TIL: What Social Security means in India
by Sreelakshmi R.
As Indians, the concept of Social Security is not really referenced in our popular culture. Most of us associate it with the ‘American’ concept of those 10–12 digit pins that often seem to get compromised in detective shows in the West. As it turns out (and intuitively so) social security and the benefits it encompasses varies from country to country; while India has some form or social security, it is definitely not an entitlement. In fact, it is closely connected with your employment as one’s employer makes contributions to the various funds that make up social security in India. This means that less than 10% of all employed Indians get access to social security, as that is the proportion of organised sector jobs in the country. Unfortunately, that is a low proportion of the population that can’t afford many necessities like good healthcare!
So what are the various funds in India? — Depending on one’s status, there are 4 or 5 types of social insurance: Pension, Health Insurance & Medical Benefits, Gratuity, Disability Benefits, and finally, Maternity Benefits. Paid Maternal leave is legislated to a guaranteed minimum (in a move where India has proven to be far more progressive than many other countries, including the US). Pension and Gratuity in India are paid upon superannuation or disability, and are a function of the number of years of service and the number of employees in the organisation. Pensions are provided mainly through three schemes: Employees Provident Fund (EPF), Employees Pension Scheme (EPS), and Employees’ Deposit Linked Insurance Scheme (EDLIS). There are varying ratios of employer- employee- government contributions for each of these.
Health insurance in India is available only upon hospitalisation of 24 hours or more, resulting in other diagnostic, consultation and pharmaceutical expenses being borne by the consumer. Some workplaces offer reimbursement policies to their employees to ease the burden of such high Out Of Pocket (OOP) expenses for healthcare. Given how prohibitively expensive this could get, many informal workers are covered under certain government schemes such as Ayushman Bharat, to provide immediate reprieve from such crippling costs.
This brings us to the simple distinction between organised and unorganised workers in India: it really is just a function of if your workplace provides you with any social security. The organised economy, further contains formal and informal jobs, and only organised, formal employees get these benefits. The unorganised sector of course, definitionally, does not provide legal contracts of employment, and hence has only informal jobs. Therefore, a huge majority of Indians would never have access to social insurance. Keep watching this space to know what we think could be a solution!
Today I learnt (TIL) is a weekly series by OMI that brings you interesting nuggets of information that you didn’t know you needed.
