20-1 EXCEL BOOKS

Chapter

20

SOCIAL SECURITY
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ANNOTATED OUTLINE

INTRODUCTION
The basic purpose of social security is to protect people of small
means from risks (such as accidents, illness, invalidity, disease, old
age etc) which impair a person’s ability to support himself and his
family.

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Objectives of social security

Social security measures aim at three things

 Compensation: Offer financial help when the worker is in a state of
physical distress due to accidents, sickness, invalidity, disease, and old age.
 Restoration: Enable the worker to recover from the shocks injected by
the inhuman industrial work, rehabilitate himself and get on with his work in a
usual manner.
 Prevention: Extend monetary assistance to workers so that they can get rid
of sickness, idleness, disease etc.

Social security benefits are provided in two major ways in India:

 Social insurance: In this scheme, a common fund is
established with periodical contributions from workers out of
which all benefits in cash or kind are paid
 Social assistance: In this case, benefits are offered to persons
of small means by the government out of its general revenues.

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Social Security in India

Social security benefits extended to workers in India may be put

under the following heads

Social security benefits in India

 Medial care
 Sickness benefit in cash
 Old age pension or retirement benefits
 Invalidity pension
 Maternity benefit
 Accident benefit
 Survivor’s benefit

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The Workmen’s Compensation Act, 1923

Welfare facilities could be classified into two categories; Intramural (provided

within the establishment) and Extramural (undertaken outside the
establishment ).
Intramural and Extramural welfare
measures: ILO
The Act aims at compensating the worker adequately in case of injuries or accidents
suffered by him during and in course of employment.
 Coverage: all workers employed in factories, mines, plantation, transportation,
construction works, railways, ships etc; does not apply to casual workers
 Administration: the commissions appointed by respective governments
 Benefits: three conditions must be met:
There must be an injury
It should be caused in an accident
It must be caused during the course of employment
 Assessment: entire liability for compensation is placed on the employer; so many
employers in small industry find it difficult to pay the compensation.

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The Employee’s State Insurance Act,

1948
The ESI Act offers medical help and unemployment insurance to
industrial workers during their illness.
 Coverage: all factories run with power, employing 20 or more
persons drawing less than Rs. 3000 per month
 Administration: ESI Corporation, an autonomous body set by the
central government.
 Funds: employer contributes 4% of the wage bill and employee
contributes 1.5% of his own wages towards the ESI Fund
 Benefits: the scheme provides for 5 types of benefits to injured
persons through an extensive network of more than 500 centres all over
India:

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The Employee’s State Insurance Act,

1948
 Sickness benefits
 Maternity benefits
 Disablement benefits
 Dependents' benefits
 Funeral benefits
 Assessment: Not popular with unions and employees, as
many complain
 About inadequacy of facilities and benefits. There is
considerable delay
 In making payments to workers. Employers often get away
without
 Making any payments to injured persons

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The Maternity Benefits Act, 1961

It provides for payment of maternity benefits to women workers on

certain conditions;

 Benefits: maternity leave upto 12 weeks; with full wages;

additional sum of Rs.25 paid if employer offers no medical care; the
women employee, however, must have worked for at least 100
days in 12 preceding months

 Assessment: employers discharge women employees on first

signs of pregnancy and thereby escape liability; most women
employees are ignorant about the provisions of the act, and do not
claim benefits.

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The Employees’ Provident Funds And

Miscellaneous Provisions Act, 1952
The EPF and Miscellaneous Provisions Act offers retirement
benefits to workers in the form of provident fund, pension and
deposit linked insurance.

Group Insurance
Group life insurance scheme provides insurance cover to several
employees working under one employer, as long as they remain in
service of that employer.

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An Overview of Social Security

Measures In India
Social security measures have not been able to live up to the
expectations of workers in India on account of several reasons.

why social security measures have

failed to live up to the promise?
 Cover only workers in organised sector.
 Does not offer unemployment insurance
 Several schemes hare in-built weakness; as a result, the beneficiaries are put
to lot of trouble and inconvenience.
 Lack of funds, facilities, trained staff to implement the schemes.
 There is considerable overlapping of schemes
 Most measures are in the nature of social assistance and not social insurance.
 Mostly employers have to make contributions.

Social Security