MBA management


International Labour organization in different conventions have been giving due emphasis on social security and various laws were added and existing were being amended. ILO has suggested various methods of organizing establishing and financing various social schemes social security are different in developed, underdeveloped and developing countries. In underdeveloped countries there only very few social security schemes with having a fairly low level of benefits.

It was ILO experts and professor “Adarkar” whose joint efforts invited government of India in 1946 for introducing for important elements of social security like:

(i) Organization of health Insurance scheme.
(ii) Revision of Workmen’s Compensation Act.
(iii) Central Law of Maternity Benefits.
(iv) Extension of these schemes to other classes of Workers some other schemes like leave with allowance during sickness were introduced which lead to enactment of Employee’s State Insurance Act 1948. The plantation Labour Act 1951 and Employees Provident Fund Act 1952.

Evolution of Social Security in India

The Indian Social security Schemes for organized sector have been influenced by these factors:

(i) British policy to raise labour cost in the established industries.

(ii) A policy of corporate paternalism leading to variety of benefits like promoting loyalty of employees.

(iii) In the post-independence era, the emerging of welfare state concept which has lead to a series of welfare and protective legislation based on relevant international labour standards.

(iv) Many of the social security and welfare measures become statutory obligation of employers.

(v) Due to rapid industrialization there was a need to promote the commitment to work force for industrial and urban life.

In India due to rapid industrialization a new class of Industrial proletariat was created having a rural background and with every little social and material resources. For them there was a great need of systematized help through social security agencies. The non-industrial classes were also in urgent need of social security which were due to industrialization in 19th century.

Indian social reformers, labour welfare organization and many progressive employers persuaded the undertake social security measures as a protection for the workers against few of contingencies.

Indian Govt. appointed a committee of enquiry and the committee reported that steps should be taken by mill owners to alleviate the distress caused by the unemployment. It further recommended that a voluntary gratuity schemes should be introduced but unfortunately no action could be taken for its implementation.

In 1929 Government of Bombay was the first to give a proposal for enacting Maternity act. It was observed the productivity depends upon the quality of labour which further primarily depends upon its quality of labour which further primarily depends upon its quality of labour which further primarily depends upon its health, nutrition, literacy, social values and customs.

The Bombay textile Labour Enquiry observed, “that in all pursuits a high standard of efficiency can be expected only from persons who are physically fit and free from mental worries. That is only from persons who are properly trained. Properly housed, properly fed and properly clothed.”

It is understood that to neglect the labour is to neglect productivity as finally the welfare of country lies in their welfare. To build up a stable labour force with full commitment was only possible by creating a genuine welfare state of an affairs, good perception and psychological feelings for creating good moral habits.

Status of Social Security in India during Pre-Independence Period

The evaluation of social security in India can be studied broadly in two segments.
I. Pre-Independence Period
II. Post-Independence Period

There was large scale industrialization in Indian from 1850 especially in the Textile Industries. But as workers being totally unorganized no attention could be paid towards the welfare.

Pre-Independence Period and Social Security of Workers

In 1877 first labour unrest took place at “Empress Mills Nagpur” for improving their wages. In 1890 first Trade Union Bombay Mill Hands association was formed under the leadership of N.M. Lokhande.

In 1885 the first Fatal accident Act was passed. Inspite of this workers were living under very poor inhumane conditions. There was no provisions of any measures for social security before 1920.

In 1920 International Labour Organization gave a boost to labour welfare and social security schemes. In the convention of 1929 of ILO the workers social security schemes. In the convention of 1929 of ILO the workers social security was considered as of high importance. Then there came the appointment of strong recommendations on labour welfare and social security.

After the first world war, due to Indian National movement. British Government started thinking about the employees and accordingly (i) Workmen’s compensation Act, 1923 (ii) The payment of wages Act’ 1936 (iii) Minimum wages Payment Act (iv) Maternity Benefits Act were passed from time to time Mr.B.R. Ambedkar was appointed as a ‘labour member of the victory’s council” after second world war.

“The Whitley Commission” recommended that some suitable measures should be taken to restore health to the workers. On the recommendation of the commission and in the consultation with the “standing Advisory Committee of Labour and Industries” the government agreed for a contributory Medical scheme in which both employer and employee will contribute towards a common fund.

In 1937 a contributory Health Insurance scheme was formulated. At the same time , the Bombay Textile enquiry Committee also recommended the formulation of health Insurance Scheme in which the (i) employer (ii) Employee and (iii) The state Government contributed towards the fund.

In 1940 during the first Labour Minister’s conference the need for sickness Benefit fund was felt. In 1943 Indian Government appointed a commission under the chairmanship of B.R. Ambedkar and its report was submitted in 1944.

B.R. Ambedkar commission strategy recommended the upper age limit of 60 years and employment was divided into three categories- permanent, temporary and casual. The employer was required to pay contribution towards insurance schemes for all the workers, whereas only permanent and temporary workers were required to pay their contribution.

In 1947, the Industrial dispute Act was enacted with the main objective was to make provisions for the investigation and settlement of industrial disputes. Most important contribution of employee’s State insurance Act 1923.

Post–Independence period and Social Security

In 1947 India got Independence and Indian Government intensified the labour welfare and social security measures. In 1948 employees state Insurance was duly modified and that was beginning of the era of Social Insurance of Indian labour.

“In 1952 international Labour Organization provided the expert advice of eight experts on social security for long six month for proper implementation of the schemes of employee state Insurance Act. They devised and advised the method of its administration, the development of the panel system of medical benefit and training of the necessary staff in order to extend the scheme throughout the country.”

In 1948 Indian government made certain important amendments in existing Indian factories act 1934 and came with an entirely new nomenclature “The factories act 1948” with a main purpose of regulating conditions of work in manufacturing establishment for ensuring adequate health, welfare measures, hours of work and leave with wages.

In 1948 Indian government made certain important amendments in existing Indian factories Act 1934 and came with an entirely new nomenclature “ The Factory Act 1948” with a main purpose of regulating conditions of work in manufacturing establishment for ensuring adequate health, welfare measures, hours of work and leave with wages.

In 1948 the Government enacted Maximum wages Act for prevention of exploitation of labour due to payment of unduly low wages.

In 1952 Government enacted Employee’s Provident fund and miscellaneous provision act with a main objective of providing substantial measures of financial security and timely monetary assistance to industrial works and their families.

‘Besides this’
(i) “The Assam tea plantations provident fund act 1995.” The personal injuries (Compensation Insurance) act, 1963.
(ii) The seamen’s provident fund Act 1966
(iii) The plantation labour Act 1951
(iv) The(central) maternity benefit Act, 1961

Were enacted for providing social security to weaker section of the society where there were more chances of exploitation and victimization.

Social Security Schemes at Global Level

At global level the concept of social security was felt much earlier as compare to India. Countries like U.S.A. U.K. Germany, Japan are very liberal and highly concerned about the social security of their employees and many healthily other scheme are still in their pipeline.

1. Social Security in U.S.A.

In U.S.A. these schemes were introduced in 1935 to give protection to workers and his family against the complete loss of income through old age or death. In 1950 social security programme was extended to cover farm and household employees and other persons. In U.S.A. there are four separate social security programmes providing finance security to American workers and their families which include:

(i) The Old age and survivors Insurance (OASI). It pays monthly cash benefits after a worker retires or dies.

(ii) The disability Insurance (DI) which pays cash benefits after a worker becomes disable during injury of occupational disease.

(iii) The hospital insurance (HI or Medicare Part A) which pays for hospital care of the aged and for long-term disablement.

(iv) Supplementary medical Insurance (SMI or Medicare Part B) which pays for part of the costs of Physician’s services for out patient services and related medical and health care.

(v) In U.S.A. there is unemployment insurance- programme which provide cash benefit as a right to every unemployed persons after meeting certain conditions.

(vi) Worker’s Compensation legislation is provided cash benefits and medical care when any worker is injured in connection with his job.

(vii) All these schemes are being financed by Federal Tax through Federal treasury by federal government.

(viii) Beside this in U.S.A. there are union – negotiated plans in thee system for the social security which provides health insurance, laid- off employee and benefit for retirees and many others.

(ix) More than 45 million employees in U.S.A. are beneficiaries of private pension and different welfare plans.

(x) The rights of employees are protected under employee Retirement Income security Act, 1974.

(xi) Many new legislative changes have taken place on Dec.21, 1977. These legislations are designed to meet the financial problems faced by different social security schemes.

(xii) In U.S.A. under social security schemes there are many benefits for retirees over 65 years of age who continue to work.

2. Social Security Scheme in Great Britain (U.K.)

The schemes of social security was introduced in U.K. after Second World War. After 1900 strong protects had begun against the government for providing sufficient social security schemes. Then central government accepted responsibility for helping the aged person of small means out of govt resources.

(i) “In 1908 old age pension” was passed to provide pension payable people above 70 years of age but were based on test of needs.

(ii) In 1911 first statutory schemes of social insurance was passed.

(iii) “National insurance Act” was introduced providing compulsory insurance against employment for workers in certain industries and against sickness and medical cost for low paid workers.

(iv) In 1929, a local government Act was passed as per the Act a new system of “Poor Laws’ was introduced are to be administered by country councils.

(v) After the Second World War in 1939, social insurance Pension was provided to deaf and blind, old age, widows and orphans.

(vi) In 1929 “Poor Law relief “was re-named Public assistance and transferred to larger local govt. authorities.

(vii) As per “Worker’s Compensation Act 1887” compensation is paid to the employee for injury by accident irrespective of whether employee or employer was at fault.

(viii) The famous Beveridge Report was published in 1942 under which it was recommended that there should be a strong system of social security which would protect the individual from the “Cradle to the grave.”

(ix) This report further suggested that disorganized system of social Insurance and Social assistance should be replaced by “Unified system.”

(x) In 1946 National insurance (Industrial injuries) act was passed.

(xi) In 1971, a “new family Income supplement” was introduced.

(xii) In 1975 the Social security Pension Act was passed.

(xiii) In 1982 social security and Housing Benefit Act was introduced.

(xiv) In March 1981 the total expenditure on social security was as high as 22.4 billion which was approximately 10% of the grass National Income.

3. Social Security Schemes In Germany

It was Germany who first came with a comprehensive modern plan of social security with a basic purpose of providing protection to workers.

(i) In 1883 wages earner came under compulsory insurance modern plan of social security with a basic purpose of providing protection to workers.

(ii) In 1884 accident Insurance act was introduced.

(iii) In 1889 the Invalidity and old age Protection Act was passed.

(iv) In Germany social Insurance consist of:
• Sickness insurance
• Old age Pension
• Accident insurance
• Unemployment insurance

(v) Germany federal government pays payment of compensation for a chosen list of occupational diseases.

(vi) Then there is National Employment service responsible for occupational placement and vocational counseling.

(vii) On 1st October 1974, “rehabilitation benefit alignment act” was passed.

4. Social Security In Sweden

In Sweden like Germany is also considered as a pioneering country for taking initiative in the field of social Insurance. In this country there are different Social insurance benefits provided to the employees like.
(i) Old Age Pension.
(ii) Survivor’s insurance.
(iii) Medical care.
(iv) Sickness insurance.
(v) Industrial injury.
(vi) Unemployment insurance.
(vii) Parent’s cash benefit.
(viii) Swedish social security system aims at benefiting the whole of country not merely employment persons.
(ix) Sweden state subsidized voluntary unemployment Insurance Schemes covering majority of Swedish employees.
(x) In 1973 Unemployment Insurance Act was passed.
(xi) On 1 July 1977, Employment injury act was introduced. The main benefit of this act was to put the injured person in some economic position as if he had not been injured.

5. Social Security Schemes in Japan

In 1922 japan was the first Asian country to come out with a highly comprehensive social Insurance system by passing health insurance act.
(i) In 1938 “National health Insurance Act” was introduced.
(ii) In 1939 “Seamen’s insurance Act” was passed.
(iii) In 1941 “Employee’s personal programme” was introduced.
(iv) In 1959 with a purpose of establishing a universal Medical care. ‘The National health Insurance programme” was amended.
(v) There are special pension programmes for different categories of employees like Agricultural workers, seaman, private school teachers and civil servants.
(vi) In 1975 unemployment insurance was amended and it was made compulsory for all industrial and commercial firms with more than five employees.

6. Social Security Schemes in New Zealand

New Zealand is highly concerned with the security insurance scheme. As per The New Zealand Act 1935, the government would be providing payment for- (i) Old Age (ii) Widow- hood (iii) Orphan- hood (iv) Unemployment act (v) Disabilities (vi) Superannuation.

(i) “The New Zealand Act” made a very wide claims of coverages of contingencies which almost guaranteed all sorts of benefits to the citizen from Cradle to grave.
(ii) With good support from “International Labour Organization” the concept of comprehensive social security was introduced.
(iii) In 1952 “Minimum Standard Convention” was held which divided social security in nine divisions like.
(a) Unemployment benefit
(b) Old Age Benefit
(c) Employment Injury benefit
(d) Family Benefit
(e) Material benefit
(f) Medical care
(g) Invalidity benefit
(h) Survivor’s benefit

In 1974 a “Universal No fault accident Insurance” was introduced in New Zealand.
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Review Questions
  • 1. What do you know about social Assistance? Discuss its features and different schemes under it.
  • 2. What do you understand by social insurance? Give its features and different schemes operating under it.
  • 3. Discuss the Social security measures in U.K. and Britain with special reference to Germany, Japan and New Zealand.
  • 4. Discuss the scope of social security in India. Explain different acts which are providing social security to Indian workers.
  • 5. What do you understand by different social security schemes in India during pre-independence period?
  • 6. Explain different schemes of social security after independence in India.
  • 7. Explain various schemes of social security in U.S.A. and U.K.
  • 8. What do you know about various measures taken by Germany and Sweden in providing social security schemes to their citizen?
  • 9. Critically examine various social security laws prevailing in different countries. Are these sufficient.
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