India Employer Forum

World of Work

Navigating the Challenges of Limited Social Security

  • By: India Employer Forum
  • Date: 04 February 2025

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India’s employment landscape is a complex tapestry woven with both opportunities and challenges. While the country has experienced notable economic growth in recent decades, the benefits of this progress have not been evenly distributed, particularly when it comes to the realm of employment and job creation. The country faces a critical social security challenge: generating sufficient quality jobs while simultaneously strengthening its social security framework.

A Mixed Bag of Employment Trends:

Recent data suggests a positive trend in overall employment numbers, but a closer look reveals that much of this growth is concentrated in low-paying, informal jobs. Furthermore, the quality of employment remains a critical issue. Many individuals are underemployed, working in jobs that do not fully utilize their skills or provide adequate income. India’s employment scenario is characterized by a very large informal sector, which accounts for a significant portion of the workforce. This sector is often characterized by precarious work arrangements, low wages, and limited access to social security benefits.

While the formal sector has witnessed some growth, it still lags behind in absorbing the vast pool of job seekers. With the rise of the gig economy and platform work, the nature and definition of formal work is also evolving offering a mixed bag of opportunities and challenges. These new forms of employment offer flexibility and potential income generation, but they often lie outside the purview of traditional social security nets, raising concerns about long-term security and welfare. The prevalence of vulnerability among this sector of workers, too, is a critical concern that warrants in-depth analysis and targeted interventions.

The Social Security Landscape:

The International Labor Organization’s Social Protection Platform has highlighted several key obstacles in implementing a robust social security net in India, owing to the diverse needs and contributory capacities of the various segments of the workforce, ranging from professionals and business owners to small farmers, entrepreneurs, and assisting family workers.

India’s social security framework has been evolving over the years, encompassing various schemes and programs that aim to provide a safety net for workers. These include contributory schemes like the Employees’ Provident Fund (EPF) and the Employees’ State Insurance Corporation (ESIC), which offer retirement benefits, healthcare access, and other forms of social security to formal-sector employees. For the informal sector, the government has implemented various social security schemes, such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), which provides guaranteed wage employment in rural areas, and the Unorganized Workers’ Social Security Act, 2008, which aims to provide a framework for social security coverage for unorganized workers.  

Despite these efforts, significant gaps remain in social security coverage. A large proportion of the workforce, particularly those in the informal sector, remain excluded from any formal social security net. This leaves them vulnerable to income shocks due to illness, unemployment, or old age. Moreover, the existing schemes often suffer from implementation challenges, including lack of awareness, cumbersome procedures, and inadequate funding. All of these factors render the current social security net insufficient in meeting the needs of the beneficiaries.  

Moving Forward: A Multi-Pronged Approach

Addressing the complex interplay of employment, job creation, and social security requires a multi-pronged approach. Firstly, promoting inclusive economic growth that generates quality jobs is paramount. This requires policies that support investment in key sectors, promote innovation, and foster a conducive business environment. Secondly, strengthening the social security framework is crucial. This involves expanding the coverage of existing schemes, improving their implementation, and exploring innovative approaches to provide social security to informal workers, including leveraging technology and mobile platforms. Thirdly, promoting social dialogue and collaboration between governments, employers, and workers is crucial to ensure that policies and programs are aligned with the needs of all stakeholders.  

In the face of rapid technological change and evolving work structures, safety nets empower individuals to adapt and the economy to remain resilient, moving beyond their traditional role as a social welfare measure. India’s social security landscape is ridden with challenges and opportunities. While progress has been made in certain areas, significant gaps remain, particularly in ensuring social security coverage for the vast majority of the workforce. Addressing these challenges requires a concerted effort from all stakeholders, including the government, employers, and workers. By adopting a multi-pronged approach that focuses on inclusive growth, India can provide a safety net for all its citizens.  

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