#TIL: What is portable social security?
By Sreelakshmi R.
What does your mobile phone charger, IKEA furniture and Employee Provident Fund account have in common?
They are all portable- meaning, if you were to change your job, or your location of work, you can choose to carry all of them with you to your new destination. And this, as you can imagine, is a pretty important feature to consider when you invest in these items.
As we have discussed in this series before, social security is a collection of funds that employees are entitled to, which is made up of contributions from themselves, their employers, and the government in varying proportions. Therefore, social security is closely linked with one’s employment. This means that unemployment, or changing jobs, has an impact on long-term savings and retirement instruments, which adversely affects quality of life of workers. The kind of social security which is not impacted by such a change, could be termed as portable benefits.
Portable social security has been associated with international migrant workers for the longest time. However, with a country as vast as India, and a fast-paced world with dynamic changes in the workforce, it is necessary to adopt portability as a first principle for good social security of workers. The migrant worker crisis due to the pandemic-induced lockdown brought this need into sharp relief earlier in 2020. Such a principle would also benefit the enormous unorganised sector in the country, by delinking geographical location and job status from access to benefits.
The Employee Provident Fund (EPF), which covers pension and provident fund, is an example of portable social security in India. Unfortunately only 4.5 crore, or 10% of the Indian workforce has access to this instrument, and it is only mandatory if the worker earns under Rs 15,000 per month. On the other hand, the Employee State Insurance (ESI), which covers medical care, maternity and disablement benefits, and is availed by an estimated 3 crore workers and their families, is not portable. It depends on if one’s employer offers ESI, especially if they earn above the statutorily defined Rs 21,000 per month. These are the primary instruments available to workers in India, and they leave much to be desired as they largely apply to only big, organised enterprises. Needless to say, the legal binding aims to secure the livelihoods of low-earning workers alone.
India’s workforce is also undergoing a dual demographic and technological transformation, particularly in the urban services sector. The pervasion of platform work as a legitimate livelihood source necessitates the rethinking of our social security structures. The new realities are rapid digtialisation of jobs, attractive terms of work such as flexible hours, and the fact that workers can be associated with competing businesses. This renders an “employer”-centric model untenable and creates room for increased portability of benefits. It is time to reimagine our social security structures around this altered reality.
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