History of Social Security of Unorganized Workers-With Special

Reference to India

Sujit Kar1

“Social Security” is very wide term and today it has acquired a global character. The concept
is also of multi-dimensional in its contents and form, and it has social, Economic,
psychological, ethical and political over tune besides legal ones. But the irony is that it has
not yet acquired any standard or uniform definition. However according to “Beveridge” it is
designed to provide against want, disease, ignorance, squader and idleness.2

"Social Security means that Government, which is the symbol and representative of society is
responsible for fixing a minimum standard of living for all its citizens".3 "Social Security is
an instrument for social transformation and progress and must be preserved, supported and
developed as such. Furthermore, far from being an obstacle to economic progress, as is all too
often said, social security organized on a firm and sound basis will promote such progress,
since once men and women benefit from increases security and are free from anxiety for
tomorrow,4 they will naturally become more productive.”5

The man’s quest for the protection from the natural hazards, socio-economic insecurity is the
base of the development of social security concept. With the industrial revolution a new class
‘workers’ emerged, who were totally dependent on the wages and allowance for their
existence. Sometime they were subject to exploitation by the employers in the industries.
Since then the workers were in quest for the social security. In the mean time the government
of the state had also started to undertake a number of social security measures like pre-natal
and maternity benefits, paid leave, medical care, pensions, unemployment benefits, family
allowances and old age pensions, etc.

The history of social security in the form of social insurance and social assistance begins in
the Europe the 19th Century and these are the Germany, USA, Britain and France where it is
started first.

2.1 Social Security in Germany:

1
M.A., LL.M., (Research Scholar in Law, Sambalpur University)
2
Modern Industrial Relation by S.K. Mishra.
3
G.H.D. Cole (Social Scientist).
4
http://www.icsw.org/global-conferences/social-securities.htm
5
(Preface to " Into the 21st Century: the Development of Social Security")

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 History of Social Security of Unorganized Workers-With Special
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Germany is the first state in the world which adopted the old age social insurance scheme in
the year 1889 during the period the Chancellor Otto Von Bismarck. The idea was propounded
first by the German Emperor William the First in the year 1881and William the First wrote to
the German Parliament that, “…those who are disabled from the work by age and invalidity
have a well-grounded claim to care from the state.”

In order to keep the wellbeing of the workers and efficiency of the German economy
Chancellor Bismarck was motivated to undertake the social insurance scheme as propounded
by the Emperor William the First. It is also to be noted that the social insurance is one part of
the social security. The other part of the social security is the social assistance. The social
insurance scheme in Germany provided for the contributory retirement benefits and disability
benefits schemes where it was mandatory for the employers, employees and the Government
to participate and to contribute in the retirement and the disabled benefits schemes. The
Workers’ Compensation Programme, 1884 and the Sickness Insurance made the income
security of the workers and other employees of the German exclusive on the basis of social
insurance principle. In that scheme the age of retirement was fixed into 65 years. That age of
65 years for the retirement benefit was later on followed by the USA in its own social
security planning.

2.2 Social security of the workers in England:

Exploitation of the unorganize workers is evidenced since past in the international as well as
national scenario. In 17th Century the English industrialists found Jamestown Colony and
started to import slaves from Africa to this colony. The year 1664 is very much notable in the
history of workers as the first Slavery Code initiated trend of making African servants slaves
for life. It was the beginning of exploitation of workers and the said workers were totally in
secured. This insecurity was social, economic, and political. The workers also were in need of
security and in the year 1786, the Philadelphia Printers organized the first successful strike
for increasing their wages. Very soon, the Philadelphia Carpenters went in strike in the sector
of building trades in demand of 10-hour day of work. The struggles for freedom of workers
began in the early of 19th century. The “mill girls” assemble in Lowell, Mass against their
wage cuts. The Lowell-Female Labours Reform Association started public petitioning for 10-
hours day for work in the year 1843.

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 History of Social Security of Unorganized Workers-With Special
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Two problems began to appear in the 1980s People were living longer, and hence collecting
Social Security benefits longer. Also, the ratio of the number of contributors to the number
of recipients to the fund dropped. Worries about the financial health of the Social Security
System began in earnest in the 1980s.

2.3 USA on Social Security:

In reality the social security plan was coming into being in USA in the year 1935 but there
was one precursor which would be called as the social security as provided to the disabled
veterans, widows and children of the deceased in the Civil War in USA. That led then
America to undertake the pension programme. The first National Pension Programme was
introduced in the year 1776 even if prior to the Declaration of the Independence. America had
social security programme in the form of pension to the civil war veterans since 1862. But the
social security for the general population was developed in the other social and historical
back ground. Let see the developmental history of the social security for the general
population particularly for workers in USA.

In 17th Century the English industrialists found Jamestown Colony and started to import
slaves from Africa to this colony. The year 1664 is very much notable in the history of
workers as the first Slavery Code initiated trend of making African servants slaves for life. It
was the beginning of exploitation of workers and the said workers were totally in secured.
This insecurity was social, economic, and political. The workers also were in need of security
and in the year 1786, the Philadelphia Printers organized the first successful strike for
increasing their wages. Very soon, the Philadelphia Carpenters went in strike in the sector of
building trades in demand of 10-hour day of work.

The struggles for freedom of workers began in the early of 19th century. The “mill girls”
assemble in Lowell, Mass against their wage cuts. The Lowell-Female Labours Reform
Association started public petitioning for 10-hours day for work in the year 1843. It was the
state of New Hampshire which enacted 10-hour day paid in 1847.

The concept of today’s union movement was originated with the foundation of National
Labour Union in America. Federation of Organized Trades and Labour Unions formed in the
year 1881 in USA. The boycott of Pullman sleeping cars lead to general strike on rail road

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 History of Social Security of Unorganized Workers-With Special
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and accordingly Erdman Act prohibited discrimination against rail road workers because of
their union-membership and also provided for mediation, conciliation as the mode of railway
labour disputes.

First two decades of 20th century is known as the progressive era of labour movement.
Women’s Trade Union League was established at AFL Convention in the year 1903. Within
few years the Industrial Workers of the World constituted to turn out the labour movement at
international level. In connection with this movement, the leadership of industrial workers of
the world was punished by virtue of imprisonment in the federal prison as they showed
disloyalty to the United States.

In first term of President Franklin D. Roosevelt the act relating to social insurance was
passed. It was the time of great depression of the 1930s when the rates of poverty among
senior citizens exceeded 50 percent.6 In USA the provisions of social security have been
changing since the 1930.

In the year 1935 the Social Security Act was passed in USA which provided for a number of
programmes for various group of citizens. Under this Act there is provision to pay a
continuing income to the retired workers of aged 65 years or more after their retirement. In
the year 1939 the benefits was extended to the surviving spouse and children of the said
workers also.

In the 1950s there were some changes in the said social security programme which included
the first Cost of Living increase (COLA) since 1940. By the year 1950 a number of
occupational groups are come under the adequate social security coverage. Following are the
programs under the Social Security Act and Amendments:- (1)Unemployment benefits; (ii)
Temporary Assistance for Needy Families; (iii) the Federal Old-Age (Retirement), Survivors
and Disability Insurance; (iv) Health Insurance for Aged and Disabled (Medicare); (v) Grants
to States for Medical Assistance Programs (Medical); (vi) Supplemental Security Income
(SSI); (vii)State Children’s Health Insurance Program (SCHIP); (viii) Patient Protection and
Affordable Care Act. In the 1960s the Medicare Insurance was added to the social security
programme under which the healthcare provided to the beneficiaries aged 65 years or more of
the social security scheme by virtue of the Medicare Act. In 1972 the related to the Cost of

6
Source: “A Reader’s companion to American History: Poverty Retrieved March’17, 2006

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Living of the workers and other employees was modified and the COLA was provided each
year on the basis annual increase in the rate of inflation.

2.3.1 Workers in USA:

In the 1930s, with the effects of the Great Depression millions of Americans had lost their
jobs or had no avenue of earning enough money to support their families. Social decay was
possible, so it was in 1932, that Franklin Roosevelt as President of the United States
advocated an idea which was referred to as social insurance. Eventually, this idea developed
into the social security system that is in existence today. Following the outbreak of the Great
Depression, poverty among the elderly grew dramatically. The best estimates are that in 1934
over half of the elderly in America lacked sufficient income to be self-supporting. Despite
this, state welfare pensions for the elderly were practically non-existent before 1930. A spurt
of pension legislation was passed in the years immediately prior to passage of the Social
Security Act, so that 30 states had some form of old-age pension program by 1935. However,
these programs were generally inadequate and ineffective. Only about 3% of the elderly were
actually receiving benefits under these states plans, and the average benefit amount was about
65 cents a day.

There were many reasons for the low participation in state-run pension systems. Many elderly
were reluctant to "go on welfare." Restrictive eligibility criteria kept many poor seniors from
qualifying. Some jurisdictions, while having state programs on the books, failed to actually
implement them. Many of the state-passed pension laws provided for counties within the state
to opt to participate in the pension program. As a result, in 1929 of the six states with
operating pension laws on the books only 53 of the 264 counties eligible to adopt a pension
plan actually did so. After 1929, the States began enacting laws without county options. By
1932 seventeen states had old age pension laws, although none were in the south, and 87% of
the money available under these laws were expended in only three states (California,
Massachusetts and New York). The Civil War had left many soldiers as disabled veterans. At
the beginning Union veterans, who had sustained battlefield injuries and were disabled, or the
widows of the soldiers, were given the pension payments. Confederate veterans and their
families were excluded. Although the need for economic security affects all ages and classes
of society, one particularly acute aspect of this need is the problem of old age and the
possibility of retirement after a long life of labor. Retirement, a feature of life we now take so

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much for granted, was not always readily available, and it was a struggle to develop adequate
systems of retirement. This trend toward urbanization also contributed to another significant
shift in American society, the disappearance of the extended family and the rapid rise of the
nuclear family. Today we tend to assume that "the family" consists of parents and children--
the so-called nuclear family. For most of our history, we lived in "extended families" that
included children, parents, grandparents and other relatives. The advantage of the extended
family was that when a family member became too old or infirm to work, the other family
members assumed responsibility for their support. But when the able-bodied left the farms to
seek employment in the cities, often the parents or grandparents stayed behind. And when
new immigrants first arrived in our land, it was often the breadwinner who first made the
passage and only later could he bring the family over.

The Industrial Revolution transformed the majority of working people from self-employed
agricultural workers into wage earners working for large industrial concerns. In an
agricultural society, prosperity could be easily seen to be linked to one's labor, and anyone
willing to work could usually provide at least a bare subsistence for themselves and their
family. But when economic income is primarily from wages, one's economic security can be
threatened by factors outside one's control--such as recessions, layoffs, failed businesses, etc.

2.4 The Social Security in France:

In the international scenario there was “Social Assistance” provided by the professional
organizations to their members in the middle age in France. Such “Social Assistance” was a
form of now-a-days “Social Security” concept. But this system comes to an end in the year
1791 with the abolition of corporation by the “Allarde Decree”. By the year 1835 there was
“Societies for mutual support” under the provisions of Human Law. The foundation of the
modern social security system in France is based on Charter Mutuality, 1898. Apart from
these private mutual social assistance, the state sponsored “Social aid” scheme like ‘Free
Medical Assistance’, ‘Worker Compensation Claims’, ‘Child Birth Assistance Programme’,
‘Elderly and Disabled Persons Assistance Programme’ were initiated in the year 1893, 1898,
1904 and 1905 respectively.

The beginning of 20th Century was notable for the social aid through insurance to indemnify
the injured employees. By the year 1928 the insurance coverage extended to illness,

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 History of Social Security of Unorganized Workers-With Special
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maternity death. The concept of universal social security programme covering all the citizens
of France in case of sickness or injury was first time evolved during the period of Second
World War based on the plan of British economist William Beverage. The Constitution of 4 th
Republic in France, it was obligation of the state to assist the most vulnerable section of the
society financially.

Following legislations namely ‘Social Security to Government Workers, 1947’, ‘Insurance

Scheme for Non-Salaried, Non-Farm Employees, 1948’, ‘Compulsory Retire Insurance
Scheme for the Farmers, 1952’, ‘Compulsory Health insurance for the Farmers, 1961’,
‘Maternity Health Insurance Schemes for Non-Salaried, Non-farm Workers, 1966’,
‘Protection enforcement of Salaried Firm Workers against work related accidents, 1972’,
‘Universal Retire Insurance compulsory for working population, 1975’ and ‘the Complete
Institutionalization of Universal Health Care and Personal Insurance, 1999 are providing
unified social security scheme throughout the 20th century in France.

It is very clear from the above discussion that during the period of French Revolution the idea
of social assistance was prevailed in France. Later of the state sponsored social assistance/aid
in an extended form was coming into force. Said social aid and social assistance were
extended to the farmers, pregnant mothers, workers working in the hazards industry. The
need of social assistance was then felt by the France.

2.5 ILO and its Social Security Mandates:

The realization of the social security was started with French revolution whereby the rights of
men proclaimed and later on it was adopted into the preamble of the French Constitution. In
the year 1919 just after the World War First the ILO was formed in accordance with the
provisions of the Versailles treaty. The treaty provided for the right to social security of the
working class. In the year 1944 along with the other countries the International Labour
Organization (ILO) adopted a declaration covering the extent of the measures of the social
security for the working class.

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 History of Social Security of Unorganized Workers-With Special
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On various aspects of the social security a number of Resolutions, Recommendations and

conventions have been adopted by the ILO. In this respect the Convention No-102 covering
minimum standard of social security like Medical Care, Sickness Benefit, Unemployment
Benefit, Old Age Benefit, Invalidity Benefit, Employment Injury Benefit, family Benefit,
Maternity Benefit and Survivor's Benefit is very much important and it was adopted in the
year 1952. Later on the ILO has set up a number of Resolutions, Recommendations and
conventions which amplifying and extending the measures of the social security.

International labour law is generally concerned with the rights and obligations of the workers,
employers, trade unions and governments etc. The ILO and WTO are the international
functionaries making reforms in the labour market. World Bank and International Monetary
Fund have the indirect control over the international labour laws. The labour standards are
violated for the first time in the earlier stage of industrial revolution. During this time, the
employers hired the workers abroad without giving due protection of labour standard. This
results in loss of bargaining power of the workers. The International Labour Organization-
one of two direct functionaries of international labour law is constituted on the idea that
“Peace can be established only if it is based upon social justice”7

It is the preliminary task of the ILO to interrelate the ideas and principles of labour laws
among the member states by issuing conventions. It is the “Hours of Work (Industry)
Convention, 1919 whereby 48 working hours in a week has been ratified by the 52 states out
of the 185 member states. In this respect it is very necessary to mention the ILO Conventions
relating to the social security of the workers.

Social Security (Minimum Standard) Convention, 1952; Employment Injury Benefits

Convention, 1964; Invalidity, Old Age and Survivors’ Benefits Convention, 1967 and
Maintenance of Social Security Rights Convention, 1982 of the ILO are related to the
subjects of the social security of workers and these are ratified by 48, 24, 16 and 32 member
states respectively.

The other conventions in concerned with the social security of the workers are Equal
Remuneration Convention, 1958 and the3 Equality of Treatment (Social Security)
Convention, 1962. The content of the former convention is of the right of not to be

7
Treaty of Versailles 1919, Part-XIII, Section- and Article-427

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 History of Social Security of Unorganized Workers-With Special
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discriminated against on the grounds of sex, colour, race, religion, political opinion, national
extraction or the social origin or the other grounds as determined by the member states in the
employment. This convention is ratified by 172 member states of the ILO.

There are 190 conventions under the international – Labour –Organization till the date. Out
of these 190 conventions there are 8 fundamental conventions (on prohibition of Forced
Labour, Child Labour, the right to organize in a trade union, and suffer no discrimination)
and these are compulsory bound upon all the member states if these are ratified by the
concerned state. On the basis of jurisprudence of such local courts, the ratified conventions
are enforced as there is no international labour court at present.

On the basis of subject matter, the conventions are to be classified as follows: The first one
covers the individual right to work, wage standard, working hours, prohibition of child labour
and “Social Security” of workers. The second one is related to the subject of workers’ right to
join in trade union, collective bargaining, participation in the management of the
establishment etc. The third one is in concern with the right of equal treatment, special
protections for the workers from indigenous-communities and migrant workers. The fourth
category is related to promotion of job guarantee, regulation of employment agencies etc. The
fifth category contains 6 conventions and requires administrative and executive approach of
the member states towards the promotion and enforcement of labour standard so enshrined
under the ILO conventions. There is sixth category of convention, where there are 12 specific
conventions relating to seafarers. Seafarers are international in nature.

There is another category of conventions which are related to the working of fishing,
plantation, hotels, domestic works etc. This category of convention consists of 6 conventions.
So the earlier history of ILO and its conventions shows that, social security of workers is
taken into account in the very first category of convention. These are 5 conventions relating
to social security. The convention of 1952 is concerned with the social security minimum
standards; 1964 convention envisaged employment injury benefits & convention of 1967
provides for invalidity, old-age and survivors’ benefits. Convention of 1982 promotes the
maintenance of social security rights and the convention of 1962 is regarded with social
policy-basic aims and standards. In the same year is another convention relating to equality of
treatment-social security.

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Apart from the conventions containing the social security measures, the I.L.O. has the issue
relating to minimum wage law vides Minimum Wage Fixing Machinery convention, 1928;
Minimum Wage fixing Machinery (Agriculture) convention, 1951 and Minimum Wage
Fixing convention, 1970 as minimum wage law.

2.6 WTO on Social Security:

WTO is rather strong than ILO in respect to operation of labour standard in the international
level. Since its inception in the 1994 it has the real authority to enforce the labour standards
by virtue of trade section. The main object of the WTO is to reduce customs, tariffs and like
other obstruction for the free export and import of goods, services and capital between its
member states. Hence very aim and object of the WTO puts question regarding the operation
of labour standards.

In reality, within this era of globalization the maximum member states of WTO take
advantage of low wage and poor condition at work places for their profitable business. In the
opinion of many labour lawyers and economist, the WTO, since its formation results in
weaker bargaining power of workers.

WTO has yet to adopt labour standards by means of rights, duties, safety, social security,
equality of status and of opportunities etc. of workers but early history (1994-2013) the
World Trade Organization is not so promising.

2.6.1 Workers in the member state of WTO:

The labour standards are violated for the first time in the earlier stage of industrial revolution.
During this time, the employers hired the workers abroad without giving due protection of
labour standard. This results in loss of bargaining power of the workers. In the era of
globalization the maximum member states of WTO take advantage of low wage and poor
condition at work places for their profitable business. In the opinion of many labour lawyers
and economist, the WTO, since its formation results in weaker bargaining power of workers.

Availability of basic facilities for the unorganized workers like primary education and
primary health care is very poor in South Asia. Poverty with malnutrition and deterioration in
the health of women signify very low levels of social development in these economies. With

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the emerging ageing of the population, old age social security also assumes special
significance.

2.7 EU & ECJ on Social Security Schemes:

The European Union has its own system of labour law. But these are not exclusive as the
provisions for minimum wage fairness of dismissals and collective bargaining are not
included in it. But the European Court of justice has now given initiation for adopting legal
protection to keep the worker s rights alive. Regarding trade union E. C. J. is in view that “an
objective of trade union has been to organize their members across borders in the same way
that multinational corporations have organized their production globally.” Regarding
conditions of work and minimum rights of the workers it is provided under the European
Union that “Under the posted workers Directive, Article 3 lays down minimum standards for
workers being posted away from home so that workers always receive at least the minimum
rights that they would have at home in case their place of work has lower minimum rights.
Article 3(7) goes on to say that this shall not prevent application of terms and conditions of
employment which are more favourable to workers.”8

The E. C. J. recognizes “the workers right to strike in accordance with ILO Convention 87,
but said that its use must be proportionately to the right of the business’
establishment”.(http.www.wikipedia.com) the history of European Union shows that, E.U.
tries the most to make balance in between the international freedom of business and that of
right, minimum wage, working condition, safety measures, right of bargaining and like other
social security of workers.

The concept of social security has been further extended by including the provisions of the
housing, safe drinking water, sanitation, health, educational and cultural facilities as also a
minimum wage, which can guarantee the workers a life with dignity. In the year 1948 the
General Assembly of United Nations adopted the Universal Declaration of Human Rights and
which states that "every member of a society has a right to social security". As Mr. Francis

8
Source:www.google.com/http.www.wikipedia.com

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 History of Social Security of Unorganized Workers-With Special
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Blanchard, Director General, ILO says, "Social security is an instrument for social
transformation and progress".

2.8 Social Security in the Countries in Asia and Pacific:

“The developing countries in Asia and Pacific are predominantly agricultural. The societies
in these countries have derived their support and sustenance from their time tested
mechanisms, founded on the caring for the individuals by the family and community. The
growing urbanization has produced a two-fold effect. Firstly, it has eroded the homogenous
character of a rural community and secondly, it has brought about the need to provide an
alternative form of social security in vulnerable environment. The diversity of historical
factors and a noticeable variation in the pattern of social security development have made the
countries in Asia and Pacific to adopt various schemes. This was done also in the interest of
vast unprotected groups and the informal sectors but the inadequacy of infrastructure and the
high operational costs in extending social security and protection to various groups like
marginal farmers, artisans, agricultural workers, fishermen, etc. have constrained the planners
to adopt a conservative approach of maintaining the status quo and deferring the extension to
the excluded groups. Availability of basic facilities for primary education and primary health
care is very poor in South Asia. Poverty with malnutrition and deterioration in the health of
women signify very low levels of social development in these economies. With the emerging
ageing of the population, old age social security also assumes special significance. The
developing countries in Asia and Pacific have to adopt a critical approach towards the
implementation of social security schemes. The enormous social needs and a host of
contending priorities of the entire population cannot be covered and a selective approach has
been adopted. The main obstacle in the extension of social security coverage is due to high
operation cost and inadequate infrastructure, which has always been unaffordable and
unavailable as a resource to a developing nation. The problem for rural coverage has also
contributed in many ways in large-scale implementation. Many Governments find their rural
communities with a weak economic capacity, low educational levels, and seasonal work
making it difficult in determining wages. Social Security is one of the important dimensions
of the development process. It assumes a place of special significance in the developing
countries, where poverty, destitution and income inequalities abound in large measure.

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 History of Social Security of Unorganized Workers-With Special
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While growth is an important precondition for expanding the scope of social security, no less
important is the need for adopting special social security policies. The concept of social
security includes many crucial aspects of human development. Education and health
facilities, old age pension, security of jobs, insurance against risks, unemployment and
deprivation, are some of the issues that come within the scope of social security. There is a
major on-going debate on finding ways and means of bringing the informal sector into the
fold of social security schemes in a more effective manner. This kind of widening of scope of
social security schemes is a socially desirable objective. But achieving it is a daunting task as
the informal sector in South Asian countries is excessively large (usually larger than 50%). It
has significant policy implications in terms of allocation of resources and implementation of
schemes. Some efforts are on but we need to put these issues at the forefront.”9

2.9 Social Security in India:

Several developing countries in Asia and Pacific have been searching for extending
alternatives social security protection to various groups. Each country is faced with a
different situation. India as such is a vast nation with one-sixth of the world human
population. The social security measures planned and implemented in India in the post
Independence era has been limited to organized sectors whereas the majority of the work
force earns wages through unorganized labor markets. The Government of India has been
dealing with a population that has been ever growing. The planners with the limited resources
have barely been able to cope with the ever-increasing demands. The rapid disorganization of
a joint family system due to urbanization is leaving more and more families in secured,
vulnerable and devoid of social security. The Government institutions and NGOs have to
build up a system in order to build in a community-based network.

2.9.1 Social security in ancient India:

In the early Vedic age the society was divided into four-fold on the basis of varna or
complexion. But with complexities of social life the society was further divided into four
classes on the basis of quality and karma i.e. nature of work or labour. According to these
there were four classes i.e. Brahomanas, Kshatryas, Vaisyas and Sudras. But in the latest
Vedic Age the four divisions of class was transformed into cast system and change from one

9
Source: http//.www.google.com

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class to another class was strictly prohibited. Each cast was assigned to specified job and the
people of other cast could not live 0n other jobs. After all people belonging to a specific cast
were assigned to their specified job and consideration for that job, be price or be kind was
also specified. So, the social security of people in general was indirectly protected through
these cast system in latest Vedic period in ancient India. But this security was rather
economic security than the others securities.

The life of the Vedic Aryans was divided into four stages or Ashrams. The rule was applied
to Brahamanas, Kshatriyas, Vaisyas only. According to this rule in Brahmacharyya Ashrams
they had to live in the house of the Preceptor (Guru) for taking education. In the next, they
had to return back home and after getting married they had to live as Grihi with wife and
children. This stage was called Garhasthya. On attaining the age of fifty they had to leave the
house and stayed in forests separately. It was known as Vanaprasta. On the fourth and last
stage they had to take Sannyasin by renouncing the world. There is no question regarding the
security, life, livelihood etc. in first two stages of life i.e. the Brhmacharyya and Garhasthya.
It is easily presumed that, there was social security in these two stages the Aryans had to face
various adversities of life. The so called securities were not at all available in these two stages
of life. The Vedic Aryans treated their entire life as religion in practice and usually they did
not give social security more importance than their religious faith.10

In early Vedic Age, the Aryans used to live in the villages and such villages were the unit of
social, economic and political life. Each and every family in the villages had a piece of
agricultural land. There was posture land in every village and to which each and every family
of the village had the equal right to graze their cattle. These were the evidence of economic
security in early Vedic age.

In early Vedic age, they (Aryans) lived in joint family headed by Grihapati. The Grihapati
was the protector of his all the family members against any kind of adversities and as the
head of the Vish or Jana the Vishapati or the king had to protect the people and their
properties in general. So, it can be treated as social security of general people from the part of
Grihapati and king in the early Vedic period.11

10
Source: History of Ancient India, By Dr. K. C. Chaudhuri, New Central Book Agency (P) Ltd, Reprinted:
2002, Pages 35-56
11
Ibid.

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In later Vedic age, in spite of agriculture there were various occupations, professions, arts,
crafts and industries in India also. The transport and other communication were developed
also. But in that period there was no such evidence of social security of working class
associated with the above stated professions, industries etc.

But in respect to political authority and duty of the king in the later Vedic age, it can be said
that, the king was to protect the castes and orders and he had to support the learned Brahmins
and the needy and poor of all classes. No one in his country suffer from hunger, sickness and
cold etc. This is the clear evidence of social security of subjects as provided from the part of
king in later Vedic age.

There was also strong and sound evidence of social security of the subjects in Maurya era
during the kingship of Asoka. ‘All men are my children’ indicates his attitude towards the
subjects and welfare of the subjects was basic and fundamental character of the governance
under his kingship. During the era of his kingship, to serve the welfare purpose of the
subjects, the king’s law even superseded the sastras. The present day concept of welfare state
takes inspiration from the Asoka and the welfare-state is the basis of social security.

In the era of Nanda-Maurya, Gupta even in 7th Century A.D., the wealth of India was on the
basis of exploitation of natural resources and the utilization of skilled, semi-skilled and
unskilled man power. Like the capitalist system of production, the wage of the labour was
very low in that period. The practice of ‘Hired Labour” was also practised at that time in
industry, agriculture, animal husbandry, trade and domestic services. The labours were paid
their wages on daily basis or fortnightly or six monthly or on annual basis. The wages were in
form of cash or in kind.12

“Forced-Labour” was also practised in that time and usually the slaves were engaged as
forced labours. The labour laws as laid down in the later Smritis following the lines of Manu
and Yajnavalkya were more or less justified in nature. The hire labour did not perform his
duty properly for his master, was liable to pay fine and his wage was forfeited. The labours
those were receiving the wage but were failed to perform their duties, were liable to pay fine
@ double of the wage received to the king and also liable to refund back the wage to their

12
See Supra Pag.44, note 39 ( Pages 57-64)

15
 History of Social Security of Unorganized Workers-With Special
Reference to India

masters. On the other, unable to complete the task of work as contracted or agreed into made
the labour liable to pay heavy fine as punishment.

A master failed to pay due wage to the labour was also liable to pay the same to the labour as
well as to pay fine to king. In view of Katyayana a servant or domestic worker would not be
held liable due to loss because of theft, fire or flood etc. The labour performed overtime work
was eligible for extra wages. On the other hand a master forced his labour to work in
sickness, was liable to pay fine. It was also seen in the Gupta period that the silk weavers
were migrated from Gujrat to Mandasore but it was for better opportunities. There was not
only the wage and working security of the labour class but they were to maintain the working
standard. The metal workers and weavers were to confirm the standard and not to decrease
the material. So, it can be said that a well settled and justified labour policy was maintained
in Nanda-Maurya, Gupta age and even in 7th Century A.D. in India.13

2.9.2 Problem of the working class in ancient India:

In early vedic age in India on attaining the age of fifty the man had to leave the house and
stayed in forests separately. It was known as Vanaprasta. On the fourth and last stage they
had to take Sannyasin by renouncing the world. There is no question regarding the security,
life, livelihood etc. in first two stages of life i.e. the Brhmacharyya and Garhasthya. It is
easily presumed that, there was social security in these two stages the Aryans had to face
various adversities of life. The so called securities were not at all available in these two stages
of life. The Vedic Aryans treated their entire life as religion in practice and usually they did
not give social security more importance than their religious faith. In later Vedic age, in spite
of agriculture there were various occupations, professions, arts, crafts and industries in India
also. The transport and other communication were developed also. But in that period there
was no such evidence of social security of working class associated with the above stated
professions, industries etc.

“Forced-Labour” was also practised in that time and usually the slaves were engaged as
forced labours. The labour laws as laid down in the later Smritis following the lines of Manu
and Yajnavalkya were more or less justified in nature. The hire labour did not perform his

13
See Supra Pag.44, note 39 (Pages 364-365 & 368-369)

16
 History of Social Security of Unorganized Workers-With Special
Reference to India

duty properly for his master, was liable to pay fine and his wage was forfeited. The labours
those were receiving the wage but were failed to perform their duties, were liable to pay fine
@ double of the wage received to the king and also liable to refund back the wage to their
masters. On the other, unable to complete the task of work as contracted or agreed into made
the labour liable to pay heavy fine as punishment.14

In the ancient India a master failed to pay due wage to the labour was also liable to pay the
same to the labour as well as to pay fine to king. In view of Katyayana a servant or domestic
worker would not be held liable due to loss because of theft, fire or flood etc. The labour
performed overtime work was eligible for extra wages. On the other hand a master forced his
labour to work in sickness, was liable to pay fine.

2.9.3 Social security in Medieval India:

Concept of Social security was not found in Sultani period in India. But in Afgan-Mughal
period especially in the era of Afgan-ruler Sher Shah Suri, the social security measures were
undertaken by virtue of welfare policy. The main object of the governance of Sher Shah Suri
(1540-45AD) was to assure overall welfare of the subjects. Sher Shah Suri thought himself as
the protector and guardian of his subjects. That welfare concept is the basis of present day
social security.15

2.9.4 Social security in pre-independent India:

Ruling of British “East-India Company” in India affected the Indian economy very much.
Traditional self-sufficient village economy and agricultural based village economy had totally
been broken down due to this. New administrative policy, development of railways and other
communication made the commodity, goods as manufactured in England easily available in
India. Thus the traditional cottage industry in the Indian villages came to an end. India then
became the open market of British Commodity as well as sources of raw materials for British
factories in England. The workers engaged in the cottage industry either made them engaged

14
See Supra Pag.44, note 39 (Pages 35-56)
15
Source: Madhyamik History of India and the world, By Jiban Mukhopadhyaya, Naba Bharati Prakashani,
Revised Second Edition: December, 2004, Third Reprint: January, 2005

17
 History of Social Security of Unorganized Workers-With Special
Reference to India

in cultivation or remain unemployed. The social security of the farmers, labour class etc. in
modern India came into question during this period of 1765-1856.

After having the ‘Diwani’, the British East India Company took the land and land reforms
related schemes like ‘Panchsala O Eksala Settlement’, ‘Permanent Settlement’, ‘Rayatwari
Settlement’, and ‘Mahalwary Settlement’ during the period 1772 to 1777; 1786 to 1793; 1820
and 1822 respectively. Under these settlements the cultivator and allied workers were totally
exploited. The social security of the farmers and allied workers was far and far to achieve.

In respect to commerce and industry, it can be said that the East India Company from its
inception in the year 1600 the company tried to keep monopoly in the matter of business and
commerce in the East and Far East in the world.

By the year 1717 the East India Company took the ‘Dastak’ from the Mogal Emperor and
whereby it started business in Suba-Bangla without any tax, custom, revenue etc. related to
such business and commerce. Sometimes the members of the company unlawfully used that
‘Dastak’ in their personal business also. Hence, it can be said that the East India Company
had started to keep the total control over the business-commerce and economy of India by
this time.

In the mean time the industrial revolution took place in England and a number of capitalists
emerged in England. The said capitalists gradually demanded for the scope of business in
colonial India. By the year 1813 monopoly of the East India Company in Indian business and
commerce came to an end and it was free to each and every businessman of England to keep
business in India.

In the middle of 18th Century, India was very sound and rich in the field of commerce and
industry in the world. Bengal, Agra, Multan, Lohar, Burhanpur, Surat, Broch, Ahamedabad
etc were famous for cotton industry. But as a result of industrial revolution, the
Comparatively Chip and Standard quality cotton and silk sharee and other products are
available in the Indian market and the British Parliament imposed 10% custom duty in
exporting of Indian cotton to England whereas imposed only 2% custom duty in importing
cotton from England to India. Accordingly the Indian Industry was totally broken down. The
concerned workers of the Indian industries became unemployed. Few others engaged in
cultivation but survival was not easy for them. It was very tough to have the minimum

18
 History of Social Security of Unorganized Workers-With Special
Reference to India

fooding, clothing and lodging for the said unemployed workers in India and hence, there was
no scope for having social assistance or social insurance.16

During this 18th century, the Indian society was greatly affected by the western influence.
Accordingly the traditional Indian Society lost its base and significance. In place of joint
family and cast system a new “class-based” society emerged.

Very next, there was industrial revolution in the Colonial India and whereby a new working
class also emerged around the industrial towns in British Colonial India. They were mostly
come from the rural area and they had nothing social and material resources with them.
Hence, they were also in need of social security.

The history of social security of labour or working class in modern India has it root with the
enactment and execution of labour and industrial legislations during the British ruling as well
as in independent India. Let look on this historical development.

It is the Apprentices Act, which provided for enabling children to learn trades, crafts and later
on to seek employment on the attaining of their full age. It was also the first legislation
relating to the working class.

During 1850s, a number of cotton mills and jute mills had been established in British –ruled
India. Huge number of workers was engaged with these industries but the working condition
of workers was so pathetic. The workers had to work for a long time. There was no healthy
environment of work. They had no rest hours, with pay leave, safety in the work place and
security of life. In the mean time the Fatal Accidents Act, 1855 was passed. The Act was
passed on the basis of “tortious liability” of employers as propounded under the common law
principles of torts. But this Act was not exclusive one as it only provided compensation in
case of death as a result of tortious wrong of the employers. The quantum of said
compensation was very minimal and provided only to a limited and selected legal heirs of the
deceased workman. The application of this Act was not wide enough also. So, the measure
for social security for the workers under this Fatal Accident Act was not exclusive one.

16
See Supra Pag.47, note 44

19
 History of Social Security of Unorganized Workers-With Special
Reference to India

For the better health condition to be provided to the workers in the sea, the Indian Merchant
Shipping Act was enacted in the year 1859. But practically it was not so effective in
providing social security to the sea men.17

By this time, the number of factories was increased at a huge rate. But the workmen of these
factories were not able to organize themselves. Due to this unorganized or the scattered
character of the workers, the demand for taking of social security measures was not raised by
the workers at all. Only a few members of House of Lords argued for enactment of
legislations providing safety and healthy working condition of the workers in these factories.
That resulted in the enactment of the Indian Factories Act, 1881.

Like the cotton, jute and other factories, the conditions of mine sector was also inhuman and
risky. The safety, security, healthy condition of work was also essential for the mine workers.
Accordingly, in the year 1901 the Indian Mines Act was passed to provide safety and security
measures to mine workers.18

The above stated legislations providing social security were especially for the cotton, jute,
railway, shipping and mine workers. There were no such labour or industrial legislations for
the general workers both organized and unorganized by this time in British ruled India.

The above situation was so due to “Concept of Laissez faire” where by the government was
not to interfere in the matter of employers and employees. That had created impediments in
the application and execution of the above mentioned labour legislations as well as in the
passing of social security legislations for the workers in general and to apply the same
exclusively.

The situation was to some extent changed in British ruled India with the establishment of
International Labour organization (ILO) in the year 1919. The ILO has adopted a number of
conventions and recommendation providing liabilities on the employers and industries,
concerned Government and labour, Out of which India had rectified 3 conventions related to
workmen’s compensation in the occasion of occupational diseases and equality of treatment
in accident compensation.

17
See Supra Pag.47, note 44
18
See Supra Pag.47, note 44

20
 History of Social Security of Unorganized Workers-With Special
Reference to India

In the meantime, Montague-Chelmsford reforms, 1919 empowered the Central Legislature to

enact labour and industrial legislation and under which the Workers Compensation Act, 1923
was passed in order to provide compensation in case of accident injury inflicted to the
workmen. Such payment of compensation would be provided promptly and the legal
procedure would be minimal. This Act was first legislation in British ruled India to clearly
provide for social security to the organized workmen in the industries.

By the year 1925, Government of India had enacted the Provident Fund Act, whereby the
scheme for provident fund launched and the said provident Fund would be paid to the
workmen after their retirement. It was social security during the retirement stage of the
workers.

The Government of India Act, 1935 made specification of the subjects on which then Federal
Legislature can enact industrial legislations. By virtue of this Act of 1935 a number of
exclusive, wide and covering a major portion of industrial workmen and their respective
rights and liabilities were enacted.

Second World War made a vital change in the history of social security of workers in British
ruled India. There were shortage of men and materials after the 2nd World War. In order to
increase the rate of production, the assistance of the workers was very much essential. To
have the co-operation from the workers, the measures of social assistance or social insurance
from the government to the workers were also essential. The British government had also
changed their policy and attitude towards the labour class in India. The appointment of Dr. B.
R. Ambedkar into the Viceroy’s Council as member of the working class proved the said
attitude of the government.

The “Standing Labour Committee” was constituted by the government of India so as to take
health insurance scheme for the individual worker. These were nothing but the forum for the
discussion on labour related problems etc.

In the meantime government of India proposed to launch sickness benefits for workers in
India. But regarding the success of this scheme, the government itself was in doubt as the
workers in India were more or less migrated. On the other hand, there were no sufficient
medical export and stuff in rural areas in India so as to treat the sick workmen and
accordingly giving sickness-certificate.

21
 History of Social Security of Unorganized Workers-With Special
Reference to India

But the “Textile Labour Enquary Committee” in Bombay had launched sickness insurance
scheme for the textile workers in Bombay and later on in Allahabad. The said insurance
scheme was contributory in nature and off course fruitful for the working class in the cotton
industry. But it was very unfortunate that, the other Provincial governments were not agree to
launch the said sickness insurance scheme.

There was a drastic change in the matter of labour welfare during 1940s. The government had
referred the matter of sickness insurance of the workmen to the First Labour Minister’s
Conference, 1940 held at New Delhi.

Coincidentally in the same Year “Employees Conference’ as organized by “All India

Organization of Industrial Employees” held at Bombay. In the said conference the employees
had critically discussed about the matter of sickness insurance and they had given proposal
for the tripartite contribution i.e. contribution from the part of employer, government and
labour in paying insurance premium.

The 2nd and 3rd “Labour Minister’s Conference” held in 1941 and 1942 respectively also
discussed the matter of labour welfare and allied schemes. After all in the year 1943 the
Government of India made a commission under the chairmanship of Dr. B. R. Adarkar and
the commission had submitted its report in the year 1944. The commission mainly dealt with
the matter of recommendation as made by the ILO and labour Minister’s Conference etc
considerably.

The Adarkar Commission mainly made recommendation for the workers in the textile-
engineering, mineral and metal group of industries. But the government was not satisfied
with the Adarkar Commission Report and sent the report before the ILO for examine the
same by the experts. Accordingly ILO recruited M. Stock and Rao to examine the Adarkar
Report. M.Stock and Rao made same modifications as regard to the amount contribution and
benefit, organization of medical service financial structure, and classification of labours
relating to the sickness insurance scheme. After the independent of India, this modified
Adarkar Report was taken as the subject matter of Employees’ State Insurance Act, 1948 and
in the field of social security of organized workers the E.S.I. Act, 1948 plays an important
role.

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 History of Social Security of Unorganized Workers-With Special
Reference to India

Prior to the independent of India, there was the Mica Mines Labour Welfare Fund Act, 1946,
which provided social security measures for the mine workers. Immediate after the
independent the interim government also undertook five years plan. This five years plans
proposed to be included health insurance scheme, revision of the Workmen’s Compensation
Act, 1923, legislation as related to the maternity benefit and extension of the health insurance
benefit to the other classes of workers, those who are not covered by earlier labour welfare
related Act etc.

So it can be said that, the effort for the enactment of labour welfare based legislation takes
speed during the year 1919 to 1947 and it is so due to the conventions and recommendations
of ILO. But all these effort are for formal organized workmen in India. Let see how the social
security measures for the informal or unorganized workers are to be undertaken in post
constitutional period in India.

2.9.5 Working class in pre-independent India:

In British ruled India new administrative policy, development of railways and other
communication made the commodity, goods as manufactured in England easily available in
India. Thus the traditional cottage industry in the Indian villages came to an end. India then
became the open market of British Commodity as well as sources of raw materials for British
factories in England. The workers engaged in the cottage industry either made them engaged
in cultivation or remain unemployed. The social security of the farmers, labour class etc. in
modern India came into question during this period of 1765-1856.

After having the ‘Diwani’, the British East India Company took the land and land reforms
related schemes like ‘Panchsala O Eksala Settlement’, ‘Permanent Settlement’, ‘Rayatwari
Settlement’, and ‘Mahalwary Settlement’ during the period 1772 to 1777; 1786 to 1793; 1820
and 1822 respectively. Under these settlements the cultivator and allied workers were totally
exploited. The social security of the farmers and allied workers was far and far to achieve.

As a result of industrial revolution, the Comparatively Chip and Standard quality cotton and
silk sharee and other products are available in the Indian market and the British Parliament
imposed 10% custom duty in exporting of Indian cotton to England whereas imposed only
2% custom duty in importing cotton from England to India. Accordingly the Indian Industry
was totally broken down. The concerned workers of the Indian industries became

23
 History of Social Security of Unorganized Workers-With Special
Reference to India

unemployed. Few others engaged in cultivation but survival was not easy for them. It was
very tough to have the minimum fooding, clothing and lodging for the said unemployed
workers in India and hence, there was no scope for having social assistance or social
insurance.

During 1850s, a number of cotton mills and jute mills had been established in British –ruled
India. Huge number of workers was engaged with these industries but the working condition
of workers was so pathetic. The workers had to work for a long time. There was no healthy
environment of work. They had no rest hours, with pay leave, safety in the work place and
security of life.

Like the cotton, jute and other factories, the conditions of mine sector was also inhuman and
risky. The safety, security, healthy condition of work was also essential for the mine workers.
Accordingly, in the year 1901 the Indian Mines Act was passed to provide safety and security
measures to mine workers.

2.9.6 Social security of workers in post-independent India:

The necessity of social security is implicit in the Indian Constitution. Large numbers of
Indian population are contributed significantly in the Indian economy and also work without
being protected by suitable protective labour legislations. This fact vibrates the scenario at
that time in 1969 upon the Report submitted by the first Labour Commission. As one of the
terms of reference of the Seconds Labour Commission that was appointed in 1999 was to
suggest a beneficiary legislation for the unorganised sector towards protecting their rights and
providing them social security and welfare measures. Then Government of India constitutes
Second Labour Commission in 1999 and set two tasks before the Commission as to suggest
rationalisation of existing laws relating to labour in the organised sector and to suggest
umbrella legislation for ensuing a minimum level of protection to the workers in the
unorganised sector.

Even though the concept of social security in implicit in Indian constitution but even after
fifty years of the adoption the status of unorganised workers in India is far from satisfactory.
Therefore Second Labour commission also submitted report on their commendation that there
is require national policy for providing social security to the workers in the unorganised
sector.

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 History of Social Security of Unorganized Workers-With Special
Reference to India

About the status of the social security in India the Second National commission
recommended as follows: “The social security situation in India is characterised by ambiguity
in policy and responsibility. There is variety of schemes but these have been framed at
various points of time and therefore, do not confirm consistent polity or direction. Indeed, till
the 9th Five year plan, Plan made no mention of social security. The working Group on labour
policy set up by the Planning commission also pointed out that, the schemes of social
security, types of benefits or protection provided there under do not conform to any overall
plan or design. There is as a matter of fact, no policy on social security and the Five year
plans are practically silent about this important aspect. However, in the light of the Directive
Principles none can argue that the Indian constitution does not visualize social security. 19

According to the World labour Report, 2000 the public expenditure on social security in India
in 1.8% of GDP against 4.7% in Sri Lanka and 3.6% in China. This is the measure of the
human development that there countries have achieved and the distance we have yet to travel.

The ‘World Labour Report 2000: Income security and social protection in a changing world’
published by the International Labour Office (Committee on Employment and Social Policy)
Geneva, November 2000 also highlighted the social security concept in the changing context
of family structures, longer life expectancy, old-age dependency ratio, rates of unemployed
labour force and changes in labour markets etc. It is also found in this report that, the
member countries request the ILO for giving the technical assistance for the extension of the
social protection of the labour section. This reveals that we are yet to do much for social
security in our country.20

On recommendations of the Second Labour Commission during the period of NDA

government the Unorganized Sectors Workers Bill, 2003 was drafted to guarantee the social
security towards the workers in India. Another Bill was drafted during the period of the 1 st
UPA government in India namely the Unorganized Sector Workers’ Social Security Bill,
2005 and the Unorganized Sector Workers’ conditions and livelihood promotion Bill, 2005.

19
Repert of the National commission on labour, Volume-I(Part-II), P.787.
20
Source: International Labour Office, Governing Body, Committee on Employment and Social Policy,
GB279-ESP-7-2000-10-0087-1-EN.Doc

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 History of Social Security of Unorganized Workers-With Special
Reference to India

In this respect the aspect of social security were discussed almost in all parts of India. After
all the UPA government instead of accepting the “Unorganized sector Worker Bill, 2003” as
drafted by the earlier NDA government drafted another Bill namely “Unorganized Sector
Workers Social Security Bill, 2005” for the purpose of securing social security to the workers
so engaged in the unorganized sector. Even UPA government has also followed the
recommendations laid down by the Second National Commission on Labour constituted by
the NDA government. Through this Bill the UPA government has given the statutory shape
to their National Common Minimum Programme commitments.

Finally the unique piece of legislation has been placed in the floor of the House of the
Parliament. The legislature argued in favour of this legislation. It was widely advocated for
the extension of formal social security towards the weaker section of the society. However,
the Unorganized Worker Social Security Act, 2008 has notified by the Central Government
and to make the social security relevant and meaningful for about 40crors unorganized
workers in India.

In all advance countries in the world today, the provisions of social security is considered as
the most important and the most indispensable subject of the national programme of
economic development so as to strike at the root of poverty, unemployment and disease. It is
the objective of everywhere as the hard core of social policy in view of present industrial
growth and their complexity of socio-economic order. The need for social security is well
established of socio-economic order. Every society is so well convinced of its utility and
merit that it occupies an important place in social policy formulation and social welfare
legislation. But the countries should also give importance for the implementation process of
the social security schemes properly and efficiently so as to cover all of its citizens in the
arena of social security.

About all the states in the world have their own constitution may be in written or unwritten.
The legislative, executive, judicial and like others functions of the states are governed on par
with the provisions of the constitution. The social security measures for the unorganized
workers are also to be discussed in the light of the constitutional and legislative mandate of
the state.

26