Getting organised: 25% of unorganised workforce may get minimum pension

New Delhi: The Centre proposes to roll out a financial security scheme for the 25% of the country’s unorganised workforce who are worst off. The labour ministry plan is to give a minimum guaranteed pension to 100 million people earning a monthly salary less than Rs 15,000, a senior government official told ET.

The scheme will cost Rs 1,200 crore annually and could be the first step toward the government’s vision for universal social security for the country’s 500 million workers, he said, adding that the labour ministry has sent the proposal to the finance ministry for consideration. The current minimum pension stands at Rs 1,000 per month for the organised workers.

The move is likely to benefit household helps, drivers, plumbers, electricians, barbers and other workers earning less than the threshold salary under the scheme.


“The labour ministry is pushing hard as the government feels that this section of the workforce needs some kind of social security since they cannot sustain on their own after reaching the age of retirement,” the official said, adding that the finance ministry could soon give its assent.

According to the official, workers will have to make a small monthly contribution for 20-25 years, starting at 18. The Centre will make a matching contribution.

“The scheme would be rolled out in phases and the first phase of the scheme will see partial coverage with the benefit of minimum guaranteed pension to all beneficiaries after retirement,” said the official cited above.

Out of the total 500 million workforce, over 90% are unorganised workers who are often deprived of not just minimum wages but also any kind of social security, be it pensions or health insurance. Those earning above Rs 15,000 are covered under the Employees’ Provident Fund Organisation or the Employees’ State Insurance Corporation and hence will be out of the ambit of the scheme in the first phase.

Vrijesh Upadhyay, general secretary of the the RSS-affiliated Bhartiya Mazdoor Sangh, told ET that Union minister Arun Jaitley had in his meeting with BMS in the first week of January agreed in-principle to its demand for some kind of social security for the bottom section of the country’s workforce.