India’s social security framework has long recognized the rights of workers to protection against life’s uncertainties. Yet over 90 percent of India’s workforce continues to operate in the informal sector, outside the reach of traditional welfare schemes. This vast majority of workers-domestic helpers, street vendors, construction laborers, agricultural workers-face daily challenges without the safety nets enjoyed by their formal-sector counterparts. While India has made constitutional commitments and legislative efforts toward social security, the gap between policy and implementation remains substantial.
Table of Contents
- Understanding India’s informal workforce
- The NCEUS recommendations and their vision
- Key recommendations included
- Legislative responses: From vision to reality
- Implementation challenges
- The Code on Social Security 2020: A new framework
- Key features of the new framework
- Current initiatives and progress
- Persistent gaps and future directions
Understanding India’s informal workforce
The informal sector dominates India’s employment landscape. India has more than 50 crore workers, with almost 90 percent in the unorganized sector. These workers typically lack written contracts, regular wages, or access to benefits like provident funds, health insurance, or paid leave.
The informal economy encompasses diverse occupations. According to government classifications, unorganised workers include contract-based workers in construction, casual laborers, handloom and powerloom workers, beedi and cigar workers, sweepers and scavengers, tribal labor, and self-employed individuals in small businesses. The data showed that 94.11 percent of registered informal workers have a monthly income of Rs 10,000 or below, highlighting the economic vulnerability of this workforce segment.
The NCEUS recommendations and their vision
Recognizing the precarious conditions faced by informal workers, the National Commission for Enterprises in the Unorganised Sector was established in 2004. The Commission produced comprehensive reports addressing both workers and enterprises in the unorganised sector.
The NCEUS recommended a social security scheme for unorganised workers covering minimum benefits such as old age pension, life insurance, maternity benefit, disability benefit, minimum healthcare and sickness benefit. The Commission argued that India needed to move beyond limited assistance schemes toward a comprehensive social security program for all workers, particularly those in the unorganised sector.
Key recommendations included
National Minimum Social Security Scheme: The Commission proposed a scheme for all unorganised workers, including health benefits to cover hospitalisation and sickness allowance, maternity benefits and life insurance. For old age security, the NCEUS recommended a monthly pension for workers below the poverty line above 60 years, and a Provident Fund for other workers.
Funding mechanism: The proposed scheme envisioned contributions from workers, employers, and the government. Where employers could not be identified, the central government would bear the contribution. The NCEUS estimated the cost of the scheme to be Rs 7,367 crores in the first year and Rs 25,401 crores in the fifth year.
Social Security Boards: The recommendations called for establishing National and State Social Security Boards to formulate, monitor, and review schemes for different sections of unorganised workers.
Legislative responses: From vision to reality
Following the NCEUS recommendations, Parliament enacted the Unorganised Workers’ Social Security Act in 2008. The Act provided for constitution of National Social Security Board which shall recommend social security schemes covering life and disability cover, health and maternity benefits, old age protection and any other benefit for unorganized workers.
Implementation challenges
Despite being on the statute books for over fifteen years, the Act has faced significant implementation obstacles. Some of the main difficulties are tracking the implementation of the plan, collecting premiums, and identifying beneficiaries.
Structural gaps plague the legislation. The Act does not provide a unified comprehensive scheme covering all unorganised workers. Instead, it references multiple existing schemes with varying eligibility criteria, contribution requirements, and administrative structures. This fragmentation creates confusion about registration requirements and benefit access.
The institutional framework has proven inadequate. Although it has been a decade and a half since the act was passed, these boards are yet to operate at full capacity or generate any meaningful impact. Many states have formed unorganised workers’ welfare boards, but their effectiveness remains limited.
The Code on Social Security 2020: A new framework
To address these challenges, India introduced the Code on Social Security in 2020, which consolidated nine existing social security laws. The Code extends social security coverage to all workers, including unorganised, gig, and platform workers, covering life, health, maternity, and Provident Fund benefits.
Key features of the new framework
Recognition of new employment categories: For the first time, the Code formally defines and recognizes gig workers and platform workers, mandating social security schemes for them covering life insurance, disability insurance, health, maternity, and pension benefits.
National Database: All unorganized, gig, and platform workers will have to register themselves on a National Portal, receiving a Unique Identification Number verified through Aadhaar valid across the entire country. This aims to ensure benefit portability for migrant workers.
Expanded ESIC coverage: The Code extends Employees’ State Insurance Corporation coverage across India, removing previous geographic restrictions. It also permits voluntary ESIC membership for establishments with fewer than 10 employees.
Aggregator contributions: Platform aggregators may be required to contribute between 1 to 2 percent of annual turnover to social security funds for gig and platform workers.
The Labour Codes came into force on November 21, 2025, marking a significant policy shift. However, questions remain about effective implementation and whether the new framework will overcome challenges that plagued previous legislation.
Current initiatives and progress
Several government schemes currently provide social security benefits to unorganised workers. The e-Shram portal, launched in 2021, serves as a national database for unorganised workers. As of March 3, 2025, over 30.68 crore unorganised workers have registered, with 53.68 percent of them being women.
Other initiatives include Pradhan Mantri Jeevan Jyoti Bima Yojana for life insurance, Pradhan Mantri Suraksha Bima Yojana for accidental insurance, Ayushman Bharat for health coverage, and Atal Pension Yojana for old age security. Over the past decade, 24.8 crore people have escaped multi-dimensional poverty due to several social security measures.
Persistent gaps and future directions
Despite legislative frameworks and government schemes, significant challenges remain. Coverage gaps persist, with many informal workers still outside the social security net. An International Labour Organization report found that in 2022, 70 percent of workers in the construction sector in India did not receive the prescribed minimum wage.
Awareness remains low among intended beneficiaries about available schemes and registration procedures. Administrative capacity at state and district levels often proves insufficient for effective implementation. The fragmented nature of schemes across different ministries creates coordination challenges.
Moving forward, India must strengthen institutional mechanisms for scheme delivery, increase budgetary allocations for social security programs, simplify registration and benefit access processes, and ensure effective grievance redressal systems. The transition from the Unorganised Workers’ Social Security Act 2008 to the Code on Social Security 2020 represents an important policy evolution, but its success will depend on implementation quality and political commitment to protecting vulnerable workers.
What do you think? Can India’s new labour codes effectively bridge the gap between policy intent and ground-level implementation for informal workers? What additional measures might be necessary to ensure comprehensive social security reaches the most marginalized workers in India’s vast informal economy?
References
- https://www.drishtiias.com/daily-updates/daily-news-analysis/social-security-for-unorganised-workers
- https://static.pib.gov.in/WriteReadData/specificdocs/documents/2025/jun/doc2025628577901.pdf
- https://ruralindiaonline.org/hi/library/resource/social-security-for-unorganised-workers-report/
- https://labourfile.com/section-detail.php?aid=355
- https://www.pib.gov.in/newsite/PrintRelease.aspx?relid=68099®=3&lang=2
- https://www.legalserviceindia.com/legal/article-4011-the-unorganized-workers-social-security-act-2008.html
- https://idronline.org/article/rights/do-indias-labour-codes-address-informal-workers-needs/
- https://www.pib.gov.in/FactsheetDetails.aspx?Id=150473®=3&lang=2
- https://www.pib.gov.in/PressNoteDetails.aspx?NoteId=155119&ModuleId=3
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