Impatient with parliamentary delay in passing the omnibus legislation for the unorganised labour, the Labour Ministry has decided to strike out on its own.
The ministry plans to launch a provident fund/pension scheme for mine and cine workers with contributions from both the worker and the government from April.
The scheme, under the rubric of the Unorganised Sector Workers' Social Security Bill, comes amid the expectation that the enabling Bill will be passed during the Budget session of Parliament.
As labour is on the concurrent list, both the Centre and state governments can legislate on it. But the complaint has always been that state governments have been unable to sustain them because of a resource crunch. By claiming ownership of a scheme wholly funded by it, the Centre hopes to avoid that situation in the case of this scheme.
Initially, the scheme will cover around 500,000 mine and cine workers registered with the Labour Welfare Organisation. Later, all workers in the unorganised sector - which constitutes 94 per cent of the country's workforce - will be brought under the scheme.
This is the first-of-its-kind scheme for the unorganised sector where the workers will also contribute a share. The ministry expects to bring a vast mass of the working population that has stayed outside the pale of the formal economy so far, under this scheme.
The scheme will be run by the labour ministry. Of the Rs 100 subscription per month, Rs 75 would be paid by the worker, while Rs 25 would be contributed through Labour Welfare Funds.
The government's contribution for the pilot scheme covering two sectors is likely to cost around Rs 810,000 annually. The funds will come from the labour ministry's internal resources.
Workers of limestone, dolomite, iron/manganese/ chrome ore mines along with cine workers in the age group of 18 to 52 years, who are not already covered under a provident fund scheme of the government, are eligible under the scheme. Subscribers will be eligible for provident fund/pension at the age of 58.
"Workers will deposit the monthly premium in a designated post office/bank or with the Labour Welfare Organisation's dispensaries. The money would be transferred to UTI, which would act as the fund manager of the corpus created from the contribution from workers and government," a labour department official said.
UTI will provide the members' list to the Welfare Commissioners who will deposit the central government's share, as a subsidy, with UTI periodically.
The worker would be eligible for a lump sum amount at the time of maturity, equivalent to the value of the units issued to him by UTI from time to time. An option for a pension scheme in lieu of the lump sum amount will also be provided to the worker.
The only other pension scheme for unorganised labour is the government's proposal to pay Rs 200 per month to all below the poverty line persons above 65 under the National Old Age Pension Scheme.
"There is no structured contributory pension/provident fund schemes for workers in unorganised sector. So, the ministry is working on a scheme to provide old age security to this segment of unorganised workers," a ministry official said.
As the scheme is contributory, a worker is free to join any other scheme as well. In case of default, the deposited money will not be confiscated and the member can rejoin the scheme later.
"A member is eligible for pension only after attaining 58 years of age, which will be paid through a bank or post office. If a worker wants to withdraw his money, he is free to do so but in such cases he will not get the pension and is only eligible to get his deposits and growth amount subject to deduction of 1 per cent exit load," officials said.
