1. Budget 2024: Here’s what to expect for workers in unorganised sectors

Budget 2024: Here’s what to expect for workers in unorganised sectors

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4 min read • Updated: January 31, 2024, 3:14 PM

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Summary

A new social security fund for the workers in the unorganised sectors is likely to be announced by the Central government in the upcoming Budget 2024.

unorganised workers
The allocation to the Ministry of Labour and Employment was reduced to ₹13,221.73 crore in 2023-24.

The government is likely to roll out a new scheme enhancing social security for the unorganised sector workers in the upcoming Budget. As several reports suggest that the government is expected to focus on more pro-people measures in an election year in Budget 2024, the informal sector workers may have some reason to cheer.

Finance minister Nirmala Sitharam is set to present the Interim Budget 2024 in the Parliament on February 1. This year, it will be an Interim Budget instead of a full-Budget as Lok Sabha elections are scheduled to be held in April-May.

A new social security fund for the workers in the unorganised sectors is likely to be announced by the Central government in the upcoming Budget 2024. The scheme will cover the labour forces in the informal sector or those working in the gig economy, according to an Economic Times report.

The social security fund, proposed under the Social Security Code 2020, will be in line with universal social security for workers in India. It could either be funded by the Centre or by both state and central governments. There is also a possibility of the Social Security fund having contributions from employees and employers or the aggregators in case of gig workers. Proceeds from monetary penalties imposed for violation of the code, CESS collected under the existing labour laws and corporate social responsibility (CSR) contribution would also be directed to the fund to reduce any additional financial burden on the government.

The Code introduced in 2020 is yet to see implementation due to delays in the framing of rules by states. However, it contains provisions for partial implementation. In the Interim Budget, with a potential announcement on the Social Security Fund, the government looks ready to extend the benefits to unorganized sector workers in an election year.

The possible announcement of a Social Security Fund will be a boost for the unorganised sector, which struggled to secure significant allocations in the Budget 2023. The allocation to the Labour Ministry and its social security schemes saw a cut in the last Budget. The allocation to the Ministry of Labour and Employment was reduced to ₹13,221.73 crore in 2023-24 from ₹16,893.68 crore in the previous Budget.

While funds for several social security schemes saw a cut, allocations to the Employees’ Pension Scheme (EPS), 1995, increased in Budget 2024. The estimated amount for the scheme in Budget 2023 was ₹9,167 crore, up from ₹8,485 crore.

Social Security Code 2020

The Social Security Code 2020 was introduced by the government as part of its reform of labour laws to improve the working conditions in the informal sector. It consolidated nine central labour laws related to social security of workers into one. The new code has been drafted with an aim of extending the benefits to all workers in the organised/unorganised sectors.

The Code expands the definition of employees to cover inter-state migrant workers, construction workers, platform workers and film industry workers. It has provisions for registration of workers engaged in various unorganised sectors. This uniformity in the definition allows for determining wages for social security benefits.

The Code also lays out guidelines for setting up a National Social Security Board to recommend the Central government on formulation of schemes for different sections of unorganised, gig and platform workers.

The Code mandates that fixed-term contracts workers will also be eligible for gratuity. Previously, only permanent employees were eligible for gratuity. The Social Security Code 2020 also has penal provisions in the case of failure to pay gratuity to employees or a failure to pay contributions.

The events giving rise to gratuity are superannuation, retirement, resignation, disablement due to accident or disease or termination of a contract under fixed-term employment or death

The new legal framework brings unorganised sector workers under the cover of social security schemes including life insurance and disability insurance, health and maternity benefits, provident fund and skill up-gradation.