Social security means the efforts related to protect and support the sufferers against the impacts of different types of unwanted activities due to that the life of persons is under risk. These are called social risks and include retirement, sickness, disability, old age, survivor, death of earning members, maternity, unemployment, etc. .

“Social security is an instrument for social transformation and progress”. Social security is the security that society furnishes, through appropriate organisation, against certain risk to which its members are exposed. The risks are essentially contingencies against which the individual of small means cannot effectively provide by his own ability or foresight alone or even in private combination with his fellows. – ILO

Learn about:- 1. Introduction to Social Security 2. Meaning and Definitions of Social Security 3. Evolution 4. Concept 5. Scope 6. Characteristics 7. Objectives and Nature 8. Need and Importance 9. Functions 10. Measures 11. Social Security in India 12. Social Security Schemes in India.

What is Social Security: Meaning, Definition, Characteristics, Evolution, Concept, Measures, Need, Objectives, Functions and Schemes


    1. Introduction to Social Security
    2. Meaning and Definitions of Social Security
    3. Evolution of Social Security
    4. Concept of Social Security
    5. Scope of Social Security
    6. Characteristics of Social Security
    7. Objectives and Nature of Social Security
    8. Need and Importance of Social Security
    9. Functions of Social Security
    10. Measures of Social Security
    11. Social Security in India
    12. Social Security Schemes in India

Social Security – Introduction

In every country, the composition of population varies from one to other country to some extent. The features of the population also vary. For comparative study the factors such as – age, sex, education, health, income, employment, social and employment risks, size of family, family and social systems, etc. The position of population in developed country is better than developing country and is poor in underdeveloped country.


In developed countries the people get education, medical, pension, provident fund facility, accident benefits, maternity benefits, survivor benefits, death benefits, support in case of natural calamities, retirement benefits, unemployment allowances, disablement benefits, etc.

In developing countries some of the benefits are not provided wherein underdeveloped countries these are not provided or very less provided. In their social set up the population is not secured properly. It creates worries for individuals, families, societies and the nation. There is need to support the downtrodden persons for at least their better survival and development of the economy and nation as a whole.

All the requirements cannot be fulfilled by people of their own from their resources. They face a lot of difficulties in their life. They are the most sufferers and the need for supports for such people was strongly felt in the past and in present too it is felt.


The different agencies had been involved in such activities such as – government, social workers, NGOs, religious trusts, individual’s time-to-time. This can be termed as social guarantee or security in legal terms.

When a person is young, healthy and having good financial conditions, he needs very less support from others for better leaving. But all days are not equal. Due to different reasons when the persons are not in position to earn and support himself need support. When a person becomes old, retires, disabled, death of earning member in family, sickness, the person or family is in troubles and for survival he is not capable.

At this crucial juncture, he and his family need support from someone otherwise their like would become hell. In long run society and nation both are sufferers. Further, with inflation, changing composition of families, and time factors in family also the family members are not supporting each other and the situation in the society is worsened. The aged, retired, sick, and disabled persons are nowadays ignored by family members also.

They started looking forward the help from old age houses or from someone else. To tackle this situation for improvement of the society, the efforts are needed to ensure such persons a normal life if not good.


Under such situations all concerned were worried includes governments, social workers, industrialists, volutes, and trusts to improve their conditions by providing required facilities or benefits. These efforts ensured in the past secured life to the sufferers. These efforts were known as facilities or social security measures. These are to be provided for self and family for their survival.

The term social security has been defined differently by different au­thorities. Yet in the simplest terms, Social Security is defined as the security that the society furnishes through appropriate organisations against certain risks to which its members are exposed.

Social Security Meaning and Definitions Propounded by Different Experts and Authorities

Social security is a very wide concept to define and it is difficult also. Social security means the efforts related to protect and support the sufferers against the impacts of different types of unwanted activities due to that the life of persons is under risk. These are called social risks and include retirement, sickness, disability, old age, survivor, death of earning members, maternity, unemployment, etc.

The efforts can be put by different parties but when the efforts can be included in legislations relating to different areas with the objective to design legal stem of social security. These are called social security legislations. In the United States, social security considered as a set of programmes which includes old age, survivors, and disability insurance, for the elderly and their dependents.


As a more general term, “social security” refers to any scheme designed to protect persons and society from the suffering caused to workers and their families due to unfavourable events in their lives.

Social security for employees is a concept which became important in the developed and industrialized countries. It can be defined as measures providing protection to workers class against risk like retirement, resignation, retrenchment, maternity, old age, unemployment, death, disablement and other similar conditions.

The social security has been defined by different experts and authorities as follows:

Social security administration stated that, “social security to programmes established by government statutes which insure individuals against interruption or loss of earning power, and for certain special expenditures arising from marriage, birth, or death”.


“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.” G.H.D. Cole.

“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, they will naturally become more productive.” (Preface to “Into the 21st Century – the Development of Social Security”).

United Nations General Assembly adopted in its Universal Declaration of Human Rights stating that, “every member of a society has a right to social security”. As Mr. Francis Blanchard, Director

“Social security is an instrument for social transformation and progress”. Social security is the security that society furnishes, through appropriate organisation, against certain risk to which its members are exposed. The risks are essentially contingencies against which the individual of small means cannot effectively provide by his own ability or foresight alone or even in private combination with his fellows. – ILO


“According to Bloom the social security was seen as a way to help people through adverse conditions and shocks which would inevitably affect vulnerable workers and poor people more disastrously than wealthier class.”

A programme in which the government provides money to people who are unable to work because they are old, disabled, or unemployed. Social Security – a programme in the US that requires workers to make regular payments to a government fund which is used to make payments to people who are unable to work because they are old, disabled, or retired.

Government programme aimed at providing basic needs to citizens who are retired, unemployed, or unemployable due to a disability or disadvantage. It is funded usually by mandatory payroll contributions from both the employees and the employers, and from the government’s tax revenue — Business Dictionary.

According to Friedlander “a programme of protection provided by society against the contingencies of modern life — sickness, unemployment, old age, dependency, industrial accidents and invalidism against which the individual cannot be expected to protect himself and his family by his own ability or foresight”.


According to Friedlander Social security means a programme of old age, unemployment, health, disability, and survivors insurance maintained by the US federal government through compulsory payments by specific employer and employee groups. The theory or practice of providing economic security and social welfare for the individual through government programmes maintained by moneys from public taxation.

William Beveridge has defined social security as “the securing of an income to take the place of earnings when they are interrupted by unemployment, sickness or accident, to provide for retirement through old age, to provide against loss of support by death of another person and to meet exceptional expenditure connected with birth, death, or marriage. The purpose of social security is to provide an income up “to a minimum and also medical treatment to bring the interruption of earnings to an end as soon as possible.”

According to ILO, “Social security is the security that society furnishes through appropriate organisation against certain risks to which its members are exposed. These risks are essentially contingencies against which the individual of small means and meager resources cannot effectively provide by his own ability or foresight alone, or even in private combination with his fellows. These risks being sickness, maternity, invalidity, old age and death. It is the characteristic of these contingencies that they impair the ability of the working man to support himself and his dependents in health and decency.”

Social Security – History and Evolution of the Concept from Ancient Time to Post Independence Period

Evolution of the concept of social security has been studied under different heading and these are:

Ancient Time:

Since medieval time, in the society the care of the weaker section was taken but it was by religious trusts or kings of the kingdoms. They use to take care by providing drinking water, inns, foods, and protection against threats at very low level. In past the Roman Kingdom started social welfare work to help the poor was improved by the emperor. In Jewish religion there was a tradition and considered the charity is a matter of religious obligation rather than benevolence.

Contemporary charity is regarded as a continuation of the past practices. The Song dynasty in 1000 AD government started different social welfare or assistance programme for people for establishment of retirement homes, public clinics, and graveyards. The provisions for welfare and pension were into practice in the early Islamic Laws of the Caliphate in form of charity from seventh century for poor, aged, orphans, widows, disaster, famine, etc.


In 1601, in Britain welfare programmes were started under English Poor Laws which gave responsibility for providing poverty relief assistance to the poor and later on nineteenth century it was further modified for extension of its scope. Robert Henry Nelson remarked on social security that in medieval Roman Catholic Church was involved welfare programmes for poor.

There were no such laws to have provisions regarding social security. Across the world the situation was similar more or less. The concept of joint family prevailed in the society and social security of disabled, sick and aged people was provided by family members. Further, the religious trusts, churches, temples, community, etc., provided social security benefits to their members.

With the rapid development of science, technology and industry in the nineteenth century, social security matters and policy were taken up by the governments gradually. Up to this time, there was no progress in the field of social security and weaker sections of the society were the most sufferers worldwide. There was no such system to take care of sufferings of the people due to industry and personal life.

For such people the life was full of hardships, tension and the lives became a curse for them. Somehow in development countries the situation was comparatively better than the other countries across the world. Up to beginning of twentieth century there was no significant development in this area. Development started in first half of twentieth century in development countries in Europe and America.

In USA and European Countries:

The beginning of modern social security system was seen in Germany first of all. These appeared under ruling of Bismarck in the late nineteenth century. Germany was the first European industrial nation to start a social security programme that was extended to people other than military forces. In the 1880s Chancellor Bismarck took the initiatives and enacted a plan of compulsory sickness and old age insurance for protecting most wage earners and their dependents.

Due to the development of industries this social security started to spread and reached to other European countries like France, Britain, Netherland, etc. In the meantime the revolution started in Russia and the rulers anticipated similar activities in European countries.


So to pacify the frustrated masses the governments of different European countries started enacting social security legislations and provided certain benefits under those legislations. Within three decades this was willingly accepted with more added features by European and Latin American countries for their workers. So it can be said this was the very beginning of the modern form of social security and conditions of workers started improving in those countries.

The next contribution in evolution of concept of social security is from United States of America. The wave of social security legislation reached here also along with industrialization. In the United States the federal government took the steps for insurance scheme only for the soldiers who had been disabled in war.

After a decade or so somewhere in 1790s onwards again the federal government introduced pensions scheme for disabled in the American Revolution. In 1820 the government extended this scheme to disabled veterans of the war of 1812. Further, in this direction the government took decision and extended this pension scheme to most veterans age 65 or older also.

The government did not take solid steps for pension scheme to rest of the workforce in USA. The retired, unemployed, sick, and disabled workers were left ignored. They use to manage from their personal savings, charity trusts and their associations formed by them. These facilities were very limited and were only for members.

In the beginning of twentieth century, the economy was in depression. Due to depression the crore of workers became unemployed up to 1932. The American faced a lot of difficulties because they were not in a position to manage their basic needs from their resources.

During economic depression Franklin Roosevelt became President of USA and served from 1933-1945 for more than twelve years. To revive from the economic depression and calm the massed he was hard pressed and realized the importance of social security plans for needy citizens of USA. Under this situation he accepted the concept of social security. Whatever may be reason for this but he had soft corner for industrial workers and their families.


He stated that, “I see no reason why every child from the day he is born, shouldn’t be a member of the social security system. When he begins to grow up, he should know he will have old age benefits direct from the insurance system to which he will belong all his life. If he is out of work, he gets a benefit.

If he is sick, or crippled, he gets a benefit… Cradle to the grave — from the cradle to the grave they ought to be in a social insurance system.” President Franklin Roosevelt spoke to Secretary of Labour Frances Perkins. On 14 August, 1935, he introduced the Social Security Act. Its focus was on unemployment, poverty, and old age insurance for employees’ security measures.

Social Security Act, 1935 made the legal provisions regarding social security to provide old age, survivors, and disability insurance benefits to workers and their families. The responsibility for management of this programmes was assigned to Social Security Administration, an independent federal agency. The benefits were given to individuals on the basis of their employment record and their contribution made to social security during their employment careers.

Further, in 1965 under social security health insurance benefit was introduced under the medicare programme. Social security plan designed with the objective to protect society from the instability caused to workers and their families by the unemployment or death of a wage earner.

A government run plan of social insurance helped to ensure that no single family would completely suffer due to loss of incoming wages. Over a period of nearly six decade the security legislation were amended to meet the workers and society requirement in this area. During the tenure of President George Bush, Congress started debate on the future of social security.

The debate foiled on the ground that the costs of social security benefits is already very high and further cannot be increased due to debt of the government. In the 1980s President Ronald Reagan appointed the Greenspan Commission to address the mounting financial concerns social security was facing. Under this bill social security benefits, were taxed and raised the retirement age with effect from 2000.


This contributed and increased the reserves in social security trust funds. Further, time-to-time the debates were conducted and necessary amendments had been made in India to get the present position in USA.

After the First World War the International Labour organisation (ILO) was established under the treaty of Versailles. Under this treaty the need for social security right to the workers was discussed. A resolution was passed in 1944 by ILO along with other Nations of the World for extensions of social security measures. In 1952, the convention-102, minimum standards of social security was discussed and was adopted regarding social security measures.

The provisions were made regarding the measures. The measures include old age, unemployment, disability, medical care, pension, care, and sickness benefit, family benefit maternity benefit and survivor’s benefit Later on subsequently ELO has conducted a number of conventions and adopted resolutions for extending the scope of various measures of social security.

With the present increasing demands the scope of social security has been further widened, that includes provisions for safe drinking water, sanitation, housing, health, educational and cultural facilities, minimum wage, etc., which can ensures workers a decent life.

In Asian and Pacific Countries:

The developing countries’ economies are agriculture based in Asia and Pacific. In these countries the joint family pattern prevailed and social security was provided by the community and family members for old, disabled, unemployed, retired, widows and poor persons. This was the tested system and served the purpose for a long duration.

Due to urbanisation and high inflation, they joint family system is disappearing and the need for another system is felt in uncertain environment. Economic development in Asian countries is reasonable but very poor in some of them and African countries. The basic facilities like education, proper nutrition, health, medical, etc., are missing. Due to low economic development there is significant high demand for social security system.


The social security schemes are to be prepared and implemented by the government without wasting much time in the interests of the weaker sections of the society. Due to non-availability of poor infrastructure facilities the operating costs have gone high. Mainly the rural areas coverage and low income have made the things further difficult.

In the developing countries due to poverty, low per capita income, and poor facilities, the demand for social security schemes has become more significant for economic development. For proper evolution of social security schemes economic development is the precondition. For providing pension, education and health facilities, insurance, medical, housing, drinking water, welfare, etc., falls under the scope of social security.

These need a huge fund for their management. Due to lack of sufficient fund these could not be provided in developing and underdeveloped countries. To manage social security schemes in such countries is an uphill task. Due to this reason the development of social security concept has been very slow in these countries.

Special focus is needed with sincere efforts on war-footing in mainly underdeveloped countries. Still to reach to the satisfactory level of development it would take a long time in very less developed countries.

Social Security in India:

India is a very large country and its economic development was very poor and it was ruled by British government The British government took no initiative for development of its economy. It has the different objectives other than economic development. Each country is faced with a different situation and similar way India too. Indian population is very huge and difficult to manage.

Due to very low economic development before independence there was no much progress. But in post-independence period the social security measures were planned and implemented has been limited to organized sector. In India the majority of the workforce is engaged and earns wages from unorganized sector only. Due to urbanization and high inflation the joint family system is disappearing rapidly.

The Government of India has been taking initiatives for social security schemes but due to low income and huge population the success achieved is not satisfactory. In post-independence period many social security legislations have been enacted and implemented for organized sector. The unorganized sector is still uncovered. It can be said the progress in India is still not satisfactory. A lot is to be done for unorganized sector still.

Social Security – Emergence of the New Concept

The concept emerged in the U.S. when it passed the Social Security Act in the year 1935. This Act encompassed Old Age Pension Act introduced in 1938. Social Security Board was put in place in US to administer various social security measures. This concept gained acceptance across the globe in various forms at various points of time.

Social Security Act is in response to human dignity and social justice. International Labour Organization (ILO) defines social security as protection which society provide for its members through a series of public measures, against the economic and social distress that otherwise would be caused by the stoppage or substantial reduction of earnings resulting from sickness, maternity, employment, injury, unemployment, invalidity, old age, death and the provision of subsidies for families with children.

Recently some new concept of social security namely, social safety nets, social protection, and social funds have emerged. These find a place in the report of the NCL, 2002. Social safety nets are measured to miti­gate the negative effects of structural adjustments, mostly in the form of cash payments.

Social funds are the brain child of the World Bank for building up local-level capacity in the local governance. Social pro­tection provides guarantees of basic social support for citizens based on their needs rather than on their rights. The World Bank has defined the term as human- and capital-oriented interventions. The defini­tion integrates labour market intervention with social insurance programmes and social safety nets.

The need of social security measures arises to help the people when they are unemployed and are exposed to risks such as sickness, old age, invalidity, maternity, etc. The concept of social security is essentially related to the high ideals of human dignity and social justice.

It has gained importance to such an extent that it has now become a major aspect of public policy in most of the countries and the extent of its prevalence has become a measure of the progress made by a country towards the ideal of a welfare state. “Social security is not a burden but a wise investment which yields good dividends in the long-run.”

Social Security  Scope: Social Insurance, Social Assistance and Public Service

The scope of social security is very wide. Social security schemes include health insurance, maternity benefits, compensation for employment injury, worker’s family pension-cum-insurance schemes, compulsory and voluntary social insurance, provident fund schemes, as also public health services.

Though social security programs differ from country to country, they have three characteristics in common, viz., – (i) they are established by law; (ii) they provide some form of cash payment to individuals to compensate at least a part of the lost income that occurs due to such contingencies as unemployment, maternity, work injury, invalidism, industrial disease, old age, burial, widowhood, and orphan hood; and (iii) the benefits or services are provided in three ways- social insurance, social assistance, or public service.

Scope # 1. Social Insurance:

It is a mechanism through which benefits are provided to the contributories (out of contributions made by them, the employers and the government) necessary for satisfying wants during old age, sickness, unemployment and other contingencies of life.

The main features of social insurance are as follows:

(i) Certain risks which cannot be faced by the persons in their individual capacity are faced collectively by a group of persons.

(ii) Social insurance is contributory in nature as both the government and the subscribes have to deposit monthly subscriptions to the social insurance scheme.

(iii) Certain, benefits are provided to them in the case of contingency.

(iv) Benefits are claimed by the insured persons as a matter of their rights in accordance with their salary.

(v) They are insured against the risk on compulsory basis, and it is obligatory for them to contribute under the scheme.

Scope # 2. Social Assistance:

It is a program through which the Government attempts to ameliorate the distress caused by contingencies of life. No contributions are made, for getting the benefit, by the workers.

In other words, social assistance includes “non-contributory benefits towards the maintenance of children, mothers, invalids, the aged, the disabled and others like the unemployed.” Benefits are provided to persons of small means in sufficient quantity so that their minimum standards of needs could be satisfied.

Scope # 3. Public Service:

Such programs are usually financed directly by the Government from its general revenue in the form of cash payments or services to every member of the community falling within a defined category. The examples of such programs are National Health Service providing medical care for every person, old age pension, pension for invalids, survivors pension to widow or orphan, and so on.

Social Security  12 Characteristics

Over a long period of nearly a century, many experts, organisations, and dictionaries have given the definitions and meanings of concept of social security. These have been affected with the situation at the time of definitions given. They have focused on different aspects of life of a person relating to his social security.

The characteristics of social security are summarized and are the following:

(a) Social security programme is for the persons living in the society and working.

(b) It is for the needy persons as retired, unemployed, old, and disabled.

(c) The interest of social security to facilitate needy persons for at least normal life living.

(d) It is to offset the impacts of hardship due to social risks such as – sickness, old age, retirement, disability and unemployment.

(e) Contributes in improving the standard of living of the ignored people from the society.

(f) This programme is necessary for national development and happiness.

(g) The major roles played in providing the facilities are governments, NGOs, trusts, and volunteers.

(h) Governments enacted certain laws regarding benefits provided by them and these are known as social security legislations.

(i) The evolution of concept of social security and social security legislation has taken a long time to reach to the current position.

(j) The facilities provided and social security legislations are not same across the world.

(k) Many benefits are provided under social security to the workers and may include pension, gratuity, maternity, provident fund, sickness benefits, disablement benefits, funeral benefits, welfare facilities, etc.

(l) People prefer to join the jobs where social security measures are provided and well implemented.

Social Security Objectives and Nature of Social Security Legislation and Schemes

Condition of the weaker sections of the society was not good. They were not in a position to meet their requirements of their own from own resources. They started looking towards others for help. In this situation, they were not attended property and can be said they were ignored due to their retirement, sickness, disablement, unemployment, etc. They did not enjoy good life in the society.

These people were lost respect in the family and society also. They were the most sufferer group in the society. Further, their position was worsened due to inflation, changing pattern of family, and carelessness of children towards elder persons in the family. Further, urbanization also added to their sufferings. In search of jobs, the children are moving from city-to-city and country-to-country.

The old parents are living alone with their empty nest. If they do not have any source of income and ignored by the children then their lives become a curse. These factors attracted the attentions of government, academicians, volunteers, NGOs, and trusts. They realized that with the suffering segment of the population, the society cannot become prosperous.

The social security programmes were initiated for weaker segment of the population including workers. The social security benefits were provided and legal provisions were made regarding social security.

These were known as social security legislation and these were enacted with the objectives to:

(a) Support the workers in their bad time.

(b) Pay proper attention when they are not useful for the organisations.

(c) Help them at the time of their retirement and old age.

(d) Support them when they are sick and disabled.

(e) Provide source of income when they are unemployed.

(f) Contribute in removing his hardship and his family members.

(g) Provide the support when no one is there in their life as standby.

(h) Develop a healthy and happy society for living.

(i) Avoids worries of weaker section of the society and live a tension-free life.

(j) Attract better employees who keep future in mind for better life.

(k) Lead a happy life even after retirement and at old age also.

(l) Contribute in development of the society, and nation both.

If we look at the objectives served by the social security legislation in dealing with workers, society and nation, it can be said the functions performed by it are very important. Due to this the issue of social security has become very important worldwide. It provides help to die needy persons at the most required time when they do not have option.

It can be concluded that the social security measures under different legislations are very important across the world. Without any objections these are accepted by all concerned willingly. It is further going to play more important role in rapidly changing global business environment.

Nature of Social Security:

1. Social security schemes are providing social assistance and social insurance to employees who have to face challenges of life without regular earning due to some contingencies in their life.

2. These Schemes are implemented by enactments of law of the country.

3. They generally are relief providers to employees who are exposed to the risks of economic and social security. This protection is provided to them by members of the society of which he is apart.

4. These schemes have a broad perspective. They not only provide immediate relief to the employees who have suffered on account of contingencies, but also provide psychological security to others who may face the same problems in times to come.

Social Security – Need and Importance

It is felt pertinent to define the term ‘social security’ before ‘the need for social security’ is discussed. Social security means the protection given by the society to its members. So, the measures provided by the society to its members for their protection at the time of need arising out of contingent situation are social security.

Societal members may have problematic situation due to their accident, retirement, sickness etc. During this period they may need monetary assistance, support in other form to maintain them and their families. This sort of support is a measure of social security.

Social security is the security given to the members of the society against some odds so that they can combat and survive.

The need for social security arises from the following:

i. Medical treatment is required when an employee falls sick. During the period of his ailment he remains absent from his work and he cannot earn. So, for his own maintenance and maintenance of his family, as also for his medical treatment monetary support is required. Social security provides such support.

ii. Women employees when they are on the family ways cannot attend duties for some time in pre-natal and post-natal period. They need help and support for their sustenance. Social security measures provide maternity benefits to such women.

iii. There is a possibility to meet with an accident when employees work on machines. The accident may cause injury making the employees partial disabled or total disabled. It may also cause death. Under such eventuality, compensation scheme under social security measures may save the employees/their families from ruining.

iv. Old age is a curse to most human beings as during such time they lose their ability to perform work and cannot earn. But, such people can find pleasure and meaning to survive if they are given retirement/pension benefit under social security measures.

v. Employees’ job is not secured. They remain afraid of losing jobs any time. Present business scenario adds to their apprehension. Company retrenches employees when their services are not required. After retrenchment it becomes difficult for the employees to carry on if no monetary support is received. Social security helps the retrenched employees to restart their way of life.

The need for social security is also felt from the following:

(i) It enhances the level of morale of the employees.

(ii) It increases production and productivity as employees feel happy and contented.

(iii) A climate of mutuality is established. Mutual understanding, mutual faith and confidence amongst management and employees is developed.

(iv) It becomes easy to make the employees accept changes in the organization. OD techniques can be introduced to improve quality of goods and services so that organization can face the challenges.

(v) A sense of belongingness, ‘we feeling’, ‘togetherness’, amongst employees is developed which helps to achieve team goals and organizational goals.

(vi) Organization providing social security measures can attract skilled and experienced employees and also can retain the best lots.

(vii) Social security acts as a motivational mechanism. It inspires employees to give much more attention on their production and services than on other areas of activities like planning for future employment, tackling of contingent situations, sorting out medical issues etc.

(viii) Social security measures help to create a committed, loyal and positive workforce.

(ix) Social security makes’ a change in the mind-set of employees. Employees’ perception about company, company’s philosophy, style of functioning, objectives, mission also changes. Thus a congenial, conducive industrial climate is established.

(x) Social security brings peace and harmony in industry.

Social Security – Functions

Some of the important functions of social security are:

(1) To provide protection and relief to members of the society against some contingencies which expose them to risk of social and economic security. The protection is provided to them in the capacity of the members of the society who are related to and dependent upon each other.

(2) The social security schemes in a broader perspective also provide psychological and sociological security.

(3) The social security schemes are implemented mainly through enactments—these are enforced at the local, state, and the national level for the purposes of proving financial assistance to persons in distress and having the need of assistance.

(4) The concept of social security also includes social assistance and social insurance. The common feature in most of the social security schemes is that –

(a) Most of the social security programmes are implemented under the authority of law.

(b) Some sort of cash benefits other than the benefits in kind are provided to individuals to compensate the loss of income which may be due to old age, invalidity, sickness, unem­ployment injury, maternity, and any other contingencies.

(c) The benefits or the services are provided mainly through social insurance or social assis­tance or public services.

Social Security – Measures

Social security measures are the facilities and services available to the employees from humanitarian point of view. It ensures that when the workers have given their effort and energy to any organization and the society, he does not become a liability to his family, his employer and to the society. Social security measures ensure that the workers are provided protection and security in their life time. The security measures are generally specified by law.

According to ILO, “social security is the protection by which society provides for its members through a series of public measures, against the economic and social distress that otherwise would be caused by the stoppage or substantial reduction of earnings resulting from sickness, maternity, employment injury unemployment, invalidity, old age and death”.

The social security measures also contribute to industrial development through making workers efficient and reducing waste arising from industrial disputes, because with these measures a worker feels social and economic security and, therefore, puts his heart and soul in increasing production.

Several laws have been enacted since independence to provide for social security to the workers. For instance, Employee’s State Insurance Act was passed in 1948 and Employees’ Provident Fund Act in 1952. Some measures of social security existed even before these acts were passed.

But these measures were in the nature of social assistance and not social insurance. Moreover, they covered only a minor part of the distress of the industrial workers. Again payment was the sole responsibility of the employer and the worker was not liable, in any way, to pay any contribution.

Social security is thus:

(iii) The basic aim of social security measures is to provide protection to people of small means against risks or contingencies. The contingencies which may impair a person’s ability to support himself and his family may include sickness, old age, invalidity, unemployment, death, etc.

(iv) Social security measures are generally guided by social legislations.

(v) Social security measures provide for cash payment to affected persons to partly compensate them for the loss of income due to any of the contingencies.

(vi) Social security is a must for the protection and stability of workforce in any economy. Money spent on social security is a sound investment which yields rich dividend in future.

Social Security in India

India is a welfare state. The Constitution of India characterizes the State as democratic and socialist. A democratic state is a state that is based on the concept of equality and accountability—a socialist state is one that accepts the responsibility for providing and ensuring social security to all its citizens without any discrimination.

Broadly speaking, the idea of social security is that, the state shall make itself respon­sible for ensuring a minimum standard of material welfare to all its citizens on a basis wide enough to cover all contingencies of life from the womb to the tomb, so as to say.

There is perhaps no country in the world where the state has not taken the responsibility of provid­ing any of the social services that are looked upon as ingredients of social security such as the supply of water, elementary medical services, sanitation, elementary education, and so on.

If the State with­draws and leaves the social security to be bought, a large percentage of population will have no access to even elementary social security because they do not have adequate income to buy these services. The European Union’s revised social charter 1996 accepts the responsibility of the State in the field of social security and specifies right to work, just conditions of work, safe and healthy working conditions, fair remuneration, right to organize and bargain collectively, protection to employed women, right to health, and right to benefit from welfare services—all as a part of social security.

It is this integral relationship between employment, education, and livelihood that has generated considerable public opinion to treat social security measures even as a fundamental right. The clauses that define fundamental rights and formulate the directive principles of State policy in our constitution leave no doubt about the concern and commitment of it to the rights of citizen to enjoy social security.

Concept of Social Security in India:

The Social Security schemes in India cover the organised work force, which may be defined as workers who are having a direct regular employer-employee relationship within an organisation. The social security legislations in India derive their strength and spirit from the Directive Principles of the State Policy as contained in the Constitution of India. These provide for mandatory social security benefits either solely at the cost of the employers or on the basis of joint contribution of the employers and the employees. While protective entitlements accrue to the employees, the responsibilities for compliance largely rest with the employers.

Social security schemes can broadly be classified into:

(1) Non-statutory schemes, and

(2) Statutory schemes.

Non statutory schemes may further be classified into:

(i) Schemes run by voluntary organizations

(ii) Schemes of public assistance

(iii) Gratuitous benefits provided by the employers to its workers and employees

Statutory schemes have the force of law.

Several legislations provide social security to workers in India.

The most important ones are as follows:

(i) The Employees State Insurance Act, 1948 (the ESI scheme under the Act aims at providing health care and cash benefits in case of sickness, maternity, and employment injury).

(ii) The Maternity Benefit Act, 1961. The act applies to all factories, establishments, plantation, mines, and shops (the benefit under the provisions of the Act is in the form of periodical payment in case of confinement, miscarriage, or sickness arising out of pregnancy).

(iii) The Employees Provident Fund and Miscellaneous Provisions Act, 1952 (the legislation provides for old age, invalidity, and survivorship benefits to the workforce in the organized sector).

(iv) The Payment of Gratuity Act, 1972 (it provides for terminal benefit paid in lump-sum comple­mentary to the periodical pension payment. The Act applies to factories, mines, oil fields, planta­tions, ports, and railway companies).

(v) The Workmen Compensation Act, 1923 (it provides for the losses due to accidents arising out of or in the course of employment causing death or disability).

(vi) The statutory measures are also provided for against layoff and retrenchments (in the form of compensation) in The Industrial Disputes Act, 1947.


Every factory, oilfields, plantations, port, railways and mines. Every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which 10 or more persons are employed or were employed on any day of the preceding 12 months.

Every motor transport undertaking in which 10 or more persons are employed or were employed on any day of the preceding 12 months. Such other establishments or class of establishments in which 10 or more employees are employed or were employed on any day of the preceding 12 months, as the Central Government may, by notification, specify in this behalf. A shop or establishment once covered shall continue to be covered notwithstanding that the number of persons employed therein at any time falls below 10.


Every employee, other than apprentice irrespective of his wages is entitled to receive gratuity after he has rendered continuous service for five years or more. Gratuity is payable at the time of termination of his services either – (i) on superannuation or (ii) on retirement or resignation or (iii) on death or disablement due to accident or disease. Termination of services includes retrenchment.

However, the condition of 5 years continuous service is not necessary if services are terminated due to death or disablement. In case of death of the employee, the gratuity payable to him is to be paid to his nominee, and if no nomination has been made then to his heirs.

Calculation of Benefits:

For every completed year of service or part thereof in excess of six months, the employer pays gratuity to an employee at the rate of 15 days wages based on the rate of wages last drawn by the concerned employee. The amount of the gratuity payable to an employee is not to exceed Rs. 3,50,000.


The Act is enforced both by the Central and State Government. Section 3 authorizes the appropriate government to appoint any officer as a controlling Authority for the administration of the Act. Mines, major ports, oilfields, railways, factories and establishments owned or controlled by the Central Government and establishment having branches in more than one State, are controlled by the Central Government.

The remaining factories and/establishments are looked after by the State Governments. The Central/State Governments appoint the Controlling Authorities for different areas and inspectors, to ensure that the provisions of the Act are complied with. The Central/ State Governments also frame rules for administration of the Act.


In order to ensure the welfare of workers, appropriate provisions have been made under Section 42 to 50 of the Factories Act, 1948. Under Section 46 State Governments are empowered to frame rules requiring that in every factory, wherein more than two hundred fifty workers are ordinarily employed, a canteen shall be maintained by the employer for the use of workers.

Similarly, Section 47 envisages that every factory, wherein more than one hundred fifty workers are ordinarily employed, adequate and suitable shelters or rest rooms and lunch rooms with the provision of drinking water, where workers can take meals, should be provided and maintained for the use of workers.

Section 48 provides that every factory, wherein more than thirty women are ordinarily employed should provide and maintain a suitable room for the use of children under the age of six years of such women workers. Section 49 provides that the occupier of the factories employing 500 or more workers should appoint such number of welfare officers as may be prescribed under the Act.

Statutory Amenities Provided in the Factories:

Statutory amenities have to be provided in the factories as a compliance of welfare measures. The type of amenities and its number relates to the number of men/women workers employed in the factory.

Voluntary Welfare Activities are subject to the discretion of the management of the organisation. There is no statutory compliance on the part of management of the organisations for providing such facilities.

1. Medical Facilities

2. Conveyance Facility

3. Accommodation Facility

4. Recreational Facility

5. Education Facilities

6. Loans for House Construction, vehicle purchasing, etc.

Social Security – Schemes in India

Generally, India’s social security schemes cover the following types of social securities, though; a large population is in the unorganized sector and does not have an opportunity to participate in each of these schemes.

For the companies, some of these securities are mandatory to adopt:

1. Pension

2. Health Insurance and Medical

3. Disability

4. Maternity

5. Gratuity.

1. Pension:

The Employees’ Provident Fund Organization, under the Ministry of Labor and Employment, ensures superannuation pension and family pension in case of death during service. Presently only about 35 million out of a labor force of 400 million have access to formal social security in the form of old-age income protection.

Out of these 35 million, 26 million workers are members of the Employees’ Provident Fund Organization, which comprises private sector workers, civil servants, military personnel, and employees of State Public Sector Undertakings. The schemes under the Employees’ Provident Fund Organization apply to businesses with at least 20 employees. Contributions to the Employees’ Provident Fund Scheme are obligatory for both the employer and the employee.

Four main types of monthly pensions are offered:

i. Pension upon superannuation or disability;

ii. Widows’ pension for death while in service;

iii. Children’s pension; and

iv. Orphan’s pension.

In addition, there are separate pension funds for civil servants, workers employed in coal mines and tea plantations in the State of Assam, and for seamen.

2. Health Insurance and Medical:

India has a national health service, but this does not include free medical care for the whole population. The Employees’ State Insurance Act creates a fund to provide medical care to employees and their families, as well as cash benefits during sickness and maternity and monthly payments in case of death or disablement for those working in factories and establishments with 10 or more employees.

In case of sick leave, the employer will pay half salary to the employees covered under the Employee’s State Insurance Act.

3. Disability:

The Workmen’s Compensation Act requires the employer to pay compensation to employees or their families in cases of employment related injuries resulting in death or disability.

In addition, workers employed in certain types of occupations are exposed to the risk of contracting certain diseases, which are peculiar and inherent to those occupations. A worker contracting an occupational disease is deemed to have suffered an accident out of and in the course of employment and the employer is liable to pay compensation for the same. Occupational diseases have been defined in the Workmen Compensation Act in parts A, B, and C of Schedule III.

Compensation calculation depends on the situation of occupational disability:

i. In case of Death – 50 percent of the monthly wage multiplied by the relevant factor (age) or an amount

ii. Total permanent disablement – 60 percent of the monthly wage multiplied by the relevant factor (age) or an amount

The Compensation Act also includes stipulations for partial permanent disablement and temporary disablement (total or partial).

4. Maternity:

The Maternity Benefit Act requires an employer to offer 180 days wages during maternity as well as paid leave in certain other connected contingencies.

Every woman shall be entitled to, and her employer shall be liable for, the payment of maternity benefit

Any woman working in an organization and allowed to maternity benefit may give written notice to her employer stating that her maternity benefit and any other benefits to which she may be entitled may be paid to her or to anyone she nominates in the notice, and that she will not work in any establishment during the period for which she receives maternity benefit. On receipt of the notice, the company shall authorize the employee to absent herself from the company until the end of six week period following the day of her delivery.

5. Gratuity:

For establishments with ten or more employees, the Payment of Gratuity Act requires the payment of 15 days of additional wages for each year of service to employees who have worked at a company for five years or more.