COLLIERY MAZDOOR SABHA OF INDIA (CITU)

Tuesday, April 12, 2011

SOCIAL SECURITY AND WEST BENGAL LEFT FRONT GOVERNMENT

Subhanil Chowdhury

THE Left Front government of West Bengal has been following an alternative path of development since its very inception. This alternative path of economic development is most exemplified in the policies of land reforms and agriculture in the state. However, what is often not recognised is the fact that West Bengal has one of the most developed social security nets in the country, particularly for the workers in the unorganised sector. This article attempts to enumerate the achievements of the Left Front government with regard to providing social security to the workers, which is in sharp contrast to the neo-liberal policies pursued by the government of India.

SOCIAL SECURITY IN THE COUNTRY

The neo-liberal economists and the mainstream media have been celebrating the high growth rates achieved in India. What is, however, left unsaid by these commentators is the fact that this high growth in India has not been able to generate adequate employment opportunities for the people. This is evident from the fact that the unemployment rate (Current Daily Status) has reached a historic high of 8.2 per cent in rural areas and 8.3 per cent in urban areas (see NSS Report on Employment and Unemployment Situation in India, 2004-05, Part 1). This is a remarkably high unemployment rate, unprecedented since the NSS started collecting data.

The problem of employment in India does not end there. What has essentially happened is that there has been an increase of informal employment in the economy. The National Commission for Enterprises in the Unorganised Sector (NCEUS), in its Report on Conditions of Work and Promotions of Livelihoods in the Unorganised Sector (2007), has estimated that 92.3 per cent of the total workers in India were unorganised or informal workers in 2004-05, which was 91.5 per cent in 1999-2000. Clearly, then, there has been an increase in the informalisation of employment in India between 1999-2000 and 2004-05.

In the face of growing evidence that the unorganised sector workers are among the poorest sections of the population, and under pressure from the Left, the UPA-1 government had brought the Unorganised Workers’ Social Security Bill. The NCEUS had, in consultation with the trade unions, made very important recommendations for guaranteed wages, work conditions and social security schemes for these sections to be backed by central allocation of funds for this legislation. The UPA government rejected these recommendations and produced a diluted version of the bill. Subsequently, the standing committee of parliament suggested several changes in the bill. But the UPA government pushed through a truncated legislation, which is high on rhetoric and near zero in substance --- the social security schemes are limited only to the below-poverty-line (BPL) workers. The act does not provide any dedicated fund from which these schemes will be financed. Nor does it provide for any time frame within which all the workers will be included in the schemes.

SOCIAL SECURITY IN WEST BENGAL

In sharp contrast to this half-hearted effort on the part of the UPA government, the Left Front government of West Bengal has been consistently pursuing social security schemes aimed at uplifting the conditions of the workers in the unorganised sector.

According to the NSSO 61st round data (2004-05), 91.2 per cent of the workers in West Bengal are unorganised, including the unorganised agricultural workers. This ratio is slightly better than the corresponding all-India figure, which is 92.4 per cent. (See the NCEUS Report on Conditions of Work and Promotions of Livelihoods in the Unorganised Sector.) It is this section of the workers who remain out of any social security benefit and towards whom the social security policies of the Left Front government are directed. In order to provide benefits to this section of the workers, the West Bengal government has announced and implemented a large number of projects which are enumerated below. (The following discussion is based on the booklet, Social Security for the Working Class and Left Front Government (Shromik-Shreni’r Sahamajik Surakhsha O Bamfront Sorkar), published by Department of Labour, Government of West Bengal.)

1) Provident Fund Scheme for Unorganised Workers: In West Bengal, at the initiative of the Left Front government --- for the first time in the country --- a provident fund scheme for workers in the unorganised sector was introduced in the year 2000-01. Implemented on the basis of contributions from workers at the rate of Rs 20 per month and an equal contribution from the state government, the number of workers enrolled under this scheme has increased from 10.09 lakh in the 2007-08 to 13.16 lakh in the 2008-09. Till September 2010, 19,69,616 workers had registered themselves for the scheme. The total collection from the workers is Rs 1,103,912,820. Till September 2010, Rs 6,16,91,071 have been distributed between 31,299 workers.

2) Health Scheme for Unorganised Workers: In addition to the above mentioned scheme, the Left Front government has also constituted a health insurance scheme for these workers. Under this scheme workers of 44 industries have been covered and 12 categories of self-employed workers have also been covered. Under this scheme, the government will provide money to the families of the workers who are bed-ridden in hospital for more than 5 days. In a year Rs 5,000 will be provided to the workers under this scheme for medical reasons.

3) Beedi Workers Welfare Scheme: This scheme was started from August 23, 2007 for the upliftment of the workers in the beedi industry. This scheme has two basic aims. Firstly, the scheme wants to bring the houses of the workers under electrification. Secondly, the scheme provides financial assistance to the workers for building up their homes. The number of workers benefited from these schemes and the money spent is given in the following table.

No. of Workers Benefited (House Building)	Total Money Spent
32473	Rs1621.45 lakhs
No. of Workers Benefited (Electrification)	Total Money Spent
65165	Rs. 1,04,786,316

4) Scheme for Unorganised Construction Workers: The Left Front government has started a scheme for the workers in the construction sector, whereby the workers have to pay Rs 20 per month and avail of the various facilities under this scheme. Under this scheme, medical allowances are provided to the workers, in addition to the provision of pensions for these workers. If a person is disabled due to an accident, Rs 25,000 is provided as assistance to the family; in case of death the assistance is Rs 1,00,000 This scheme also provides allowances up to Rs 10,000 for treating serious illnesses like cancer, cardiac problems, kidney problems, AIDS etc. Allowances are also provided to the workers for sending their wards to schools and colleges. Till September 30, 2010, 1,46,379 workers had registered for this scheme, Rs 1,89,67,680 had been collected from them and Rs 62,93,641 had been disbursed under various heads to 2260 workers.

5) Social Security Scheme for Transport Workers: The Left Front government announced in 2010 a social security scheme for workers in the transport sector. Workers have to register under this scheme after paying an annual fee of Rs 30. The members under this scheme will get pension benefits. In case of untimely death of workers, financial assistance of Rs 1,00,000 will be provided to the family. In case a worker becomes disabled due to an accident, a payment of Rs 25,000 to the family will be made. In addition to this, a worker will get medical benefits of Rs 30,000 for operation and Rs 10,000 for treatment of a serious illness. This scheme will go a long way in protecting the transport sector workers who are one of the most vulnerable sections of the working class.

6) Financial Assistance to Workers of Closed Factories: Since 1998, the government of West Bengal has been providing financial assistance to the workers of the closed factories. In 1998, the allowance was Rs 500 per month, which increased to Rs 750 per month in 2007 and was subsequently increased to Rs 1500 in 2010. In addition to this, Rs 1000 are being provided to each worker during puja and Id. In this financial year alone, till October 2010, 33,571 workers had been provided financial assistance under this scheme. The total amount of money spent in the current fiscal year (till October 2010) was Rs 26.26 crore. Since the initiation of this project, the government has spent a total of Rs 325 crore, covering workers in 361 factories.

POINT TO PONDER

The important point to note is this. With the advent of neo-liberal policies in India, the workers have been left at the mercy of the so-called market forces, with the central government providing little or no assistance for the upliftment of the workers, particularly those belonging to the unorganised sector.

The Left Front government has a contrasting record in this regard. This government has to function within the overall policy framework set by the central government and, as such, its power is very limited compared to the central government. However, even with this limited power, the Left Front government has tried to pursue an alternative development trajectory where workers are not sacrificed at the altar of high GDP growth rates. Rather, the state has intervened actively in improving the condition of the workers belonging to the unorganised sector.

There is no doubt that all the problems facing the unorganised workers cannot be solved by the Left Front government in West Bengal. But it is also definitely the case that the Left Front government, even with its limited powers, has put forward policies that are rushing relief to the poor and the unorganised, aimed at uplifting their living conditions. This is an alternative path of development that has to be popularised all over India.

Courtesy: www.pd.cpim.org/

PFRDA BILL: THE REALITY BEHIND

Tapan Sen

THE Pension Fund Regulatory & Development Authority Bill 2011 (PFRDA Bill) is almost the same bill as was introduced in parliament in 2005, with minor changes.

When the 2005 bill was introduced, there had been murmur and opposition among the government employees as it had a direct bearing on the pension prospect of the central government employees who joined service on or after January 1, 2004 for whom the government already notified a new contributory pension scheme on December 22, 2003.

The new pension scheme notified in December 2003 envisaged a contribution of 10 per cent of wages by the employee with a matching contribution from the central government as employer, which together will form the pension account for the concerned employee. The fund will be managed and handled by fund managers appointed by the PFRDA, the employees will get pension by the end of their service life and the pension amount will be determined by the return on investment of his pension fund made by the appointed fund manager.

PARADIGMSHIFT

Originally, government employees used to get pension at 50 per cent of the last pay drawn and the pension amount used to get revised with the changes in price indices. It was thus an assured amount. To get this system of assured pension system in place, the government employees had to forego their right to contributory provident fund, i.e., the employer’s matching contribution to the PF. In lieu of that surrender of right, assured pension was granted to them to be paid from the Consolidated Fund of India. This system of assured pensionary benefit is called the “benefit defined” pension system.

The new pension scheme brought about a paradigm shift in the entire concept of pension as a social security measure. Now the pension will be based on the “defined contribution,” meaning thereby that the pension amount will be governed by what the employee’s “pension fund account” can earn from investment in the market. The NPS does not ensure any assured amount of pension to an employee despite her or his life-long contribution to the own pension fund. Both the pension scheme notified by the government and the PFRDA bill (both 2005 and 2011) mentioned in clear terms that “There shall be no implicit or explicit assurance of benefits, market based guaranteed mechanism to be purchased by the subscriber” (Sec 20(2)(g) of the PFRDA Bill).

Can the market ever guarantee any assured return on investments? In the present day situation with extreme volatility in both the money market and the share market, the return on investment of public funds like pension funds is destined to be uncertain as well as low. Moreover, the fund managers appointed by the PFRDA will handle the fund not for charity but for their own profit. Hence whatever return on pension fund investment will reach the pensioner, will be the net amount after ensuring the profit of the fund managers. In the context of natural uncertainty of the market, fund managers are naturally expected to neutralise their risk first and then take care of the risk of the pensioners who actually supply capital to the fund managers through their life-time savings in pension fund. Therefore the PFRDA bill has paved the new regime of replacing assured pension by a pension system governed by the market forces playing with the employees’ life-time savings. Thus the PFRDA Bill and the pension system it enforces is an onslaught on the social security right of the government employees, a loot of their pension fund.

Efforts for investing a part of the provident fund accumulations of the workers in stock market are being made since long by the government but owing to resistance by the unions that could not be done as yet. The whole system of taking into consideration the opinion of the workers through their representatives in the matter of investment of their own fund in their social security corpus has been given a go bye in the new dispensation of PFRDA regime and the fund-managers and brokers will have the last say on how the employees’ savings will be invested.

DANGEROUS DIMENSIONS

But the situation under which the PFRDA Bill 2011 has been put in place has opened another dangerous dimension. It is no more limited to the pension earnings of the central government employees alone or the state government employees in the states where state government also adopted the new pension scheme. The bill empowers the government to extend the ambit to all the existing pension schemes. But most alarmingly, through PFRDA Bill the government now plans to attract the savings of the 46 crore unorganised sector workers for investment in the stock market on the same scheme of market based uncertain returns.

The government has introduced new pension scheme, now named as “National Pension System” for unorganised sector workers. As per the scheme, which is now known as “Swavalamban” and being advertised a lot, the workers will have to contribute to pension fund a minimum of Rs 1,000 per year and maximum of Rs 12,000. After making a contribution for 30 years or so, at the age of 60 years, the worker will be eligible to get 60 per cent of his contribution as lump sum and a pension of not less than Rs 1,000 per month, provided rest of his fund can ensure such return from the market. If his fund earns less, then the portion of lump sum receipt after retirement will go down and if his/her entire fund(100 per cent of his contribution) fails to earn the minimum stipulated amount of pension (Rs 1,000) he/she has to make more contribution to be eligible for getting the minimum pension. To allure people towards this scheme, the government has announced that it will contribute Rs 1,000 per year for five years till 2015-16.

Already, the government has started making aggressive efforts to enroll workers in the so called Swavalamban scheme. Anganwadi workers who have been struggling since long for pensionary benefit are now being pressurised in many states to accept “Swavalamban” by the respective state governments.

How far the unorganised sector workers are going to be benefited by this scheme? As they do not have any pension benefit at present, it is but natural that a good section of them will be attracted towards the scheme. Will they get any assured pensionary benefit after making contribution for the scheme? No.

The scheme is silent if there would be a break in continuity of contribution which is but natural for the unorganised sector workers, frequently losing jobs and changing employment. What will happen if he contributes for five years thereafter for one year he fails to make contribution or after making contribution for say ten years becomes incapacitated to earn, say at his forty years of age and cannot continue contribution? Will he have to wait up to sixty years either to claim pension or lump sum payment? All these possibilities are not exceptional cases but a natural phenomenon in the life of the unorganised sector workers.

As per calculation, a worker after making a contribution for 30 years at the rate of Rs 100 per month (Rs 1200 per year) will accumulate Rs 1,49,035 which, if fully invested at 8 per cent return can ensure a monthly return of Rs 993 to him. Now as per the scheme, if he is to get the minimum stipulated pension amount of Rs 1000, he will neither get any thing as lump sum. And there is no guarantee whether the investment of his fund will continue to fetch him 8 per cent return at all point of time. If it does not earn 8 per cent in any year, what will happen to his pension earnings, the scheme is not clear about such happenings.

ACTUAL GAMEPLAN

But one thing is amply clear. The new pension system will not ensure any secure pension amount for the unorganised workers despite his continuous contribution to pension fund. Pension amount will be governed by the return earned through investment in market. And the investment will not be merely in the form of credit at assured rate of interest but also in the form of equity market as time to time decided by the fund managers. And such type of investment can no way ensure assured return.

The whole gameplan is altogether different. The share market needs a continuous flow of liquidity to keep up its profits for the speculators and brokers to earn. Pension fund can be one such source for such liquidity as it belongs to none but the poor workers who can be risked for speculative purposes. In the name of providing pension to unorganised sector workers who do not have any social security benefits, the present scheme of Swavalamban has got a prospect of attracting crores of hapless workers to contribute for their old age security. It has a propensity to garner lakhs of crores of rupees from a market in which 46 crore unorganised sector workers will be the customers. Obligation for paying the pension will come after twenty or thirty years. The PFRDA Bill has already provided for the exit route for the fund managers and aggregators through section 20(2)(g) as quoted in the earlier paragraph and also by giving wide arbitrary powers to the PFRDA to decide. It has denied the trade unions to have their say on the investment and delivery of the benefit to the workers as is the practice in case of the Employees Provident Fund.

So far as the experiences of pension fund investment in the stock market in various countries in the world are concerned, on all occasions, workers’ money in pension funds was used to raise the temperature in the stock market to make the brokers and speculators gain and workers always lost in that exercise.

Therefore, it is no more a case of pension for a few crore workers in government sector whose rights and money is being looted. It a much bigger market of 46 crore unorganised sector workers who are being allured to pay for their old age security even by remaining half-fed having immense potential of garnering several thousands of crores for fuelling the stock market. Whether the poor contributors will really get old-age security is as uncertain as the stock market. But that question will arise after twenty years. Till that time the dacoity and plunder can go on and that is precisely the game plan of the speculator-captive government at the centre.

Pension will no more remain a secure social security; it will become a funding source for unscrupulous investors, both domestic and foreign, which will be used through speculative share market. In order to please the foreign pension fund operators in the USA, the government has kept the avenue fully open for FDI investment. With this bill, if passed, the hard earned money of crores of unorganised sector workers will be utilised for speculation. Can the working class and the country as a whole tolerate such open and shameless fraud in the name of social security of millions?

Courtesy: www.pd.cpim.org/