The Union government is likely to effect a social security number portability across the formal and informal sector to cope with the dynamic future of work.
Employees’ Provident Fund Organisation (EPFO) subscribers have a unique number and the Employees’ State Insurance Corporation (ESIC) also has unique numbers for their subscribers, while a unique number system has also been launched for the unorganized sector.
Authorities believe that the multiplicity of numbers needs to be rationalized and the Aadhaar-linked account number of an employee should remain the same across the employee’s life cycle across sectors, both formal and informal ones for various social security benefits, at least two government officials said.
“Crowding of universal or unique account number (UAN) will adversely impact the social security ecosystem. What is required is one time registration, one number and a whole work-cycle for an employee. This on the table now,” said one of the two government officials mentioned above.
Such portability options can give a sizable data on employee attrition, movement of workforce from one sector to another within the formal sector and also from the unorganized workspace to organized employment, said the second official.
The move could have multiple implications. First, once you register with any social security body, it will remain true across the work-cycle. It will also reduce administrative hassle and boost ease of doing business.
“The labour market is changing. People are moving from formal to informal and gig work, depending on the market situation, income proposition, and comfort. A flexible social security portable system here will be beneficial,” the second official said.
“It is possible to have one social security number by allowing portability across organizations. Once and if this is finalized, the details will be shared,” labour and employment secretary Apurva Chandra said.
EPFO effected EPF numbers portability in 2014-15 and it proved hugely beneficial as it allowed an employee to retain the PF number across employers, instead of having a new account each time one changes a job.
The Union government was planning to allow portability of accounts between EPF and the National Pension System (NPS). However, the differential investment pattern, tax system, and contribution system of EPFO and NPS led to wide criticism of the move. The NPS-EPF portability was thus abandoned.
Once the labour code on social security is implemented, it will be easier to work on the portability option, contended the first official mentioned above. The idea is to have one number across several schemes of the labour ministry and this could be beneficial as they do not clash with each other and do not throw up a multi-ministry jurisdiction problem.
However, some experts argue that it shows a growing acceptance by the authorities of informality in the formal labour market, and officials of different social security bodies need to work out how the benefits of the formal sector and the informal sector will be accommodated without compromising accumulated benefits before rolling out the initiative. The question that arises is whether a person who is an EPFO subscriber continue to get EPFO administered pension and at the same time get informal sector pension on becoming a gig worker. An EPFO subscriber becomes eligible to pension on contributing continuously for 10 years.
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