It is reported that the Labour Ministry is in the process of seeking approval from the Cabinet for the amended Wage Code Bill. This is one of the four bills prepared by the Ministry in 2017, which are to replace 44 labour legislations existing now. One of the proposed legislation deals with social security and welfare. Called the social security code, it will consolidate 15 existing laws on pension, disability and life insurance as well as maternity, medical and unemployment coverage. The government claims that it will cover both the organised and the unorganised sector – about 50 crore workers.
However, construction workers have opposed this new legislation on the grounds that it will deny these workers whatever pension benefits they are currently receiving. The new labour code will repeal the Building and Other Constructions Workers (BOCW) Act under which various benefits are being provided to construction workers. The repealing of the Building and Other Construction Workers (BOCW) Act of 1996 will lead to the closure of all the 36 state BOCW Boards, cancellation of about four crore registrations of construction workers as beneficiaries. At present, the construction workers are already entitled to social security from BOCW boards which are adequately funded by a 1 per cent cess on the building industry and BOCW's registration fees. This cess is levied by state-level boards which then distribute the funds through various social security schemes to construction workers. The boards have been criticised for not distributing these funds and there are allegations that thousands of crores are locked up with them. But the solution is not to dismantle these boards.
A major issue is that under the new legislation, workers who barely make the minimum wage will have to make a contribution to the social security fund. According to the National Campaign for Construction Workers, which has been fighting for the rights of construction and other unorganized sector workers, the present system of collecting a minimal cess of 1-2 per cent of total construction cost from a construction establishment, as per the BOCW Cess Act, 1996, is the best method for funding their social security, The proposed closure of BOCW boards will lead to cancellation of lakhs of pensions which are being paid to older workers and disabled workers in different states and the cancellation of millions of freeships being paid as education assistance to the children of construction workers, besides the cancellation of several other benefits including maternity benefits.
Another worrying issue is that of registration of workers under the new code. The code proposes to set up a Central Social Security Board – and corresponding state-level boards – for managing all aspects of the code. All workers across India will have to register themselves with the boards and get an Aadhaar-linked social security account called the Vishwakarma Karmik Suraksha Khata, or VIKAS. Registration details will have to be updated every time a worker migrates or moves from one employer to another. Workers are concerned about how the code will ensure the registration of every single worker in the informal sector, given the diversity and fluidity of their work. Except in the case of self-employed people, workers need to establish employer-employee relations in order to register. Construction workers’ unions are currently providing the service of getting workers registered to the Construction Workers’ Welfare Board. Under the new code, these separate industry-specific boards will be reconstituted under an entirely new institutional system - “facilitation centres” run by private entities.
Workers will have to contribute between 12.5% and 20% of their monthly wages if they do not belong to the below-minimum wage income category. Those earning less than the minimum wage are exempted from paying contributions towards social security. But to avail of benefits, workers are required to periodically submit detailed accounts of their income and employment. Thus the onus will be on workers to prove their eligibility for social security.
The National Campaign for Construction Workers has written a letter to the Prime Minister expressing its opposition to the new Bill.