How do India and the UK compare when it comes to Social Security?

How do social security systems in India and UK compare? We use the WageIndicator Labour Rights Index, an international qualification standard which allows its users to compare labour legislation, to measure the benefits in both countries:

Social security refers to government measures that support an individual or household income in the event that the ability to earn has been disrupted or exhausted. Usually, governments will provide cash benefits in cases of unemployment, retirement, sickness, disability, maternity, or the loss of a spouse. In the wake of India's recent June 2024 elections and the United Kingdom's upcoming July 2024 elections, we use the WageIndicator Labour Rights Index to measure the benefits in both countries. India, a developing country, is undergoing processes to streamline its social security infrastructure. On the other hand, the UK, a high-income power just beginning to recover from a fiscal crisis, is debating which social security protections to retain and which to repeal.

Comparative Analysis 

WageIndicator's Labour Rights Index analyses a country's social security infrastructure across five different parameters, with each parameter contributing 20 points to a country's score. The parameters include Old-age pension, Survivor’s pensions, Unemployment benefits, Sickness benefits and Invalidity benefits.  India scored an 80 for its social security infrastructure, as it does not guarantee sickness benefits. The UK scored 100. Overall, the UK's social security system is much more comprehensive than India's. India is more generous with the Survivor's pension, while the UK has better Disability and Unemployment benefits. Both countries scored higher than others in their income group. 

How have the 2024 elections affected social security in the UK and India? 

The UK

The share of the UK's GDP spent on social security has increased since the fiscal crisis. While the ruling Conservative party has rolled back certain benefits for families, it has increased support for pensioners. Social security has become a contentious issue during election campaigns. The Conservative and Labour Parties released their manifestos on 11 June and 13 June 2024, respectively. The Conservative Party has said they will continue to cut back on social security contributions. They also aim to toughen up on citizens who have received benefits for over a year and help more people find jobs. The Labour Party has promised to close all tax loopholes. They have also promised not to eliminate welfare caps like the two-child cap. Both parties have pledged not to raise VAT and income tax. Financial experts, however, worry about the transparency of both parties, as refusing to raise taxes will mean that the new government will have to cut back on public spending either way. Ultimately, it is surmised that the new government will protect larger institutions like the NHS while smaller social security schemes will devolve. 

India

The Code on Social Security, which consolidates nine existing Social Security bills into one streamlined and easily comprehensible document, was introduced in the Indian Parliament in 2020 and has yet to be passed. As the Bharatiya Janata Party (BJP), together with the National Democratic Alliance, has returned to power for a third term, predictions are that they will try to pass the new code.

The new code envisions expanding the coverage of "formal" benefits like provident funds, health insurance, and disability checks to new groups, particularly those employed in the informal sector. The new code will apply to street vendors, domestic workers, freelancers, ride-sharing drivers, delivery workers, temporarily contracted labourers, inter-state migrant workers, and the film and television industry. The code does not encompass older bills like the National Security Assistance Programme (NSAP), which covers vulnerable groups like the elderly, widows, and those below the poverty line, and it has little to do with employment. 

The code has attracted a fair amount of criticism. First, implementing the new Social Security code faces several accessibility challenges. Lack of documentation, income proof, and an over-dependence on digital recordkeeping may make registration difficult for many in the informal sector, who have not previously had access to these resources and are digitally illiterate.

The second issue has to do with ambiguity and exclusion. Terminologies like "gig worker" have not been clearly defined. While the code aims to expand coverage, the new code still needs to expand its focus to achieve universal social security, leaving out groups such as home-based workers and unregistered businesses.

Furthermore, wage limits for benefits exclude low-income workers who require social security the most. Establishing Social Security Organizations (SSOs) could be confused with existing bodies and become a logistical and financial nightmare for businesses employing informal workers. This confusion may tempt these businesses to change hiring strategies or automate. Even if these hurdles are overcome, sustainable funding, a heavy reliance on state governments, and the delay in implementation all raise concerns about the success of the new code. 

Conclusion

The 2024 elections will likely change the trajectory of social security measures and their implementation in both India and the UK. Whether that change will be positive or negative remains to be seen.