Navigating the Landscape of Social Security: Concept, Evolution, and Current Practices

Few ideas have shaped modern labour relations as profoundly as social security. At its core, social security is a society’s collective promise that no worker will be abandoned to economic ruin when life takes an unexpected turn – whether through illness, injury, unemployment, childbirth, or simply the arrival of old age. For students of tourism and hospitality, where shift work, seasonal employment, and physically demanding roles are the norm, understanding this safety net is not just academic; it is foundational to how the workforce is hired, retained, and protected.

What social security actually means 🔗

Social security is best understood as a set of protective measures, both legal and financial, designed to shield workers from the social and economic distress caused by life’s contingencies. The International Labour Organization’s Convention No. 102 of 1952 remains the most widely accepted reference point for this definition, and it identifies nine core contingencies a comprehensive system should cover: medical care, sickness, unemployment, old age, employment injury, family responsibilities, maternity, invalidity, and survivors’ benefits.

What makes social security distinct from charity or private insurance is its grounding in human dignity and social justice. Benefits are not favours; they are entitlements earned through work or guaranteed by the state. The ILO standard requires that benefits be adequate in amount and duration so that every person can enjoy a reasonable standard of living, family protection, and access to healthcare.

The three strategies that fund the system 🔗

Most countries, including ours, rely on a mix of three financing approaches. The first is social insurance, where workers and employers pool contributions to share risk. The second is social assistance, funded from general taxation and targeted at those who cannot contribute, such as the elderly poor or destitute widows. The third is employer liability, where the employer bears direct responsibility for compensating injured or sick workers. Together, these create the layered structure most familiar in industrial economies.

The evolution of the idea 🔗

The need for social protection is not new. In pre-industrial societies, the joint family, caste networks, religious institutions, and village communities served as informal social security agencies. Joint families historically absorbed the shocks of illness, widowhood, old age, and unemployment, while caste guilds offered medical aid, educational scholarships, and financial help to widows and orphans. There was no formal law, but there was solidarity.

This informal architecture began to crumble with industrialisation. As cotton mills rose in Calcutta and Bombay during the 19th century, workers migrated from villages, joint families fragmented, and the old protective networks could no longer reach the urban factory floor. The shift from a caste-based agrarian economy to a class-based industrial one created a new vulnerability that demanded new institutions.

Global beginnings 🔗

The world’s first formal social security legislation is generally traced to Germany under Otto von Bismarck in the 1880s, beginning with the Sickness Insurance Law of 1883. The idea spread across Europe and gained momentum after the First World War. The establishment of the International Labour Organization in 1919 gave the concept a global voice, and Convention No. 102 in 1952 became the only international treaty to set worldwide-agreed minimum standards across all nine branches of social security. The convention also lays down principles of tripartite governance – bringing governments, employers, and workers to the same table – and requires regular actuarial reviews to keep schemes financially sustainable.

The Indian journey 🔗

In India, the formal social security movement began in the 1920s, although Indian workers had little legal protection during the early industrialisation phase from 1850 onwards. The first labour unrest occurred at Empress Mills, Nagpur, in 1877, and the first trade union – the Bombay Mill Hands Association – was formed in 1890 under N.M. Lokhande’s leadership. The Fatal Accidents Act of 1855 and the Workmen’s Compensation Act of 1923 were among the earliest legislative steps, but real momentum came during World War II.

In 1943, the Government of India appointed a committee under Professor B.P. Adarkar to design a health insurance scheme for industrial workers. Adarkar submitted his report in 1944, and after modification by ILO experts, it was passed as the Employees’ State Insurance Act in 1948 – independent India’s first major social security legislation. The Constitution that came into force in 1950 cemented this commitment through the Directive Principles of State Policy, particularly Articles 41, 42, and 43, which task the state with securing the right to work, just conditions of labour, and a living wage.

The two pillars of Indian social security 🔗

For most workers in the organised sector, two statutes form the backbone of social protection: the Employees’ State Insurance Act and the Employees’ Provident Funds and Miscellaneous Provisions Act. Tourism and hospitality establishments – hotels, restaurants, motor transport operators, and cinemas – were specifically brought within the scope of both laws, which makes them directly relevant to anyone managing personnel in this sector.

The Employees’ State Insurance Act, 1948 🔗

The ESI Act envisaged an integrated, need-based social insurance scheme to protect workers against sickness, maternity, temporary or permanent disablement, and death due to employment injury. It is administered by the Employees’ State Insurance Corporation, a statutory body under the Ministry of Labour and Employment.

The scheme applies to non-seasonal factories and to establishments such as hotels, restaurants, shops, cinemas, road motor transport undertakings, and educational and medical institutions employing ten or more persons (twenty in some states). Employees earning up to ₹21,000 per month – and up to ₹25,000 for persons with disabilities – are covered, with the employee contributing 0.75% and the employer 3.25% of wages. The scheme is self-financing, with the pooled fund administered by ESIC.

Six benefits flow from this scheme: medical care for the worker and family from day one of insurable employment, sickness benefit during certified illness, maternity benefit (now extended to 26 weeks of paid leave), disablement benefit for employment injury, dependants’ benefit for the family of a worker who dies due to occupational injury, and funeral expenses. The Rajiv Gandhi Shramik Kalyan Yojana introduced an unemployment allowance equal to 50% of wages for up to two years for insured persons who lose their jobs after at least three years of coverage.

The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 🔗

If ESI is the safety net for current crises, the EPF Act is the long-term savings instrument that ensures workers do not face old age in poverty. The Act came into being through the Employees’ Provident Funds Ordinance of 15 November 1951, replaced by the 1952 statute, and currently extends to 187 classes of establishments employing 20 or more persons. Hotels, restaurants, and cinema theatres were among the establishments specifically notified by the Central Government.

The Act is administered by a tripartite Central Board of Trustees, with representatives from central and state governments, employers, and employees. The Board operates three schemes that together create a comprehensive retirement architecture.

The first is the Employees’ Provident Fund Scheme, where both the employer and the employee contribute 12% of basic wages plus dearness allowance every month. The accumulated balance earns annual interest fixed by the EPFO and is paid out as a lump sum on retirement, or earlier for specified needs such as housing, medical emergencies, education, or marriage.

The second is the Employees’ Pension Scheme of 1995, which carves out a portion of the employer’s contribution to fund a monthly pension for life after retirement. A worker needs at least ten years of pensionable service to qualify for a pension, with the amount calculated using a formula based on pensionable salary and service. The scheme also covers the family in the event of the member’s death.

The third is the Employees’ Deposit Linked Insurance Scheme, which provides a life insurance benefit to the family of a member who dies while in service, at no cost to the employee. The employer contributes a small additional percentage of wages towards this fund.

Each member is assigned a Universal Account Number, a portable identifier that follows the worker across employers and consolidates all PF accounts under one number. This is particularly useful in tourism, where staff frequently move between properties and chains.

The Code on Social Security, 2020 🔗

The most significant recent reform is the consolidation of nine separate labour laws – including the EPF Act, the ESI Act, the Maternity Benefit Act, and the Payment of Gratuity Act – into a single Code on Social Security, 2020. The Code aims to extend coverage beyond the organised sector to gig workers, platform workers, and the self-employed, who together form the bulk of India’s labour force.

The Code introduces a unique portable number for every worker, linked to Aadhaar, so that benefits can be claimed from anywhere in the country. It also empowers the central and state governments to design dedicated welfare schemes for unorganised, gig, and platform workers – a recognition that the traditional employer-employee relationship no longer captures how millions of Indians actually work, including delivery riders, ride-hailing drivers, and freelance hospitality staff.

Why this matters for tourism and hospitality 🔗

The tourism workforce is unusually exposed to the contingencies that social security is designed to address. Long hours on one’s feet, kitchen burns, slip-and-fall injuries, exposure to peak-season stress, and the seasonal nature of employment all create real risks. A housekeeping staff member who injures her back, a chef who develops a chronic skin condition from constant water exposure, or a seasonal resort worker laid off after the high season all rely on the protections built into ESI, EPF, and the gratuity framework.

For employers, compliance is not optional. Establishments with twenty or more employees must register under the EPF Act within one month of crossing that threshold, and ESI registration is required within fifteen days of the Act becoming applicable. Beyond the legal obligation, well-administered social security is a powerful tool for retention in an industry notorious for high attrition. Workers who know their families are covered for medical emergencies and that their old age is funded tend to stay longer and perform better.

The challenges that remain 🔗

Despite seven decades of legislation, coverage gaps persist. Around 53% of salaried workers in India still do not receive social security benefits, according to the Periodic Labour Force Survey 2021-22, meaning they have no access to provident funds, health cover, or pension protection. The unorganised sector – which includes a large share of small hotels, dhabas, home-stays, and tour operators – remains under-served.

Awareness is another barrier. Many eligible workers do not enrol because procedures feel complex, or because employers under-report wages to reduce contributions. Digital initiatives such as the Universal Account Number, e-nominations, and the Shram Suvidha portal are narrowing these gaps, but implementation is uneven, especially in rural and tier-three locations where much of India’s tourism activity now happens.

What do you think? Should social security in India move towards a fully universal model that covers every worker regardless of sector or employment status, or is the contributory model better suited to a developing economy? And in your view, what is the single biggest barrier to extending these protections to gig and platform workers in tourism and hospitality?

References

1. https://www.ilo.org/resource/ilo-social-security-minimum-standards-convention-1952-no-102
2. https://www.social-protection.org/gimi/C102.action?lang=EN
3. https://socialprotection-humanrights.org/instru/social-security-minimum-standards-convention-no-102-1952/
4. https://www.legalservicesindia.com/article/826/Social-Security.html
5. https://www.nujs.edu/wp-content/uploads/2022/11/File-10.pdf
6. https://www.ilo.org/media/400301/download
7. https://abhipedia.abhimanu.com/Article/EPFO/MjczMzE4/Evolution-of-Social-Security-in-India-Social-Security-EPFO
8. https://www.studyiq.com/articles/social-security-in-india/
9. https://esic.gov.in/esi-acts
10. https://en.wikipedia.org/wiki/Employees%27_State_Insurance
11. https://www.payrollservicesindia.com/blog/index.php/employees-state-insurance-esi-act-1948/
12. https://www.epfindia.gov.in/site_en/AboutEPFO.php
13. https://ijirem.org/DOC/12-employees-provident-fund-act-1952.pdf
14. https://en.wikipedia.org/wiki/Social_security_in_India
15. https://blog.ipleaders.in/social-security-and-its-relevance-under-labour-legislation-in-india/