their
  families.
• PVHI are contributory and voluntary schemes.
  PVHI are broadly of two types individual /
  family
• or group business (excluding Government).

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Maternity Benefits Schemes

• Maternity benefits schemes in India are
• Maternity benefits schemes sponsored by Centre
• Pradhan Mantri Matru Vandana Yojana (PMMVY)
• Maternity Benefit under ESI
• Pregnant Women and Lactating Mothers (PWLM)
  who are in regular employment with
  the Central Government or the State Governments
  or Public Sector Undertakings (PSUs) under MBA,
  1961
• Maternity benefits schemes sponsored by States
• Maternity benefits schemes for various categories
• Construction workers under Building Other
  Construction Workers Welfare Boards

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Invalidity Benefits Schemes

• There are 2.68 crore disabled persons in India.
  Invalidity Benefits
• Schemes in India are associated with the
  following schemes
• Disability Cash Benefits Schemes sponsored by
  Centre
• Indira Gandhi National Disability Pension Scheme
  (IGNDPS)
• Schemes under Department of Empowerment of
  Persons with Disabilities, MoSJE
• Scheme of Assistance to Disabled Persons
  for Purchase/Fitting of
• Aids and Appliances (ADIP Scheme)
• Accessible India Campaign
• Skill Development of PwDs
• District Disability Rehabilitation Centres
• Scholarships for Students with Disabilities
  (SwDs)
• Disability Cash Benefits Schemes sponsored by
  States

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Employment Injury Benefits Schemes

• Employment Injury Benefits Schemes are
• Diablement Benefits under ESI
• Benefits under Employees Compensation Act, 1923

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Unemployment Benefits Schemes

• Unemployment Benefits Schemes in India are
• Rajiv Gandhi Shramik Kalyan Yojna (RGSKY) under
  ESI
• Atal Beemit Vyakti Kalyan Yojna (ABVKY) under ESI
• Cash relief provided to BoC Workers during
  pandemic (1st 2nd Wave)
• EPFO-Linked Atmanirbhar Bharat Rozgar Yojana

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Sickness Benefits Schemes
Sl. No. Sickness benefits schemes Beneficiaries Remarks
1 Sickness benefits schemes under ESI 424.58 Lakhs in 2020-21
2 Sick leave (leave provisions) provided to employees in organizations under central, State, PSUs etc. -- No consolidated data available. Need for creating a database.
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Family Survivors Benefits Schemes
Child and Family Survivors Benefits Schemes
are 1. Child and Family Survivors Benefits
Schemes sponsored by Centre

• National Family Benefit Scheme (NFBS)
• Indira Gandhi National Widow Pension Scheme
  (IGNWPS)
• Dependents Benefit under ESI
• 4.
• Pradhan Mantri Suraksha Bima Yojana (PMSBY)
• Pradhan Mantri Jeevan Jyoti Yojana
• Converged Group Insurance Scheme for powerloom
  weavers/ workers

ESIC COVID19 Relief Scheme
8. Handloom Weavers Comprehensive Welfare Scheme

• Converged Mahatma Gandhi Bunkar Bima Yojana
• Direct Benefit to Artisans
• Child and Family Survivors Benefits Schemes
  sponsored by States
• Pension schemes for various categories

• Child and Family Survivors Benefits Schemes
  under various sectors
• Construction workers under Building Other
  Construction Workers Welfare Boards

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THE CODE ON SOCIAL SECURITY, 2020 (NO. 36 of
2020)
Introduced Lok Sabha Sep 19, 2020
Passed Lok Sabha Sep 22, 2020
Passed Rajya Sabha Sep 23, 2020
Assent President of India Sep 28, 2020

• Draft Rules circulated for public feedback on 13
  November, 2020

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Amalgamated Labour Laws under Social Security Code

• The Employees Compensation Act, 1923
• The Employees State Insurance Act, 1948
• The Employees Provident Fund and Miscellaneous Pro
  visions
• Act, 1952
• The Employment Exchanges (Compulsory Notification
  of
• Vacancies) Act, 1959
• The Maternity Benefit Act, 1961
• The Payment of Gratuity Act, 1972
• The Cine Workers Welfare Fund Act, 1981
• The Building and Other Construction Workers
  Welfare Cess Act,
• 1996
• The Unorganised Workers Social Security Act, 2008

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Social Security Code in Brief
Chapter No. Chapter Heading Sections
Chapter I Preliminary 1-3
Chapter II Social Security Organisations 4-13
Chapter III Employees Provident Fund 14-23
Chapter IV Employees State Insurance Corporation 24-52
Chapter V Gratuity 53-58
Chapter VI Maternity Benefit 59-72
Chapter VII Employee's Compensation 73-99
Chapter VIII Social Security And Cess In Respect Of Building And Other Construction Workers 100-108
Chapter IX Social Security For Unorganised Workers, Gig Workers And Platform Workers 109-114
Chapter X Finance And Accounts 115-121
Chapter XI Authorities, Assessment, Compliance And Recovery 122-132
Chapter XII Offences And Penalties 133-138
Chapter XIII Employment Information And Monitoring 139-140
Chapter XIV Miscellaneous 141-164
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• SUSTAINABLE FINANCING OF SOCIAL SECURITY

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Identifying sustainable financial mechanisms

• Identifying sustainable financial mechanisms and
  budgeting for social protection is, therefore,
  one of the most important stages in
  conceptualizing and implementing social
  protection.
• One of the key barriers to expanding social
  protection is the lack of adequate and
  sustainable financing.
• A recent ILO report estimates that developing
  countries would need to invest an additional USD
  1.2 trillion  equivalent to 3.8 per cent of
  their average gross domestic product (GDP)
  annually to close the massive social protection
  financing gap and ensure minimum income security
  and access to health care for all.
• Ensuring the financial sustainability of social
  protection schemes and systems is key to
  realizing the right to social security.
• However, there is no one-dimensional approach to
  extending fiscal space for social protection.
• ILO Recommendation No. 202 appeals countries to
  consider different ways of mobilizing the
  necessary resources to finance social protection.
  Thus, countries need to invest more and better in
  social protection, on the basis of principles of
  universality, adequacy, sustainability and
  solidarity (Ortiz et al. 2019).
•  

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Identifying sustainable financial mechanisms

• Based on the principles of good governance, set
  out in ILO Convention No. 102 (Art. 71), the
  following principles have been identified by the
  ILO Committee of Experts on the Application of
  Conventions and Recommendations
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• Social security financing should be sustainable,
  based on the principle of sustainable financing,
  and under the general responsibility of the
  State.
• Social security funds should be protected to the
  best extent possible against mismanagement,
  cyclical fluctuations and market failures.
• The purchasing power of benefits in payment
  should be maintained by adjusting them to the
  costs of living.
• Financial deficits in relation to social security
  should be obviated in the long term, through the
  establishment by the State of a funding plan to
  assure such solvency.
• While the financial governance structures of
  social protection systems vary from one country
  to another, the application of these principles
  provides a yardstick for ensuring sustainable and
  equitable financing.

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India Social Security Benefits
Branches of social security Rights based Tax financed Contributory
Medical care ?? ??
Sickness ?? ??
Unemployment ?? ?? ??
Old-age ?? ??
Employment injury ?? ?? ??
Family benefit ?? ?? ??
Maternity ?? ?? ??
Invalidity ?? ??
Survivors' benefit ?? ??
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India Social Security benefits
Figures in million
RTE Right to Free and Compulsory Elementary
Education NFSA National Food Security Act EPFO
Employees Provident Fund Organisation AAY
Antyodya Anna Yojana PMMVY Prime Minister Matru
Vandana Yojana ESIC Employees State Insurance
Corporation

• Indias elderly population to increase 41 per
  cent by 2031
• Dependency of the elderly is to rise to over 20
  by 2031

Source Dashboards, Niti Aayog, WHO, WB, EPFO
annual report,
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India Social Security Benefits
Reservation in govt jobs for PWD others
Figures in million
Source Dashboards, Niti Aayog, EPFO annual
report, NSO)
MGNREGA MG National Rural Employment Guarantee
Act PMKISAN PM Income Support for Farmers PM
Awaas PM Support for Housing PAHAL Direct
Conditional Cash Transfer for LPG fuel PM-SBY
Pradhan Mantri Suraksha Bima Yojana PM- SYM
Pradhan Mantri Shram Yogi Maan-dhan APY Atal
Pension Yojana

• Indias elderly population to increase 41 per
  cent by 2031
• Dependency of the elderly is to rise to over 20
  by 2031

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Financing of Indias Social Protection System
Health, education, workers welfare
Tax revenues major source for social security
financing
Declining coverage with higher level of protection
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Leading to a global shift from DB to DC pension
systems (assets)
Concerns over sustainability of social security
financing

• During last 20 years, DC assets have grown by
  8.2 while DB assets have grown at 5.1 pa

Source Thinking Ahead Institute, Global Pension
Study 2022
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Best Practices Lessons Learnt

• Administrative barriers are present in extension
  of social protection to difficult-to-cover
  groups.
• Brazil, Indonesia and Argentina have worked
  towards simplifying administrative procedures for
  better compliance with contributory systems.
• Measures are being taken to build public trust.
• Japan has school-level lessons on pensions and
  innovative study tools such as "pension manga".
• Educational interventions are seen in Oman as
  well.
• France has Communication campaigns curated based
  on the requirement of providing the proper
  orientation among the young population towards
  the need for social security.
• Using behavioural techniques, Indonesia could
  reduce social security contributions arrears of
  employers and encourage them to make on-time
  payments of member contributions.
• Argentina, France, Indonesia, Oman, Saudi Arabia
  and Spain have developed fraud detection systems
  using data analysis, predictive analytics, and
  data exchange with other public agencies.
• Mexico shares the employees' monthly reports on
  the contributions made by the employers as a
  dissuasive and corrective measure to address
  under-declaration.
• Singapore developed video spots and posters to
  educate employers on their legal obligations and
  employees on their rights.

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Way Forward

• Estimating cost of providing minimum floor level
  protection/financing gap- Setting up a technical
  assistances and cooperation platforms
• Nesting social security provisions for informal
  economy
• Creating a broad framework of different policy
  options
• Easing labour mobility and strengthening social
  security financing through SSAs among G20
  countries
• Fast tracking Social Security Agreements
• Sharing of best practices on increasing coverage
  and contributory revenues amongst social security
  agencies, trustees, portfolio managers,
  custodians, actuaries
• Developing a technology driven forum for
  exchanges amongst managers and experts

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Thank you
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