The NDA government in its last budget before the election has announced an ambitious pension scheme for unorganised sector workers.

Given its tendency for hyperbole, the scheme is already being touted as the largest pension scheme in the world with 100 million potential beneficiaries. Let us therefore ponder the fate of similar schemes that were launched in the very first year of the Narendra Modi government, like for instance the Shramev Jayate programme that was launched with much fanfare for this very category of workers.

Under the scheme, all the unorganised sector workers were to be issued social security cards (UWIN, or Unorganised Workers Identification Number cards). “The workers will be assigned a unique identity so as to give them social security benefits including health insurance and old age pension,” the business newspaper Mint reported in February 2015, i.e. four years ago. BJP ministers held fairs and collected thousands of forms that are mostly gathering dust.

 The current scheme is likely to meet a similar fate.

The Atal Pension Yojna, with features very similar to the new scheme, was launched on May 9, 2015—targeting this very sector with similar hyperbole. The scheme struggled from the very beginning. The scheme had a target of covering some 2.2 crore people by December 2015. However only about 6.5% of the target was achieved by due date.

Three years after its launch, the scheme had a subscriber base of 1.1 crore people—no doubt a substantial number by itself, but still a minuscule proportion of the vast mass of 41.6 crore workers estimated to form the workforce in the unorganised sector according to the 66th round of NSSO in 2011–12. It is a telling commentary on the polity of our time that in its rush for ‘political surgical strikes’ before the upcoming elections, the government has launched a new scheme with more or less the same features that were the cause of  the failure of its previous scheme.

Unrealistic goals

The latest scheme can be critiqued on two major grounds. First is that the contributions are not linked to employment of workers and are voluntary in nature. For a large number of reasons, detailed below, the workers are not likely to welcome the scheme and deposit their contributions. The second is that by the age of 60 year when the pension benefits are supposed to start flowing in, a large chunk of workers will not be alive any more to claim benefits.

Social security schemes all over the world and even in India are linked with employment. The social security deductions are made from the employee’s salary with a corresponding deduction from the employers. However in the new scheme, the contributions are to be made only by the workers. To expect workers to deposit their contributions regularly over a period of 20 to 30 years is asking for the impossible.

The state record is so erratic and so anti-worker that to expect the workers to deposit any part of their hard earned income in a scheme from which benefits will flow after 20 to 30 years is completely unrealistic. To illustrate, even right now, PF deductions are being made from wages of millions of contract workers without their being even aware of it. Employees Provident Fund Organization is aflush with hard earned money of unorganised sector workers for which there are no claimants.

To give another example, every state has launched contributory pension schemes for unorganised sector workers that are defunct and it is impossible to claim back the contributions made by the workers.

Another major ground of critique is that by the age of 60 years when the pension funds would start flowing, majority of the workers who have paid premium for 20 to 30 years would not be alive to avail benefits. This provision shows how divorced Lutyens Delhi is from the dust and grime of real India.

While an age of 60 years is good for giving post-retirement benefits to middle classes, it is completely unrealistic for hard working informal sector workers. The current average life expectancy in India is 68.8 years and for rural males it is 65 years. However, life expectancy in India varies sharply with socio-economic status. The scheduled caste and scheduled tribe communities, who supply the maximum number of workers to the informal sector, have distinctly lower life expectancies than that of normal upper-caste middle-class Indians.

A paper written by S.K. Mohanty and F. Ram from International Institute for Population Studies titled Life Expectancy at Birth Among Social And Economic Groups in India showed that the life expectancy amongst scheduled tribes in 2006 was 60.3 years. For the poor scheduled tribes, it was as low as 56.9 years. It can be assumed that the unorganised sector workers fall in the poor category. For poor scheduled castes, life expectancy was 63 years.

While there would have been a slight increase in this over the last decade, the life expectancy for males in these two categories will be lower than the average. These figures can be tweaked in a number of ways, but one thing is very clear: a large majority of the informal sectors will not be alive at 60 years to claim benefits.

In fact, the life expectancy for manual workers, who work in hard jobs like construction, brick kilns and quarrying, is likely to be even lower. Even a cursory glance at any workplace would reveal that age of majority of the work force in jobs that require hard manual labour is below 40 years. There are no more jobs for these workers after they cross into middle age. A pension scheme for unorganised sector workers should therefore begin at 55 years or even earlier.

But then, is there no way that unorganised sector workers can be provided social security? Actually good models exist that are working. The Maharashtra Mathadi and Other Manual Workers Act 1969 provides such a model. More than 30 Mathadi Boards are functional in Maharashtra providing social security to lakhs of head load workers of Maharashtra, though Mathadi workers there are now apprehensive about the future of these boards.

The Act regulates employment, establishes a employer–worker relationship and links the social security benefits to employment. These three elements—regulation of employment, establishing an employer–worker relationship, and linkage of social security—are the three pivots crucial for any social security scheme for unorganised sector workers. Otherwise there can only be jumlas.