Description
The large gaps existing between the rich and the poor and the unorganised workers and the organised workers have led in several countries to attempts at providing social and economic security to the poor and to the unorganised sectors.
Social Security and Labour Welfare
with Special Reference to
Construction Workers in Kerala
C. P. John
Discussion Paper No. 65
Kerala Research Programme on Local Level Development
Centre for Development Studies
Thiruvananthapuram
Social Security and Labour Welfare with Special
Reference to Construction Workers in Kerala
C.P.John
English
Discussion Paper
Rights reserved
First published 2004
Editorial Board: Prof. S. Neelakantan, Prof. P. R. Gopinathan Nair, H. Shaji
Printed at:
Kerala Research Programme on Local Level Development
Published by:
Dr K. N. Nair, Programme Co-ordinator,
Kerala Research Programme on Local Level Development,
Centre for Development Studies,
Prasanth Nagar, Ulloor,
Thiruvananthapuram
Cover Design: Defacto Creations
ISBN No: ISBN No. 81-87621-68-0
Price: Rs 40
US$ 5
KRPLLD 2004 0500 ENG
Contents
1. Introduciton 5
2. Social security and labour welfare in the unorganised sector 9
3. Welfare fund model of social security measures 22
4. Social security schemes and labour welfare funds of Kerala 28
5. Kerala building and other construction workers welfare fund:
Scope, function, and performance 33
6. Kerala building and other construction workers welfare fund:
A brief review of its finances 44
7. Construction workers in Mazhuvannur Panchayat 54
8. Summary and conclusion 76
9. Appendix 79
10. References 93
Social Security and Labour Welfare with Special Reference
to Construction Workers in Kerala
C. P. John
1. Introduction
The large gaps existing between the rich and the poor and the unorganised workers and the
organised workers have led in several countries to attempts at providing social and eco-
nomic security to the poor and to the unorganised sectors. In Kerala, the introduction of
modern techniques of production and the growth of capitalist production relations had im-
portant implications for the traditional crafts as well as craftsman in Kerala. One of its
implications has been the breakdown of the conventional social security set-up. Craftsmen
in Kerala belonged to a specific caste group, namely, Kammala or Viswakarma. The social
security system among craftsmen was embedded in the craft and caste traditions and prac-
tices. The customs and practices of the craft as well as of caste groups were eroded in the
processes of change that transformed caste-based occupational traditions and the social
structure itself.
The search for alternative institutions to fill the gap caused by social transformation was a
long-drawn out process. The establishment of Welfare Fund Boards has been a major land-
mark in this pursuit. Labour welfare legislations, and the institutions constituted under them
seem to have had a major impact on the informal labour markets of the State. They are also
supposed to have added a new dimension to the social security system of Kerala. Yet,
several issues involved in providing social security to workers in informal labour markets
appear to have not received the attention they deserve. The present study on construction
workers is an attempt to analyse the problems revolving around the Welfare Fund created
for them, its impact on the lives of construction workers, and the financial solvency of the
Fund in the long run.
The Kerala Building and other Construction Workers Welfare Scheme was introduced in
1989, and has been in operation since 1990. According to the latest information available
ACKNOWLEDGEMENTS: I wish to express my deep sense of gratitude and indebtedness to Dr K.N.
Nair, Programme Co-ordinator, KRPLLD, for his guidance, expert advice, and unfailing interest at all
stages of my work. The number of researchers, friends, and family members from whom I have received
constant encouragement and guidance is so large that I cannot even hope to mention them all. A few of them,
however, standout in my mind, without whose active involvement, this work would not have been in the
shape in which it is now. First, I must acknowledge my gratefulness to Mr K.V. Surendra Nath, Ex.MP, and
the Secretary of the Achutha Menon Centre and Library, Thiruvananthapuram, and Dr K.N. Harilal, CDS
for encouraging me to do this work. I would be failing in my duty if I did not thank the staff of the Centre.
I also grateful to Mr Chidamparam, practising Actuarial expert, for the benefit of personal discussions that
enabled me to sharpen some of the arguments presented here. My sincere thanks are due to Mr Anil Kumar
P for the constant assistance at all stages of my work including primary data collection and computer work.
I owe a deep sense of gratitude towards Dr Balachandran and Dr Reji D Nair for their assistance.
C. P. John is Member, State Planning Board, Thiruvananthapuram.
there are about 15 lakh construction workers in the State. Up to March 2000 the Welfare
Board could enrol more than 8 lakh workers, who belong to both the traditional and the non-
traditional sectors. For getting enrolled in these schemes, the workers should have completed
the age of 18 years and should be below 60 years. In this scheme 26 types of workers are
eligible to be enrolled, which include Brick workers, Masons, Carpenters, Blacksmiths, Plumbers,
Fitters, Helpers, Electricians, Road workers, Welders, Seawall workers, and so on.
The Kerala Building and Other Construction Workers Welfare Fund (KBCWWF) has already
mobilised around Rs 88 cr from workers and builders, and from the State Government. The
main source of income of the Fund is the interest income accruing from its deposits in
banks. The Fund has formulated several benefit schemes such as pensions, death benefit,
accident/disease benefit, health and maternity benefit, housing assistance, family pensions,
and grant for marriage of children. The number of workers receiving the benefits and the
amounts involved has been increasing steadily.
Scope of the study
The sustainability of the Welfare Fund is crucially dependent on the state of its receipts and
disbursements. Evidence suggests that the Construction Workers Welfare Fund is unlikely
to encounter any major financial crisis in the near future. The Fund managers can take pride
in the huge amount of deposits they have accumulated over the years. But a close look at the
data on disbursements, especially their trends, would reveal certain disturbing tendencies.
Apparently disbursements are growing at a pace more rapid than that of receipts.
These trends call for a detailed examination of the source of income as well as items of
expenditure. It would be interesting to make projections of the incomings as well as outgo-
ings of the Fund to examine how and if they would balance over the long run. Incidentally,
there seems to be scope for improving the proceeds from some of the sources including
contributions from contractors. The scope for regulating the outflow of disbursements as
well as of administrative expenditures also appears to be not too insignificant. The study
would also make an attempt to analyse the activities of the Fund from the point of view of
the workers. A comparison of the living conditions of members of the KBCWWF with
those of non-members would help us understand the attainments of the Fund as well as its
shortcomings.
Objectives
The major objectives of the study are the following:
1. To account for the emergence of the Welfare Fund model of social security in Kerala
with emphasis on the construction workers welfare fund, its organisational structure, and
mode of functioning;
2. To analyse the sources of funds and payment commitments of the welfare fund;
3. To study the impact of the welfare funds on the social security environment of construc-
tion workers;
4. To study the socio-economic background of the construction workers with emphasis on
socio-psychological characteristics of the elderly among them; and
5. To suggest policy measures to improve the functioning of the Welfare Fund.
Methodology
The evaluation on the functioning of the KBCWWF is made on the basis of information
collected from secondary sources such as the annual reports of the Welfare Fund. In order
to analyse the solvency of the Fund over the long run, the actuarial method is employed. For
this purpose 30,000 entries relating to pensioners in six selected districts of the State were
collected.
To study the impact of the welfare schemes on the construction workers and their families,
a primary survey was conducted using semi-structured pre-tested and interview adminis-
tered questionnaires. The survey was supplemented by detailed key-informant interviews
and focus-group discussions among workers. It was not be possible to attempt a census
survey of all the members of the KBCWWF given the limitations of time and resources
available for the study. Therefore, an area-specific study based on Mazhuvannur Panchayat
of Kunnathunadu taluk in Ernakulam district was attempted. The operations of the Welfare
Fund activities were found to be widespread. Samples of workers were drawn from both
urban and rural areas.
The sample workers were divided into three groups: (1) Members of the KBCWWF, (2)
Non-members, and (3) Elderly workers who are pensioners. From the census data of the
taluk, construction workers were identified with the help of knowledgeable persons in the
locality and people’s representatives. Fifty households from each of the three categories
were selected at random.
Studies of the working and living conditions of workers in the informal sector in India are
few. Based on a sample survey in Delhi, Johri. CK and SM Pandey (1972) found that
extension of social security to the unorganised sector was not merely a matter of extension
of existing organised sector schemes to new groups but it involved development of a differ-
ent and more diversified set of schemes. Subrahmanya (1994) defined the concept of social
security in its broadest sense, as support provided by the society to the individual to enable
him to attain a reasonable standard of living and to protect the standard from falling due to
any contingency.
Jayadevadas (1980), based on his study of coir workers, suggested that the model before
the trade unions in Kerala was that of modern industrial employment characterised by high
wage rates, stable employment, fair working conditions, non-wage benefits, and long-term
economic security. According to Harilal (1986) construction workers are overwhelmingly
rural landless migrants compelled to seek employment in the construction sector due to
indebtedness, inadequate employment and insufficient income.
Based on their study on building industry in Pune, Rao and Deo observed that self-help
organisations constitute the sole agencies, which guarantee the minimum standards of social
and economic security to workers in non-traditional and informal sectors of the society.
K. P. Kannan (2002) stated that the ever-increasing demand for Welfare Funds for each and
every sub-sector of the informal sector may be viewed as a desperate reaction of the work-
ers for a measure of social security in an unprotected labour market.
Guha has argued that given the multiplicity of sectors, and employment and socio-economic
patterns in each State, as well as of grassroots organisations and NGOs, it is undesirable to
impose uniform patterns on social security systems (Thakurtha Guha, 1980).
Though these studies provide valuable insights into the informal labour markets, none of
them has undertaken analysis of real situations and socio-economic realities of construction
workers and activities of Welfare Boards, at micro levels. The present work is an attempt in
this direction.
Scheme of the study
The study has two major dimensions. The first pertains to the Welfare Fund: its functioning;
sources of receipts; disbursements; commitments; future prospects. The second dimension
is related to the impact of the Welfare Fund, especially on the welfare of the workers and the
social implication of the welfare fund model of social security.
The study is divided into eight sections. A discussion of development strategies and existing
status of labour welfare schemes in operation in the unorganised sector is made in the
second section. In the third section, the Welfare Fund model of social security arrangements
is briefly examined. An evaluation of the functioning of Labour Welfare Funds in Kerala is
undertaken in the fourth section. The analysis of the Kerala Building and Construction
Workers Welfare Fund and its operation and financial security is undertaken in the fifth
section. In the sixth section the solvency and existence of the KBCWWF is examined by
using the actuarial method. The seventh section contains a discussion of the socio-eco-
nomic status of construction workers. The final section summarises the findings of the
study and makes a few recommendations.
2. Social Security and Labour Welfare in India: A review
Social security is one of the pillars on which the structure of a welfare state rests, and it
constitutes the hard core of social policy in most countries. It is through social security
measures that the state attempts to maintain every citizen at a certain prescribed level below
which no one is allowed to fall. It is the security that society furnishes through appropriate
organisation, against certain risks to which its members are exposed (ILO, 1942). Social
security system comprises health and unemployment insurance, family allowances, provi-
dent funds, pensions and gratuity schemes, and widows’ and survivors’ allowances. The
essential characteristics of social insurance schemes include their compulsory and contribu-
tory nature; the members must first subscribe to a fund from which benefits could be
drawn later. On the other hand, social assistance is a method according to which benefits
are given to the needy persons, fulfilling the prescribed conditions, by the government out of
its own resources. The present section reviews labour welfare activities in India with par-
ticular emphasis on the unorganised sector.
Although provisions for workmen’s compensation in case of industrial accidents and mater-
nity benefits for women workforce had existed for long, a major breakthrough in the field of
social security came only after independence. The Constitution of India (Article 41) laid
down that the State shall make effective provision for securing the right to public assistance
in case of unemployment, old age, sickness and disablement and in other cases of unde-
served want. The Government took several steps in compliance of the constitutional re-
quirements. The Workmen’s Compensation Act (1926) was suitably revised and social in-
surance programmes were developed for industrial workers. Provident funds and gratuity
schemes were introduced in most industries, and maternity legislation was overhauled.
Subsequently, State governments instituted their own social assistance programmes.
The provisions for old age comprise pension, provident fund, and gratuity schemes. All the
three provisions are different forms of retirement benefits. Gratuity is a lumpsum payment
made to a worker or to his/her heirs by the company on termination of his/her service due to
retirement, invalidity, retrenchment or death (Bajpayee and Shanker, 1950).
Concept of labour welfare
In its broad connotation, the term welfare refers to a state of living of an individual or a
group in a desirable relationship with total environment – ecological, economic, and social.
Conceptually as well as operationally, labour welfare is a part of social welfare which, in
turn, is closely linked to the concept and the role of the State.
The concept of social welfare, in its narrow contours, has been equated with economic
welfare. Pigou defined it as “that part of general welfare which can be brought directly or
indirectly into relations with the measuring rod of money” (Pigou, 1962). According to
Willensky and Labeaux, social welfare alludes to “those formally organised and socially
sponsored institutions, agencies and programmes which function to maintain or improve the
economic conditions, health or interpersonal competence of some parts or all of a popula-
tion” (Willensky and Labeaux, 1918). As these goals may not always be realised by individu-
als through their efforts alone, the government came into the picture and gradually began to
take over the responsibility for the free and full development of human personality of its
population.
Labour welfare is an extension of the term Welfare and its application to labour. During the
industrialisation process, the stress on labour productivity increased; and brought about
changes in the thinking on labour welfare. An early study under the UN observed as follows
“in our opinion most underdeveloped countries are in the situation that investment in people
is likely to prove as productive, in the purely material sense, as any investment in material
resources and in many cases, investment in people would lead to a greater increase of the
flow of goods and services than would follow upon any comparable investment in material
capital” (UN, 1951). The theory that welfare expenditure, especially expenditure on health
and education, is productive investment has led to the view that workers could work more
productively if they were given a fair deal both at the work place and in the community.
The concept of labour welfare has received inspiration from the concepts of democracy and
welfare state. Democracy does not simply denote a form of government; it is rather a way
of life based on certain values such as equal rights and privileges for all. The operation of
welfare services, in actual practice, brings to bear on it different reflections representing the
broad cultural and social conditions. In short, labour welfare is the voluntary efforts of the
employers to establish, within the existing industrial system, working and sometimes living
and cultural conditions of the employees beyond what is required by law, the custom of the
industry and the conditions of the market (A. J. Todd, 1933).
The constituents of labour welfare included working hours, working conditions, safety,
industrial health insurance, workmen’s compensation, provident funds, gratuity, pensions,
protection against indebtedness, industrial housing, rest rooms, canteens, crèches, wash
places, toilet facilities, lunches, cinemas, theatres, music, reading rooms, holiday rooms,
workers’ education, co-operative stores, excursions, playgrounds, and scholarships and
other help for education of employees’ children. All labour welfare measures have the fol-
lowing objectives:
1. Enabling workers to live richer and more satisfactory lives;
2. Contributing to the productivity of labour and efficiency of the enterprise;
3. Enhancing the standard of living of workers by indirectly reducing the burden on their
purse;
4. Enabling workers to live in tune and harmony with services for workers obtaining in the
neighbourhood community where similar enterprises are situated;
5. Based on an intelligent predictions of the future needs of the industrial workers, design-
ing policies to cushion off and absorb the shocks of industrialisation and urbanisation to
workers;
6. Fostering administratively viable and essentially developmental outlook among the
workforce; and
7. Discharging social responsibilities.
Principles of labour welfare
Certain fundamental considerations are involved in the concept of labour welfare. The
following are the more important among them.
Social responsibility of industry
This principle is based on the social conception of industry and its role in the society that is,
the understanding that social responsibility of the state is manifested through industry. It is
assumed that labour welfare is an expression of industry’s duty towards its employees.
Social responsibility means that the obligation of the industry to pursue those policies, to
take such decisions, and to follow those lines of action which are desirable in terms of the
objectives and values currently obtaining in the society. The values of the Indian community
are enshrined in the constitution of the country.
Labour welfare is not embroidery on capitalism nor the external dressing of an exploitative
management; rather, it is an expression of the assumption by industry of its responsibility
for its employees (Maurioce Bruce, 1961). Industry is expected to win the co-operation of
the workers, provide them security of employment, fair wage, and equal opportunity for
personal growth and advancement, and make welfare facilities available to them.
Democratic values
The principle of democratic values of labour welfare concedes that workers may have
certain unmet needs for no fault of their own, that industry has an obligation to render them
help in gratifying those needs, and that workers have a right of determining the manner in
which these needs can be met and of participating in the administration of the mechanism of
need gratification. The underlying assumption to this approach is that the worker is a mature
and rational individual who is capable of taking decisions for himself/herself.
Adequacy of wages
The third principle of labour welfare is adequacy of wages; it implies that labour welfare
measures are not a substitute for wages. It will be wrong to argue that since workers are
given a variety of labour welfare services, they need be paid only low wages. Right to
adequate wage is beyond dispute.
Efficiency
The fourth principle of labour welfare lays stress on the dictum that to cultivate welfare is to
cultivate efficiency. Even those who deny any social responsibility for industry do accept
that an enterprise must introduce all such labour welfare measures which promote effi-
ciency (Marshall, 1950). It has been often mentioned that workers’ education and training,
housing, and diet are the three most important aspects of labour welfare, which always
accentuate labour efficiency.
Re-personalisation
Since industrial organisation is rigid and impersonal, the goal of welfare in industry is the
enrichment and growth of human personality. The labour welfare movement seeks to bring
cheer, comfort, and warmth in the human relationship by treating man as an individual, with
quiet distinct needs and aspirations. Social and cultural programmes, recreation and other
measures designed after taking into consideration the workers’ interests go a long way in
counteracting the effects of monotony, boredom, and cheerlessness.
Co-responsibility
The sixth principle of labour welfare recognises that the responsibility for labour welfare lies
on both employers and workers and not on employers alone (Moorthy, 1958). Labour
welfare measures are likely to be of little success unless mutuality of interest and responsi-
bilities are accepted and understood by both the parties, in particular the quality of responsi-
bility at the attitudinal and organisational level.
Totality of welfare
The final principle of labour welfare is that the concept of labour welfare must permeate
throughout the hierarchy of an organisation, and accepted by all levels of functionaries in the
enterprise.
Social security and unorganised labour
Social security is the protection 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 in earnings resulting from sickness, maternity,
employment injury, unemployment, invalidity, old age and death; provision of medical care,
and the provision of subsidies for families with children (ILO, 1989). The system of social
security was started with the organised sector. However, owing to pressures brought on
the state and the society by the growing awareness within the unorganised sector, concern
is increasingly being expressed and attention given to expanding legislative and social secu-
rity protection to the unorganised sector.
Social security schemes should be linked to economic security, including employment, in-
come, and assets. There should be a convergence of the ways of reaching sustainability and
of attaining expanded coverage. The growing demands of the unorganised labour force and
their attempts to organise themselves can be met by a decentralised participatory social
security system. It will lead to a release of the people’s creative energies and a rapid growth
of social security for the organised sector. Extending social security to the unorganised
sector is not merely a matter of extending existing organised sector schemes to new groups
for the following reasons (Getupig, et al, 1992).
1. Unorganised sector is not a homogenous category;
2. Identifying the employer in this sector is difficult;
3. Unlike the organised sector, where steady and regular employment is a given fact, unor-
ganised sector workers need employment security, income security, and social security
simultaneously; and
4. Needs of the unorganised sector workers vary from those of the organised sector.
Welfare amenities stipulated in the Factories Act, Mines Act, Plantations Labour Act, etc.,
are employment-based, in the sense that such Acts are applicable to undertakings employing
the minimum prescribed number of workers. Outside the realm of these Acts, there are a
large number of small-scale establishments, which have no obligation, statutory or other-
wise, to provide welfare amenities to their workers. These establishments are located in
both urban and rural areas, and are engaged mostly in processing primary products or in
supplementing the existing large-scale industries in transportation, construction, and retail
trade. (Ghosh Subratesh, 1996). The precise estimate of their employment strength and
their wage, welfare and working conditions are not known.
The very nature of industry, the frequent collusion between the employer and his workmen
and place of work often being in the backyard of the employers’ dwelling are some of the
social problems which stand in the way of bringing the real picture of labour conditions to
light. In the absence of any reliable data necessary for policy recommendations, one could
take stock of the situation only in terms of opinions expressed by knowledgeable sources.
Social security measures in unorganised sector in India
Social security comprises two types of measures, promotional and protective. Promotional
measures consist mainly of employment, training, and nutrition schemes, by which persons
are enabled to work and earn a livelihood. On the other hand, protective measures consist of
schemes by which the State provides the means of livelihood when a person is not able to
work (Sankaran, T.S, 1993). ILO standards relating to social security are mainly protective
and have been designed primarily for workers in the organised sector. Both promotional and
protective measures are necessary to provide adequate social security facilities.
Medical care
According to ILO recommendation No.69, medical care should be provided either through
a social service medical care service, with supplementary provisions by way of social as-
sistance, to meet the requirements of people in need who are not covered by social insur-
ance, or through a public medical service (ILO, 1984). It requires that complete preventive
and curative care be available, care which is rationally organised and co-ordinated with
general health services. In India, medical care is provided largely by the public medical
service, by private doctors and hospitals, and to a limited extent by social insurance schemes,
welfare funds, and voluntary health associations. Some of the Welfare Funds in Kerala have
adopted the reimbursement of the cost of medical care at standard rates or actuals,
whereas the Employees State Insurance Scheme is based on providing the service directly
under an integrated arrangement in which the financing and the medical services vest
with the same organisation. On the other hand, some of the public sector establishments
provide service indirectly by entering into contract with doctors, diagnostic centres, and
hospitals.
Sickness benefit
Sickness benefit is payable when an insured person has to stop work due to his poor health
conditions, and such a stop in work usually entails reduction or stoppage of earnings. Cash
benefit is designed to replace in whole, or in part, the lost earnings. In India, there is provi-
sion for payment of sickness benefit under the Employees State Insurance Scheme (Gov-
ernment of India, 1996). Employees of Central and State governments and some public and
private sector establishments are entitled to medical leave on half-pay.
Maternity benefit
One of the earliest conventions adopted by ILO was the Maternity Protection Convention in
1919. The purpose of this Convention was to ensure that a woman worker would be able to
sustain herself and her baby during the period immediately before and after her confinement.
Maternity benefit is usually provided under a social insurance scheme along with medical
care and sickness benefit. In India maternity benefit is provided under the Maternity Benefit
Act (as an employers’ liability) the Employees State Insurance Act (as a part of the health
insurance scheme), the Beedi and Cigar (Conditions of Employment) Act, Beedi and Cigar
Labour Welfare Fund Act, and the various State government schemes for social assistance.
The National Social Assistance Programme also provides for payment of maternity benefits
in lump sum.
Employment injury benefit
Employment Injury Benefit is the most widely adopted branch of social security, and is also
known as workmen’s compensation. According to ILO Recommendation No.67 concern-
ing income security, the contingency for which compensation for employment injury should
be paid, is traumatic injury, or disease in the course of employment, and not injury brought
about deliberately, or by serious and wilful misconduct of the victim, which results in tem-
porary or permanent disability or death (ILO, 1984). This is a cash benefit but is often
associated with medical care. In India, employment injury benefit is provided under the
Workmen’s Compensation Act and the Employees State Insurance Act. While the former
Act is applicable to some employment in the unorganised sector, such as the construction
industry, the latter Act is applicable mainly to workers in the organised sector.
Old-age bnenefit
Old age, invalidity, and survivors’ benefits are the main long-term social security benefits,
which are of great importance in any social security scheme. ILO conventions stipulate that
the pensionable age should not be more than 65 years, unless required by demographic,
economic, and social criteria, and that there should be a lower age for persons engaged in
arduous occupations. Old age pension may be at a flat rate, or be related to one’s past
earnings. The current trend appears to be toward building a multi-tiered system consisting
of a basic minimum pension and one or more earnings-related pensions. In India old-age
benefit is provided as follows (Ministry of Labour, 1996).
(a) Government employees:
Paid by respective governments on the basis of employers’ liability.
(b) Employees’ pension scheme:
Workers covered under the Employees Provident and Miscellaneous Provisions Act.
(c) Destitutes and persons below the poverty line:
Paid under national old age pension scheme and old age pension schemes of State gov-
ernments.
There exist no pension schemes for the self-employed, or for workers employed on a casual,
temporary or intermittent basis who are not destitute, and who are not covered by the
Employees Provident Fund and Miscellaneous Provisions Act.
Invalidity benefit
Invalidity benefit is meant for people who have permanently lost their capacity to earn to the
extent prescribed. According to ILO Recommendation No.67 concerning income security,
the contingency in which invalidity benefit is payable is the inability to engage in any substan-
tially gainful activity, because of a chronic condition due to disease or injury, or because of the
loss of a member or its proper functioning. The relevant ILO convention specifies 15 years of
contribution or employment or 10 years of insurance. But usually one requires only a few
years’ insurance, say five years, a part of which needs to be immediately preceding the inva-
lidity. In India, the Employees Pension Scheme introduced in 1995 provides for invalidity
benefits.
Survivors’ benefit
This benefit is meant primarily for widows and children of persons covered by Social Secu-
rity Schemes who cease to have any financial support on the death of their breadwinner.
However, national legislation often recognises claims of other dependents provided there are
no primary beneficiaries. A widespread practice is to base the survivors’ pension on the rate
of the old age pension the deceased was receiving or would have received (Sankaran, T.S,
1993). In India, survivors’ benefit is provided under the Employees State Insurance Act and
Workman’s Compensation Act in case of death of a person engaged in any employment
covered under these Acts. This benefit is provided under the Employees Provident Fund and
Miscellaneous Provisions Act in case of the death of a member of the scheme for any
reason. Insurance schemes of the Life Insurance Corporation and General Insurance Cor-
poration also provide this benefit. The National Family Benefit Scheme extends this benefit
in case of the death of the breadwinner of a family which lies below the poverty line.
Unemployment benefit
The underlying principle of unemployment benefit is that if a person, through no fault of his, is
deprived of his income, he has a right to expect income support, at least for the necessities of
life while he remains available for work. According to ILO recommendations No.67, the con-
tingency in which unemployment benefit should be paid is loss of earnings due to a state of
unemployment of an insured person who is ordinarily employed, a person who is capable of
regular employment in some occupation and is searching for suitable employment or due to
part time unemployment (Government of India, 1995-‘96). Its main purpose is to deal with
temporary unemployment of employed persons and not the extensive and prolonged unem-
ployment and under-employment found in many developing countries. The payment of the
benefits depends on satisfying the qualifying clause of covered employment, and a waiting
period may also be applied.
Family benefit
ILO Recommendation No.67 says that society should co-operate with parents, and give
general assistance designed to secure the wellbeing of children. This benefit is intended to
assist families in raising their children. Although there are no family benefit schemes in India,
which provide for the payment of cash allowances to families for the maintenance of chil-
dren, there exist many schemes which help families of Scheduled Castes/Tribes, minorities
and other weaker sections of society, in the discharge of their responsibilities for education
of their children, marriage of their daughters, construction of houses, and meeting funeral
expenses.
Strategies for social security in unorganised sector
The majority of the Social security schemes implemented in the country were in the organ-
ised sector, keeping large numbers outside the realm of the Social security net (Berman,
1995). A beginning has been made lately to provide social insurance for workers in the
unorganised sector, with the help of the Central and the State governments. These schemes
are administered by government agencies, co-operatives or NGOs, and are a combination of
social assistance and social insurance.
Insurance schemes
The Life Insurance Corporation of India has developed group insurance, which is akin to
social insurance based on large numbers, and has the potential to provide social security to
persons in the unorganised industrial and agricultural sectors. There exist now several other
group insurance schemes for the unorganised sector workers such as milk producers,
handloom weavers, rickshaw pullers, shop assistants, beedi workers, and fish farmers. The
schemes of the LIC provide mainly survivor benefits; however, some also provide old-age
pensions. The General Insurance Corporation (GIC) of India also administers a few social
security schemes for poor families, a Hut Insurance Scheme, and a Solatium Fund. In
addition, GIC has introduced a Health Insurance Scheme, and has been administering the
comprehensive Group Insurance Scheme for the Central Government. The schemes of the
General Insurance Corporation provide invalidity benefits, or health insurance, or protection
against loss of property.
National Social Assistance Programme
Of the various protective schemes in existence for workers in the unorganised sector, the
most important is the National Social Assistance Programme introduced in 1955 (Wadhawan,
1989). It provides social assistance to poor households in the case of old age, death of the
breadwinner, and maternity through the National Old Age Pension Scheme, National Family
Benefit Scheme, and the National Maternity Benefit Scheme respectively. Under the National
Old Age Pension Scheme, Central assistance is provided to States for payment of old age
pension to persons who are of the age of 65 years or more. In addition to the National Old
Age Pension Scheme, all State governments and Union territories have their own old-age
pension schemes.
Other pension schemes
Apart from the old-age pension schemes already referred to, the States Kerala, Tamil Nadu,
Karnataka, Andhra Pradesh, Maharashtra, and Gujarat have pension schemes for agricul-
tural workers. Many states have extended the old-age pension scheme benefits to destitute
widows, physically and mentally retarded persons, freedom fighters and indigent artists;
and some have also set up homes for destitute widows and deserted /divorced women.
Under the Family Benefit scheme assistance is given to families below the poverty line on the
death of their breadwinner; under the National Maternity Benefit scheme assistance is given
to pregnant women for the first two childbirths.
Welfare Funds
Welfare funds represent one of the models tried in India for providing social security protec-
tion to workers in the unorganised sector. There exist broadly two types of welfare funds
– contributory and tax-based. The Government of India has set up tax-based welfare funds
for mine workers, beedi rollers, cine workers, and workers in the building industry; these
funds are financed by cess levied on the production or export of specified goods. They
provide mainly medical care, assistance for the education of children, housing and water
supply, and recreational facilities. There are nearly 20 Welfare Funds constituted by Gov-
ernment of Kerala for the benefit of different target groups such as agricultural workers,
head-load workers, construction workers, coir workers, cashew workers, motor transport
workers, autorickshaw workers, toddy workers, and artisans the majority of which are
contributory.
Existing models of social security and labour welfare
Since India has committed to the welfare of the marginalised sections of the society the
government has taken upon itself the delivery of all types of social services and social
security. This pattern is reflected in existing models of social security delivery as may be
seen from Table 2.1. There are mainly three types of social security models: employers’
liability, social insurance, and social assistance. The last category includes welfare funds of
Central government, welfare funds of State government, subsidised insurance schemes,
and other forms of social assistance. The beneficiaries of the first (employers’ liability) are
mainly workers in the organised sector, whereas under social assistance the beneficiaries
are both workers in the organised sector and workers in the informal sector. The latter
belong in generally to the marginalised sectors. In the context of growing privatisation of
services on the one hand and the growing awareness and organisation of the oppressed
sections of workers on the other, it is necessary to search for models of effective social
security provision to all the unorganised sector workers.
Table 2.1 Existing Models of Social Security
Administrative/
Model Nature of Benefit Beneficiaries Financial
Arrangement
1.Workermen’s comp.
1.Employers’ Liability 2.Maternity Benefit Workers in the Employers manage
3.Gratuity Organised Sector and pay exclusively
4.Retrenchment comp. .
2.Social Insurance (A) 1.Medical Care
2.Sickness Workers in the
3.Maternity Organised sector
4.Occupational
Injury
.
(B)1.Old-age benefit
2.Invalidity benefit
3.Survivors’ benefit
4.Provident Fund
3.Social Assistance (A) 1.Medical care 1. Mine workers
2.Education 2. Beedi workers
3.Housing 3. Cine workers
4.Water Supply 4. Building works
(B) 1.Education
2.Old-age Benefit
3.Survivors’ Benefit
(b) Welfare Funds of 1.Old-age Benefit
Kerala Government 2.Meical Care
3.Education
4.Assistance for
marriage, housing etc.
Administered by
Employees’ State
Insurance Corporation
financed out of
contributions from
employers, employees
and State Governments
Workers in the organ-
ised sector and some
sections of workers in
the unorganised sector
Administered by
central Board of
Trustees, financed by
contributions from
employers, employees
and central govern-
ment.
(a)Welfare Funds of
Central Government
Administered Depart-
mentally financed by
special levies in the
form of cesses.
Workers in the
unorganised sector,
such as handloom
workers, Coir
Workers and
Cashew Workers.
Administered by
autonomous boards
financed by contribu-
tors from employers,
workers and others.
Social security for the unorganised workers cannot be reached by centralising and standard-
ising schemes; they can be reached by ‘letting a hundred flowers bloandencouraging work-
ers themselves to take initiative (Subramanya, 1994). People remain weak and vulnerable
partly because they are unorganised and hence isolated and powerless. The provision social
security can itself be a means that would lead the unorganised sector workers to organise
and become empowered. Security of needs like food, health care, housing and child care, is
empowering for vulnerable unorganised sector workers and helps them to alter their bar-
gaining positions in the market (Sen and Dreze, 1990). Centralised non-participatory sys-
tems tend to be dis-empowering, while participatory and beneficiary-run systems lead the
workers to organise themselves.
Labour welfare in the construction industry
The construction industry has several features that distinguish it from most other industries
so far as the welfare of workers is concerned. The majority of construction sites are of a
temporary nature, since most structures require little attention of construction workers
once construction is completed. This factor, making for mobility of labour in the construc-
tion industry, raises special problems on sites, where temporary arrangements must suffice
for the provision of welfare amenities. The desirable and practicable amenities would be
different according to the duration of the individual work sites, which may widely vary from
one another. Some works may be completed in a matter of days, some may last for weeks
or months and a few large sites may last for several years.
Mobility of certain construction work-places may also affect the provision of welfare facil-
ity. Some work-places such as house construction sites are stationary, while others such as
those for the laying of pipelines, and construction of road ways, canals, railways, and water
mains, move as the work progresses, so that the site conditions are even more temporary
(Anand, 1986). It is clear, particularly in cases in which the distance travelled on any one
Source: Government of India, Annual Report, 1995-‘96.
(c) Subsidised 1.Survivors’ benefit
Insurance 2. Invalidity benefit
(d) Other Forms of 1.Old-age benefit
Social Assistance 2.Maternity benefit
3.Surviovrs’ benefit
4. Assistance for:
employment
training
education etc.
Vulnerable groups
of workers such as
agricultural workers
and handloom
workers.
Administered by LIC
and GIC, financed by
contributions from
central and state
Governments
Persons outside the
job market and
below the poverty
line, destitutes,
orphans, deserted,
and divorced
women, widows,
disabled persons,
SCs., STs., OBCs,
etc.
Administered Depart-
mentally financial from
general revenues
job may be appreciable, that any structures associated with the provision of welfare facilities
would have themselves to be mobile so as not to become too far removed from the work
place.
Sometimes the nature of construction industry results in many sites being not only far away
from workers’ homes, but also from the normal social and health amenities associated with
community line (Subrahmania, et al, 1982). In such cases, in addition to temporary hous-
ing, a whole range of social amenities are to be arranged, which might require careful
planning and expenditure. It means that the presence or absence of social amenities in the
immediate neighbourhood would have considerable bearing on welfare requirements at the
site itself.
The welfare facilities provided on construction sites would in many cases depend on the
number of workers engaged. In many countries the rules themselves specify the require-
ment of certain standard welfare amenities at the construction site. When a number of
different firms employ labour to carry out works on the same site, it may be possible to pool
resources in the provision of welfare amenities (Rao and K.P.Deo, 1979). Under joint man-
agement, collaboration among contractors may greatly facilitate provision of adequate wel-
fare amenities.
When workers do not normally live in the neighbourhood of the works it may be necessary
to provide for a whole series of welfare facilities, such as transport, periodic home leave,
canteens and social amenities depending on the distance of the homes of the workers from
the work place. On sites of long duration it may be desirable and practicable to provide
housing and other amenities for the workers’ families.
Work in cement production plants and plants associated with manufacture of building mate-
rials differs from construction work proper, due to exposure of workers to dust and other
pollutants, a menace which calls for special welfare amenities (Thakurtha, 1980). Adequate
installations, such as ‘Cyclones’ or other devices should be provided in order the exhaust
dust. Protective clothing, in particular coats and gloves, should also be supplied to them in
order to prevent spoliation of their apparel with cement dust, which might ‘cake’ should the
clothing become moist, as during a shower, and also to protect their skin from allergic
reactions.
The need for provision of most welfare facilities arises primarily from considerations of
safety and hygiene. Thus the provision of protective clothing and facilities for drying cloth
may be called for by the particular conditions of the work and the exposure to which
workers are subjected. The arrangements for disinfection, first aid and sanitary, dietary and
sleeping facilities in hostels for workers must satisfy the hygienic and safety requirements
of the situation.
The International Labour Organisation (1950) has put forward important guidelines for la-
bour welfare facilities in construction industry (Table 2.2). The facilities include shelter,
meals, protective clothing, accommodation, sanitary facilities, recreation, transportation,
and leave.
Source: ILO (1950), Welfare in Construction Industry
Sl.No. Area of Facility Amenities Required
1 Shelter (i) Type of structure required under different
conditions (ii) Supervision and maintenance
2. (i) Cooking facilities for workers for preparation of
meals.
(ii) Dining facilities
(iii) Kitchen arrangements
Meals and Canteens (iv) Mobile canteens
(v) Catering control
(vi) Sharing of catering costs by employers and
workers
3. (i) Accommodation for drying and storage
(ii) Heating arrangements
Clothing (iii) Provision for protective clothing
(iv) Renewal
(vi) Laundry arrangements
4. (i) Type of structure required for sleeping
Accommodation (ii) Heating, lighting and ventilation arrangements
(iii) Provision of beds and bedding
5. Washing and (i) Sources, purification and distribution of water
sanitary facilities supply
(ii) Water-heating arrangements
(iii) Structural requirements
(iv) Shower baths
(v) Latrines and water closets
(vi) Sewage disposal
(vii) Disinfection arrangements
6. Recreation and Cultural (i) Organisation of games, lectures,
Activities cinema shows competitions etc.
(ii) Organisation of camp libraries
7. General Environment (i) Layout, appearance and maintenance of camp
of site camps (ii) Pathways, fencing, grass plots etc
8. Transportation facilities (i) Standard of transportation
(ii) Payment to workers in respect of travelling time
9. Indemnities and home (i) Purpose and amount of indemnity
leave for workers on (ii) Frequency
distant sites (iii) Payment for travelling time
(iv) Provision for visits by families
10. Organisation and control At all levels
Table 2.2 Labour Welfare Facilities in the Construction Industry
3. Welfare Fund Model of Social Security Measures
Welfare Funds represent one of the models developed in India for providing social security
protection to workers in the unorganised sector. Funds are raised by levying a cess on the
production, sale or export of specified goods, or through contributions from various sources
including employers, employees, as well as the government; the funds are used for meeting
expenditure for the welfare of workers.
The present section reviews the growth and functioning of Welfare Funds in the country.
The major limitations of the Welfare Fund model of social security are reviewed. The need
for unification of the different Welfare Funds for the purpose of transparency and adapta-
tion on practical grounds is also discussed.
Historical growth
The need for organised welfare activities for industrial labour was forcefully brought out by
the Textile Labour Enquiry Committee, in its report to the Government of Bombay in 1937
(TLIC, 1938). As a result, a number of labour welfare activities came to be established
particularly during the Second World War period. In 1944, the Government of India prom-
ulgated through an ordinance the Coal Mines Labour Welfare Fund. A Scheme to set up
Labour Welfare Trust Funds formulated by the government was discussed at the eighth
meeting of the Standing Labour Committee (SLC) held in March 1946. The Scheme was
also considered at the seventh and the ninth sessions of the Labour Ministers’ Conference,
and again at the twelfth session of SLC. A draft bill was prepared in the light of these
discussions and submitted to the Indian Labour Conference (ILC) for consideration at its
eleventh session. In 1954, the Government of India wrote directly to several employers’
and workers’ organisations impressing upon them the need to institute Welfare Funds. Mean-
while, the States also instituted Funds for industrial welfare.
Labour Welfare Funds may be categorised into industry-wise funds, State-level funds, and
enterprise-level funds (Giri V.V, 1962). Industry-wise funds exist in coal, mica, iron ore,
gold-mining, and sugar industries, plantations, and toddy tapping. State-level funds are framed
under the jurisdiction of State-level boundaries. Enterprise-level funds exist in most under-
takings of the Central Government, such as Post and Telegraphs, Ordnance Factories, and
Railways.
Kerala has set up more than 20 Welfare Funds for the benefit of workers. The include funds
for abkari workers, agricultural workers, autorikshaw workers, cashew workers, coir work-
ers, construction workers, and transport workers. A statutory fund was created for financ-
ing welfare measures for plantation workers in Assam. Similar funds have been set up also
in Gujarat, Maharashtra, Karnataka, and Punjab.
The Welfare Funds have been set up by special Acts of Parliament. For example, Beedi
workers are covered by the Beedi Workers Welfare Fund Act of 1976, Mine workers by the
Iron Ore, Manganese Ore And Chrome Mines Labour Welfare Fund Act, 1976; and building
workers by the Building and Other Construction Workers (Regulation of Employment and
Conditions of Service) Act of 1996. In addition, separate laws have been enacted for collect-
ing cess. The Welfare funds set up by the Central Government are financed by levying a
cess on specified goods (Table 3.1). Wide variations are seen in the rate structure of the
cess. The duty on mica is on an ad valorem basis, whereas the duties on other commodities
are at specific rates, ranging from Rs 0.50 to Rs 4 per metric tonne.
Table 3.1 Financing of the Central Welfare Funds
Source: Ministry of Labour, Annual Report, 1995-‘96
Benefits provided by Welfare Funds
As mentioned earlier, Welfare Funds are broadly grouped into tax-based and contributory.
The funds set up by the Central government are tax-based, while those set up by the Gov-
ernment of Kerala are mostly contributory. A contributory scheme is akin to social insur-
ance. In India, there is only one social insurance scheme, namely the Employees Social
Insurance Scheme, the experience of which has not been encouraging. Nor has been the
experience of Kerala with contributory schemes with limited coverage, satisfactory. In-
creasing difficulty is experienced in collecting contributions. In Indian conditions, from the
practical point of view, tax-based schemes would appear to work better.
The end-use of the Welfare Funds is prescribed in the laws or schemes concerned. The
majority of Welfare Funds are used, inter alia, for improvement of public health and sanita-
tion; prevention of disease; and provision and improvement of medical care, water supplies
Sl.No. Name of the Act Cess Levied on Amount of cess
1. Mica mines Labour Welfare Value of exports 4.5 percent
Fund Act, 1946 of mica
2. Lime Stone and Dolomite mines Production of 50 paise/ metric
Labour Welfare Fund Act,1773 limestone, dolomite tonne
3. Iron ore, Manganese ore and Production of Iron ore Rs.1/MT
Chrome ore mines labour Welfare Manganese ore Rs. 2/ MT
Cess Act,1976 Chrome ore Rs. 4/MT
4. Beedi Workers Welfare cess Manufacture of 50 paise/
Act,1976 Beedis 1000 Beedis
5. The Cine Workers Welfare Production of a.Hindi films
Cess Act, 1981 feature films Rs.10,000/Film
b.South Indian
Rs 5000/ Film
c.Marathi& Bangali
Rs 3000/ Film
d.Other Films
Rs2000/ Film
6. The Building and other Cost of Construction 2 Percent
Construction Workers
Welfare Cess Act
and washing, and educational facilities; improvement of standards of living, including hous-
ing and nutrition; amelioration of social conditions; provision of recreational facilities; and
family welfare including family planning, and other services (Ministry of Agriculture and
Co-operation, 1995-‘96). In actual practice, most of the expenditure from the Welfare Funds
has been on health, education, and housing.
The Central Welfare Funds have adopted the integrated model of health care and undertaken
to provide medical services directly. The assistance and facilities provided for medical care
include purchase of spectacles for persons with ophthalmic problems, reimbursement of
actual expenditure for heart disorders, kidney transplants and cancer, reservation of beds in
hospitals that treat tuberculosis and for domiciliary treatment for those with tuberculosis,
grant for treatment, diet, and transportation charges, subsistence allowance for those with
mental disorders or leprosy, and the supply of artificial limbs for orthopaedic problems
(Ministry of Rural Areas and Employment, 1996). Table 3.2 shows the number of workers
covered under the welfare funds and the expenditure incurred on their health during the
year, 1993-’94.
Table 3.2 Expenditure of Central Welfare Funds on Health, 1993-‘94
Source: Ministry for Welfare, Annual Report, 1995-‘96
Owing to increasing specialisation of health care and rapid spread of private and public
hospitals, the model of actual service provision has proved to be neither popular nor viable in
the case of welfare funds (Desai, 1988). Welfare funds are adopting the model of reimburs-
ing expenditure, or providing the services indirectly, by entering into agreement with the
providers of the service, confining their own function to the financing of the services.
Shelter is one of the basic needs of the people. Mineworkers and Beedi workers’ schemes
include housing. But considering the present costs of construction it is doubtful if the scale
of assistance provided is adequate. Another thrust area has been the education of the work-
ers children as it was felt that this would bring a qualitative improvement in their lives on a
lasting basis. Among other things, scholarships, school uniforms, textbooks, and stationary
have been provided.
The benefits offered to members of Welfare funds have been extended by entering into
Group Insurance Schemes, the funds themselves paying the premium for their members.
Over one million beedi workers are covered by the LIC’s Group Insurance Scheme. Fifty
percent of the premium is paid by the Welfare Fund, the balance being subsidised by the
LIC. The Building and Other Construction Workers Act also envisages protection of work-
ers under Group Insurance Schemes and paying the premium from the welfare funds. If
Sl. Welfare Funds No. of Workers Expenditure Per capita
No. Benefited on Health
(Rs In Lakhs) (Rs. In Lakhs) (Rs. In Lakhs)
1. Iron ore, etc 0.78 62.92 79.65
2. Lime stone 0.54 51.49 96.15
3. Beedi 27.34 681.54 24.92
similar arrangements are made for other groups as well, the cost of providing survivor
benefit may work out to be less than self insurance (Krishnan T.N, 1995). Welfare funds of
Kerala have already entered into agreement with the Life Insurance Corporation under rel-
evant group insurance schemes for which they function as nodal agencies, collecting and
paying the premium on behalf of their members and helping in the settlement of claims.
Regarding old age pension, which welfare funds need to include in the benefits they provide,
an important issue is whether only a basic minimum pension should be given leaving it to the
individuals to make their own arrangement for supplementing it, as under the Kerala schemes,
or they should provide income-related pensions as under the Employees Pension Scheme.
Limitations of Welfare Funds
Other than medical care, the Welfare Funds set up by the Central government have no
provisions for meeting the expenditure on any of the well-recognised branches of social
security such as sickness benefit, occupational injury benefit, maternity benefit, invalidity
benefit, old age benefit, survivor benefit or unemployment benefit. In other words, these
Welfare Funds cannot be considered to be providing social security, but they have the scope
and the potential to become instruments of social security if suitable amendments are made
to the laws (Subrahmanya, RKA, 1995). Such amendments were made to the Building and
Construction Workers Welfare Fund, which provides the benefits of immediate assistance in
case of accident, payment of pension, loans and advances for construction of houses,
payment of premiums for group insurance schemes, financial assistance for the education
of children, payment of medical expenses for the treatment of major ailments, payment of
maternity benefit, and provision and improvement of other welfare measures and facilities.
The Kerala Welfare Fund Schemes provide a wide range of benefits, including many secu-
rity benefits included in the ILO convention concerning minimum standards of social secu-
rity. The Kerala Fishermen Welfare Fund Act provides the benefits of distress relief in the
event of destruction of huts due to natural calamities, payment for injury in any accident
sustained while fishing, a lumpsum assistance to dependants in the event of death, old-age
pension, assistance for funeral expenses, interest-free loans for the marriage of daughters,
educational assistance, and medical facilities. However, in actual practice the Welfare Funds
in Kerala are not able to provide all the benefits because of resource constraints, and it has
been reported in the case of Fisherman Welfare Fund that ‘there are twelve schemes but
only pension is being met by the government’ (State Planning Board, 1996). That is, the
Central and the Kerala models represent two extremes, one the minimalist approach, the
other of the maximalist approach. Neither can be considered ideal for the future develop-
ment of Welfare Funds in India as far as benefits are concerned. What actually needed is to
prepare a standardised list of benefits which may be provided from the Welfare Funds and to
prioritise them, such as invalidity, health care, old age and survivor benefits, maternity and
child care, housing, and educational assistance.
The Central Welfare Funds are administrated by the Ministry of Labour through Welfare
Commissioners appointed by the Government, with the help of advisory committees, which
have no financial or administrative powers. They tend to be bureaucratic and lacking in
initiative. Moreover, an unnecessary multiplicity of funds has led to administrative problems
and proved uneconomical. There is no doubt that if the Welfare Funds can be integrated
there would be a great saving on overheads.
The problem of multiplicity is also seen in the working of the Welfare Funds constituted by
the Government of Kerala, which are administrated by autonomous boards. There are as
many Boards as there are funds. Multiplicity of Boards has resulted in heavy overhead
expenditure reducing the amount available for benefit expenditure.
Another major problem of central Welfare funds is the identification of beneficiaries. These
welfare funds do not have a system of registration; instead they have introduced the system
of identity cards. The identity cards are required to be issued by the employers, who have
not been responsive to the needs of workers. On the other hand, in Kerala the system of
registration exists but the schemes being optional the number of workers who have regis-
tered varies according to the scheme, in some case the coverage being very low.
One of the major problems of welfare funds is that they cover only selected categories of
workers and ignore many of the needy categories such as agricultural labour, forest work-
ers, and home-based workers (Getubig I P, et.al, 1992). Even within the mining sector there
are many groups such as stone, salt, etc, which have been left out. Though the Acts under
which the central Welfare Funds have been set up do not prescribe any ceiling, in practice
there exists a ceiling in the application of the benefits of the Welfare Funds.
In spite of the various problems associated with the Welfare Funds and their implementa-
tion, they provide one of the most important ways of reaching workers in the unorganised
sector. By establishing Boards for the industry as a whole and using the mechanism of cess
collection on the products of industry, they overcome the problem of identifying individual
employers, which often constitutes a major obstacle in the unorganised sector.
Unification of Labour Welfare Funds
The Government, employers, and trade unions generally agree that the Labour Welfare Funds
have gone a long way in ameliorating the conditions of labour outside their work premises
and have brought a measure of cheer in workers’ lives. At the same time, it has been
increasingly felt that various funds need to co-ordinate their activities more than what has
been done (Lokanthan, 1929). Better still, they could be amalgamated into a common admin-
istrative set-up for economy and efficiency of operations.
The existing pattern of operations of funds tends to create significant differentials in work-
ers’ social conditions. In mining, those employed in coal mines enjoy better civic conditions
and more social services than their counterparts working in mines not covered by any
welfare fund. Similarly, workers employed in different industries within the same State may
enjoy unequal benefits from labour welfare funds. Despite genuine effort to co-ordinate
activities, duplication has been found unavoidable. Too much of bureaucracy is expensive
and reduces the quantum of money available for developing welfare services for labour
(Singh, 1963). The Committee on Labour Welfare (1969) suggested the following func-
tions of the Labour Welfare Boards for the unification.
1. Community and social education centres including reading rooms and libraries;
2. Community necessities;
3. Games, sports, and other programs of physical fitness;
4. Excursions, tours, and holiday homes;
5. Entertainment and other forms of recreations;
6. Home industries and subsidiary occupations for women and unemployed workers;
7. Corporate activities of social nature;
8. Such other activities as would, in the opinion of the State Government, improve the
standards of living and promote health, family planning, and social conditions of labour.
The primary purpose of the labour welfare funds is the socio-economic upliftment of work-
ers, to secure for them better civic and social services and to bring a measure of cheer in
their lives. A unified system of administering and financing extra-mural labour welfare
schemes will also benefit workers employed in unorganised industrial sector or in such
industries remain uncovered for obvious reasons, and thus suffer more (Saxena, 1963).
Funds are a way out to extend welfare measures to a large number of workers.
Labour in the informal or unorganised sector contributes 85 percent of the working popula-
tion in Kerala (State Planning Board, 1996). Nearly three-fourths of them are wage workers
and the remaining comprises small cultivators, small-scale industrialists, contractors, shop-
keepers, etc. Cultivators, small-scale producers, and ancillary and dependent establishments
of the organised sector, as well as other sections of the working population including the
employees and workers of the organised sector, employ wage-workers of the unorganised
sector who, in effect, constitute a reserve army of under-employed and unemployed prole-
tariat at the beck and call of an oppressive and exploitative socio-economic order (Charyulu,
1975). The majority of them are settled in rural areas.
Labour relations in the unorganised sector are chaotic. For the vast majority of the workers,
formal employee-employer relationship does not exist; even in cases in which it exists, it is
of a casual nature. Infighting among workers for job opportunities is common. Anarchical
tendencies worsen relations between workers and small-time employers. Institutions to give
training and specialisation in different trades and vocations have not come into existence.
Skilled jobs in many sectors continue to be a male prerogative; unskilled and semi-skilled
jobs involving hard physical labour and environmental hazards often get reserved for women
workers.
The existing labour relations in the unorganised sector are hardly conducive to specialisation
and skill development, an essential prerequisite for productivity and technology improve-
ment (Jose, 1984). The numerous legislations for regulating labour relations in the sector so
far attempted are rendered infractuous because they all rely on the highly centraslised bu-
reaucracy for implementation. The fact that the state’s unorganised sector will continue to
play a vital role in social production for a long time to come, underscores the need for
immediate reforms in the sector.
Social security in the unorganised sector
Social security measures such as old-age pension, gratuity, provident fund, ESI, and other
insurance schemes are non-accessible to workers of the informal sector. Consequently
employment in the unorganised sector is looked down upon by the society. Most workers
in this sector themselves perceive it only as a transitory phase. This kind of situations
prevails throughout the country but it is quite conspicuous in Kerala because of the com-
paratively high incidence of casual wage labour and the high degree of labour mobility in the
State’s economy.
Working class movements in the unorganised sector have been demanding not only
minimum wages but also benefits such as old age pension, gratuity, provident fund, and
health and other insurance cover which are normally available only in the organised sector.
Legal measures for ensuring permanent employee-employer relationship and setting up of
formal training institutions replacing the hereditary and caste-based institutions for voca-
tional training are also some of the demands raised by workers’ movements (Muraleedharan,
1996).
4. Social Security Schemes and Labour Welfare Funds of Kerala
Toddy Tappers Welfare Fund, Provident Fund, and Old-Age Pension Schemes for Agricul-
tural Workers, Motor Workers Welfare Fund, and Head Load Workers Welfare Fund are
some of the schemes initiated or implemented for meeting the demands of the working class
movement (Duvvury and Sabu, 1997). Of all these legislations, the Head Load Workers Act
was unique. It has accepted the need for rationalising the employee-employer relationship
with the help of a statutory Labour Board and Tripartite Committees. But this statute was
addressed to a specific category of workers and was to be administrated mainly by the
bureaucracy with only very nominal role for grassroots-level organisations and participation
by the workers themselves.
Administering efficiently a large number of schemes and statutes addressed to different
categories of workers is found neither feasible nor practical because of the huge bureau-
cratic machinery needed for the purpose. It would have been desirable if the requirements of
different categories of workers for social security and of the terms of their employment
were met by a single scheme or statute which covers all sections of workers and all aspects
of labour relations in the unorganised sector.
Labour Welfare Funds of Kerala
The welfare fund model of social security for the unorganised sector workers in vogue in
Kerala is now more than three decades old. The pioneer in this field is the Toddy Tappers
Welfare Fund, which was constituted in 1969. Proper functioning of the welfare funds
requires active participation of both workers and the government (Lindel, 1996). In Kerala,
the State played and continues to play a leading role in the initiation and management of
Welfare Funds. Participation of the employers is found, to a great extent of, a pragmatic
proposition within the framework of their economic rationality for accumulation.
The establishment of Welfare Funds for the collective care arrangements was neither in the
agenda of the workers’ unions, nor of the political parties to which they are affiliated.
Labour relations in the State are characterised by stratification and segmentation embedded
in the traditional order. In a situation of high unemployment, the strategies followed by
labour unions in Kerala strengthened the segmentation characteristics by falling back on
caste and gender considerations (Kannan, K.P, 2001). These strategies were related to their
goal of maximising earnings of the ‘insiders’ by controlling entry into the labour market.
However, trade unions found it difficult to approximate to such a situation in the unorgan-
ised sector.
One of the major objectives of trade union activities in the State was to improve the condi-
tions of work, earnings, and the economic security of workers through improving labour
status and income. It means that the trade unions are intended to bring about a movement
away from vulnerability towards stability in employment and income of workers. In this
line the unions have succeeded to a remarkable extent in breaking down the conventional
differences between the organised and the unorganised (or formal and informal) sectors,
and establishing in their place another labour market phenomenon of insiders versus outsid-
ers (Kannan, K.P, 2001). The insiders comprised workers with primary union membership
with or without stable employment. In this process a number of labour institutions includ-
ing Minimum Wage Committees and Industrial Relations Committees were transplanted
into the realm of informal sector workers. It was the failure of the labour co-operatives in
terms of economic viability to take care of employment and social security requirements of
their workers that gave rise to the setting up of Welfare Funds in the state.
Trade unions faced difficult situations with regard to employment security of workers in
coir-weaving, cashew processing, and other traditional industries. They were forced there-
fore, to resort either the setting up of labour co-operatives or adoption of a closed-shop
strategy with regard to labour market entry. The major labour co-operatives constituted in
the state included those of toddy tappers, beedi workers, handloom weavers, and a few
groups of casual labourers in loading and unloading work. Unfortunately these co-opera-
tives did not have the managerial and even the organisational capabilities to sustain within the
prevailing competitive market framework (John Kurien, et al, 2001). The closed-shop strat-
egy lead to the exclusion of workers who were unable to get into the unions and thus to the
labour market. Thus, union membership has become the primary criterion for occupational
identity for purposes of eligibility in social security arrangements such as receiving state
pension and membership in welfare funds.
The establishment of Welfare Funds in Kerala was a consequence of the limitations of the
wage bargaining processes at the end of which the employers chose to abandon business; it
was in this background that the Toddy Tappers Welfare Fund was set up in 1969 with the
active participation of government. For over a decade, the question of extension of collec-
tive care to other sections of workers in the unorganised sector remained neglected. How-
ever, in 1977 the Kerala Labour Welfare Fund was setup for workers in small-scale facto-
ries, plantations, shops, and co-operative institutions. The eighties witnessed the formation
of nine Welfare Funds covering workers in such diverse occupations as loading and unload-
ing, motor transport, advocates’ clerks, artisans, fish workers, and handloom workers (Nata
Duvvury, et al, 1997). To this list should also be added workers in women-dominated activi-
ties such as cashew and coir-processing. The broad political acceptance of this form of
collective care arrangements under the supervision of the government in the State, led to the
setting up of seven more welfare funds in the nineties (Appendix Table 1).
The philosophy of this kind of collective care was the result of a spirit of mutualism which
took care of individual risks though collective contributions and provided some sort of
security at the end of a person’s working life (State Planning Board, 1997). Given the
political nature of workers’ mobilisation and the existence of a democratic State, the estab-
lishment of Welfare Funds was an institutional innovation which ensured participation of as
well as contribution by employers, and organisational support of the government. Social
insurance in the event of sickness, accidents and death, assistance for housing, education of
children and marriage of daughters, etc., are all part of the social assistance provided to
workers though the Funds.
Functioning of Welfare Funds
The administration of Welfare Funds is vested with the Government, and the Funds function
like other government departments. The Government nominates members to the Boards of
Directors and more or less equal representation is given to wokers’ unions, and Govern-
ment. Although the Boards of Directors are the ultimate body for deciding the policies and
functioning of the Funds, the concerned government department wields considerable pow-
ers. The establishment expenses are borne out of the receipts of the respective Funds; the
expenses include fees and allowances to Board members, salaries and other benefits to
administrative staff, other routine administrative expenses, and contribution to provident
funds of the staff. The majority of Welfare Funds in the State expend a large chunk of their
income for establishment charges (Kannan, KP, 2002). It means that the savings of the
informal sector workers are used to finance the employment of government service person-
nel.
The government contribution and the contributions of workers to the Welfare Funds are
seldom fixed on the basis of well-stated principles; out of the 19 Welfare Funds formed in
the State only 15 get government contribution. Employers’ contributions were also received
only irregularly. The coverage ratio of Welfare Funds in Kerala is also dismal due to poor
attractiveness of expected benefits.
The basic objective of all Welfare Funds is to provide a measure of social security and
insurance for workers who are vulnerable to risks and uncertainties and do not have any
other institutional protection arising from their employment status (Vijaya Sankar, P.S, 1986).
The major social security benefits are provident funds given to workers on superannuation,
monthly pension, and gratuity. Social insurance is in the form of an ex gratia payment in the
event of disability or death and a modest payment in the event of treatment for ill-health
(Appendix Table2). Welfare assistance consists of financial assistance for housing, educa-
tion of children, and marriage of daughters.
The Welfare Fund model of social security is complementary to the basic social security
provided by the state. The Welfare Funds which now cover workers in the informal sector,
both in agricultural and non-agricultural occupations, have sought to address the concerns
of social security, insurance, and welfare albeit only in the minimalist sense. Together with
the general and basic social security programmes such as food security, access to school
education, and primary health care, the State-assisted social security programmes in Kerala
have imparted a sense of dignity and self-esteem to the workers in the informal sector
(Harilal K. N, 1986). The evolution of such a broad-based social security arrangement in the
State has been the result of labour movements and the pro-poor state policies.
Certain fundamental weaknesses have been observed which act as hurdles to the smooth
functioning of the Welfare Funds in the State. Structural characteristics of the State economy
– a low-income agrarian sector, low per capita income, and low industrial productivity
persisting in the State act as constraints to the enhancement of the scope of social security
arrangements in general and Welfare Funds, in particular. These constraints can be tackled
only through a higher rate of investment and structural transformation of the economy.
However, these weaknesses cannot be held as an excuse for all the laxity in the functioning
of the Welfare Funds.
The prescribed criteria for contributions and benefits show wide variations among different
Funds; there is need for uniformity. It has been suggested that the State should contribute
large amounts only to those Funds in which the total contribution from the employers and
the workers is found insufficient to meet the stipulated benefits (Johri C.K and S.M Pandey,
1972). The majority of the workers in the informal sector remain outside the coverage of
Welfare Funds. As per the 1991 Census, Kerala’s work participation rate was 38 percent
which implied a workforce of about 120 lakh workers. Around 12 lakh were in the organ-
ised sector and the remaining 108 lakh in the informal sector. Leaving out farmers, the
workers in the informal sector came to 90 lakh, of which 26 lakh (29 percent) were covered
under the Welfare Funds, leaving out the rest (71 percent) without my social security pro-
tection (Kannan.K.P, 2002). The voluntary nature of membership and the non-attractive
nature of benefits are attributed to the low coverage.
Funds mobilised by the majority of the Welfare Funds are found insufficient to meet their
expenditure incurred on evaluating investments and making collections from and disburse-
ments to members. High costs of administration of the majority of the Welfare Boards raise
basic questions on the rationale behind running of these Funds. In reality there takes place
very little by way of welfare payments despite collection of contributions from the stakeholders.
A solution suggested to this problem is the setting up of a unified and common administra-
tive body to cater to all the Welfare Funds (Vijaya Sankar, 1986). It seems therefore essential
to think in terms of administrative arrangements which would ensure participation of work-
ers and employers and would be responsive to their specific needs and problems.
5. Kerala Building and Other Construction Workers Welfare Fund: Scope, func-
tions, and performance
The Kerala Building and other Construction Workers Welfare Fund (1990) was constituted
as per the Kerala Construction Workers Welfare Fund Act of 1989. The preamble to the Act
elucidates its objective thus “To provide for the constitution of a Fund to grant relief, to
promote the welfare of, and to pay pension to, the construction workers in the state.” The
Act also defines the construction worker as, “any person who is employed for wages to do
any work in connection with a construction work, and who gets his wages directly or
indirectly from an employer or from a contractor including supply of materials for con-
struction works.” The majority of workers in this group are masons, carpenters, painters,
concrete workers, road workers, and earth workers. Schedule–I of the KBCWWF Act
(1989) contains 26 categories of construction works (Table 5.1).
The Board consists of 15 directors, five each from the workers, employers, and the Gov-
ernment. The Government appoints one of the Directors of the Board as the Chairman. The
Government also appoints a Chief Executive Officer and other officers to assist the Board in
the discharge of its functions and duties
The major characteristics of the KBCWWF are:
1. Provision of a measure of social security and welfare assistance to workers.
2. Creation of a tripartite body consisting of the representatives of the workers, employers,
and the government with veto powers for the government on policy issues.
3. A bureaucratic organisational mode with Chief Executive appointed by the government
departments
4. Mandatory financial contribution from the workers and employers with the exception of
a few ‘voluntary’ funds.
5. Minimal financial contribution by the government except in cases in which the workers
are directly under the government activities (i.e., Government as employer) or the paying
capacity of the workers is deemed very low (Kannan. K. P, 2002).
Table 5.1 lists the categories of workers who are eligible to receive KBCWWF
benefits.
The major welfare schemes taken up by the KBCWWF include pensions, death benefits,
accident benefits, cash awards and scholarships to members’ children, medical expenses,
assistance for marriage and maternity benefit, and invalid pension. Members completing 60
years of age are eligible to pensions in the range of Rs 200-Rs 400, depending upon their
period of membership and contributions. Invalid pension at the rate of Rs 75 per month is
available to permanent disability due to diseases and accidents. Accident benefit with a maxi-
mum of Rs 50,000 is given for disability and injuries. Workers and children of members are
eligible to get marriage assistance at Rs 2000 to 3000. Maternity benefit is limited to two
child births (Table 5.2).
Table 5.1 Construction Workers who are entitled to get the KBCWWF Benefits
Source: KBCWWF Act, 1989
The style of functioning of the KBCWWF is just like that of a government department,
since the administration of the Fund vests with the government. The considerable innova-
tive skills evident in the designing and coverage of the Fund are not deployed in the admin-
istrative set-up (Kannan K. P, 2002). Even though the Boards of Directors are the ultimate
body for deciding the policies and functioning of the Fund, the government departments
wield considerable control.
Membership
Every construction worker in the age group 18-60 years who is not a member of any other
Welfare Fund and has been engaged in construction work for not less than 90 days during
the year preceding the date of registration is eligible to became member (Government of
Kerala, 1989).
Sl. No. Construction Workers
1. Brick masons
2. Rubble masons
3. Laterite masons
4. Laterite cutters
5. Brick moulders
6. Carpenters
7. Blacksmiths
8. Fitters
9. Plumbers
10. Painters
11. Sawyers other than sawmill workers
12. Workers engaged in laying iron rods for concreting
13. Casual (Maikadu)workers connected with construction works
14. Workers engaged in collecting sand and gravel
15. Mosaic workers
16. Tunnel workers
17. Rock breakers and quarry workers
18. Electricians
19. Concrete workers
20. Workers engaged in thatching and spreading tiles
21. Marble/Kadappa stone workers
22. Road workers
23. Earth workers connected with construction work
24. Workers engaged in processing lime
25. Welders engaged in construction work
26. Workers engaged in anti-sea erosion works.
Table 5.2 Welfare Schemes of KBCWWF
Source: KBSWWF
By the mid-1990s there were five lakh construction workers in the State (Department of
Economics and Statistics, 2001). Of this, only 3.5 lakh workers were registered under the
KBCWWF with a coverage ratio of two-thirds; the courage went up by 131 percent in
1999-2000. The total number of workers registered as of March 2000 was 8.12 lakh (Ta-
bles 5.3). The annual growth rate of members was high in 1997-‘98 (30.55 percent) over
1996-‘97 with the addition of 1.32 lakh new members (Table 5.4). An important yardstick
of the effectiveness of the Welfare Funds would be their coverage; in this respect KBCWWF
has achieved tremendous progress. The average coverage ratio of all Welfare Funds in the
State was under 50 percent. It needs to be pointed out that the enrolment of workers in a
Welfare Fund is a positive function of the attractiveness of the expected benefits (Ahmad
Type of Benefit Beneficiary Eligibility Benefit Amount
(Rs)
Pension Member Completion of 75-300
60 years
Death Benefit Dependent Death before 100,000
60 years
Maternity Benefit Woman Worker Limited to two 500
deliveries
Accident Benefit Member Injury/ Disability Up to a maximum
of 50,000
Cash Award Children of Marks in 1000
Members SSLC Exam 750
500
Merit Scholarship Children of Student Merit 300-1500
Members
Other Credits Members/ Treatment/ Interest free
Dependent Education/ loans
Marriage
Medical Expenses Members Fatal Diseases 1000
Immediate
Assistance for Dependent Death of a Member 1000
Funeral Expenses
Assistance for Children of
Marriage Members/ Members Marriage 2000-3000
Permanent
Invalid Pension Member disability due to 75/ Month
diseases / accidents
Refund of Member/ Attainment of 60 Amount of
Contribution Dependent Years / Retirement/ Subscription
Death with Interest.
Ehtisham, 1991). Given the nature of employment in the unorganised sector and its geo-
graphical spread, the coverage of workers under KBCWWF should be reckoned as impres-
sive.
Resources mobilisation
The major sources of funds for the KBCWWF consisted of contributions from members,
employers, and the Government, as well as the license fees levied from contractors. An
important aspect of the fund collection is the fixing of the contributions of the workers,
employers, and the Government. The KBCWWF Act (1989) fixed slabs of Rs 10, Rs 15,
and Rs 25 for the monthly contribution of members, one percent of construction cost for
employers (annul contribution made by the contractors came to Rs 100 to Rs 1000); and 10
percent of initial members’ contribution per annum for the Government.
Fund collection in 1996-‘97 was Rs 1463.27 lakh; the corresponding figure was Rs 2331.92
lakh in 1999-2000 (Table 5.5). Employers contributed 57 percent in 1996-‘97, but only 52
percent in 1999-2000; consequently, workers’ contribution went up from 42 to 48 percent,
over the corresponding period. There are different opinions among policy makers regarding
collections from the different types of contributors (Sinha, PK, 1980). Wherever the prod-
uct market allows the employer to shift the burden to the consumer, there has been less
resistance in paying contributions; but when the employers are the price takers, their unwill-
ingness becomes quite open.
Table 5.3 District-wise Distribution of Members Registered under KBCWWF, 2000
Source: Administrative Report of KBCWWF, Various Years
District Number of Members
1990-96 1996-97 1997-98 1998-99 1999-00 Total Percent
Thiruvana- 53,562 6,769 23,445 6,592 30,722 1,21,090 14.9
nthapuram
Kollam 14,690 8,959 10,737 5,478 8,356 48,220 5.9
Alappuzha 23,3315 4,145 4,650 3,212 4,928 40,250 5.0
Pathanamthitta 8,401 5,930 7,993 3,528 11,548 37,400 4.6
Kottayam 17,651 2,676 4,088 4,244 8,445 37,104 4.6
Idukki 6,979 2,037 3,467 2,846 9,244 24,573 3.0
Ernakulam 41,377 6,498 10,467 3,011 7,214 68,567 8.4
Thrissur 30,647 4,629 12,180 7,798 21,863 77,117 9.5
Palakkad 22,962 10,552 17,429 11,489 24,654 87,086 10.7
Malappuram 30,475 6,387 9,463 5,737 15,242 67,304 8.3
Kozhikode 35,270 6,821 11,773 5,852 15,894 75,610 9.3
Wayanad 5,786 1,010 986 1,078 1,783 10,643 1.3
Kannur 46,472 11,793 12,394 4,569 16,707 91,935 11.3
Kasargod 14,038 2,499 3,192 2,040 3,623 25,392 3.2
State 3,51,625 80,705 1,32,264 67,474 1,80,223 8,12,291 100
Benefit to the workers
1. Pension to a member who is unable to work due to permanent disablement or who has
completed the age of 60 years.
2. Gratuity to the members of the Fund.
3. Immediate assistance to members of the Fund, in case of accidents.
4. Financial assistance for the funeral expenses of the members and members of their
families.
5. Loans and advances to members for construction of houses for their residence on such
terms and conditions as may be fixed by the Board.
6. Expenses incurred in connection with premia for group insurance of the members as the
Board may deem fit.
7. Financial assistance for the education of children of the members as may be decided by
the Board.
8. Medical expenses of the members or their dependents as may be decided by the Board.
9. Family pension.
10.Maternity benefits.
11. Financial assistance to members to meet expenses of the marriage of their children.
12.Any other purpose specified in the scheme.
Table 5.4 Members and Beneficiaries of KBCWWF, 1996-‘97 to 1999-2000
Source: KBCWWF
In 1996-‘97, 0.2 lakh workers were given benefits, which went up to 0.32 lakh in 1999-2000
(Table 5.4). The proportion of beneficiaries was in the range of 3.9 to 4.9 percent during
1996-‘97 to 1999-2000. The amount of benefits increased from Rs 309.7 lakh in 1996-‘97 to
Rs 1049.6 lakh in 1999-2000 by 239 percent. The average per capita benefits increase was by
112 percent (from Rs 1548.5 to Rs 3280). The various benefits provided by the KBCWWF
are given in Table 5.6. The corresponding amounts are shown in Table 5.7.
Pension
Monthly pension, at the rate of Rs 200 to 400, constitutes the most important benefit, which
Details Year
1996-97 1997-98 1998-99 1999-2000
Total Members (In lakh) 4.32 5.65 6.32 8.12
New Members Registered
(In lakh) 0.81 1.32 0.67 1.80
Annual Growth rate of membership (%) 22.95 30.55 11.86 28.48
Benficiaries (In Lakh) 0.20 0.18 0.31 0.32
Beneficiaries as percentage of Members
Benefits Provided (Rs in Lakh) 309.7 478.1 665.7 1049.6
Average per capita benefit
received (Rs) 1548.5 2656.1 2147.4 3280.0
attracts the construction workers to join the Fund, as a measure of security during old age.
In 1996-‘97, 8457 members enjoyed the pension benefit; the number increased by 83 per-
cent to 15,484 in 1998-‘99. KBCWWF disbursed Rs 145.4 lakh on this count in 1996-‘97,
the amount went by 93 percent to Rs 280 lakh in 1998-‘99.
Ex-gratia payments
In 1996-‘97, 1557 members benefited from ex gratia payments; the number rose to 3458 in
1999-2000. But, ex gratia payments increased only marginally during the period from Rs 10
lakh to Rs 10.6 lakh.
Health cover
No formal insurance cover is provided to the workers; however, they are given financial
assistance in the event of accidents or fatal diseases. For example, in 1996-‘97, 361 work-
ers were given Rs 2 lakh as payment for fatal diseases; the corresponding figures were 563
and Rs 2.4 lakh respectively in 1998-‘99. But, per capita payment decreased from Rs 554
in 1996-‘97 to Rs 426 in 1998-‘99.
Table 5.5 Fund Collection of KBCWWF: 1996-‘97 to 1999-2000
Source: Administrative Report of KBCWWF, Various Years
Educational assistance
Given the importance of education in Kerala and the premium attached to it even by poor
households, it should not come as a surprise that educational assistance figures high among
the welfare benefits of KBCWWF. In 1996-‘97, the Fund assisted 933 students with an
average of Rs 214 each as scholarships and cash awards; the corresponding figures were
1826 students and Rs 690 in 1999-2000.
Housing assistance
There are several housing schemes for the poor in Kerala; this aspect of social security has
been quite seriously addressed as part of the State Government’s poverty alleviation pro
grammes (Mahendra Dev, 2001). The KBCWWF provides house-building loans; in 1999-
2000, 452 members were given loan at a cost of Rs 166.1 lakh, which was 225 percent
higher than in the previous year.
Source Fund Collection (Rs. Lakh)
1996-97 1997-98 1998-99 1999-2000
Members Contribution 620.55 1221.61 943.07 1124.64
Contribution of Employers 841.16 879.04 871.67 1207.28
License Fee from the Contractors 0.56 7.97 6.38 -
Contribution of Government 1.00 1.00 1.00 -
Total 1463.27 2109.62 1822.12 2331.92
Table 5.6 Beneficiaries of KBCWWF: 1996-‘97 to 1999-2000
Source: Administrative Report of KBCWWF, Various Years
Note: Others Include Money order Bank charges, Benefit Distributed by District Executive Officers, Free
Medical Treatment etc.; * includes items 1, 2, 9, and 10.
Table 5.7 Benefits Provided by KBCWWF: 1996-‘97 to 1999-2000
Source: Administrative Report of KBCWWF, Various Years
Note: Others Include Money order charges, Benefit Distributed by District Executive Officers, Free
Medical Treatment etc.; * Include items 1 and some segment of 2, 9, and 10.
Benefits No. of Beneficiaries
1996-97 1997-98 1998-99 1999-00
Pensions 8457 3073 15484 6103*
Death Benefits to Nominees 523 691 1031 -
Ex-gratia Payments 1557 987 2054 3458
Maternity Allowance 609 1196 976 1486
Funeral Assistance 466 647 1452 1162
Scholarship & Cash Awards 933 956 1492 1826
Marriage Assistance 2639 4463 4914 8249
Payment for Fatal Disease 361 245 563 770
Refund of contribution to
Members 4377 5121 1279 -
Interest on Workers Contribution NA 691 1279 -
House Building Loans - - 204 452
Implement Loans - - 24 127
Others - - 22 8483
Total 19922 18070 30774 32116
Benefits Amount (Rs in Lakh)
1996-97 1997-98 1998-99 1999-2000
Pensions 145.4 191.3 280.0 615.8*
Death Benefits to Nominees 61.9 69.5 106.9 -
Ex-gratia Payments 10.0 10.4 14.0 10.6
Maternity Allowance 5.5 9.3 9.8 14.8
Funeral Assistance 4.9 6.5 10.1 11.6
Scholarship & Cash Awards 2.0 9.7 11.6 12.6
Marriage Assistance 42.4 89.3 98.3 165.0
Payment for Fatal Disease 2.0 2.0 2.4 1.3
Refund of contribution to Members 32.7 30.5 55.7 -
Interest on Workers Contribution 2.9 4.1 15.7 -
House Building Loans - 28.8 51.1 166.1
Implement Loans - 2.7 1.2 6.4
Others - 23.0 8.9 45.4
Total 309.7 478.1 665.7 1049.6
Marriage assistance
Being an important event in a person’s life, lavish spending for wedding has become an
essential responsibility of households, the discharge of which involves huge expenditures.
In 1996-‘97, 2639 beneficiaries were given marriage assistance to the tune of Rs 42.4 lakh;
the amount of assistance went up by nearly four times to Rs 165 lakh in 1999-2000.
Maternity allowance
Maternity allowance at the rate of Rs 500 is given to a person for two deliveries. In 1996-
‘97 the KBCWWF disbursed a sum of Rs 5.5 lakh as maternity allowance for 609 women
members; the arrangement rose to Rs 14.8 lakh in 1999-2000, the number of members
benefited being 1486.
Death benefits
In 1996-‘97, 523 nominees of deceased members were given death benefit at a cost of Rs
61.9 lakh; the corresponding figure were 1031 nominees and Rs 106.9 lakh in 1999-2000.
Funeral assistance
A notable provisioning by the KBCWWF, which is neither insurance nor welfare, is the
financial assistance for meeting the funeral expenses of the worker. Although the worker
often worked without dignity, the need for conducting his funeral in dignity was underlined
by this form of assistance (Marcel Van der Linden, 1996). In 1996-‘97, Rs 4.9 lakh was
expended as funeral assistance; the amount increased by 137 percent in 1999-2000 (Rs 11.6
lakh).
Implement loans
The KBCWWF assists its members also with loans for purchase of implements. In 1999-
2000, 127 members were given implement loans worth of Rs 6.4lakh.
It is seen that pensioners accounted for 42 percent of the beneficiaries in 1996-‘97. Mar-
riage assistance rose from 13 to 26 percent during 1996-‘97 to 1999-2000. The corre-
sponding increases were from 8 to 11 percent in the case of ex gratia payments and from 5
to 6 percent for scholarships and cash awards to children. The annual growth rate of all
benefits taken together was 58 percent during 1997-‘98 to 1999-2000.
Critical assessment
The coverage of workers in the construction sector has been quite impressive in compari-
son with that in other Welfare Funds; still much more improvement is required, in particular,
in backward districts.
Several studies have proved that around 70 percent of the Welfare Funds in Kerala mobilise
resources that exceed their total expenditures (Government of Kerala, 1989). The income
of KBCWWF increased from Rs 6575.8 lakh in 1997-‘98 to Rs 10,156.2 lakh in 1999-2000
(Table 5.8). Contributions, which accounted for 22 percent of total receipts in 1996-‘97, fell
to 12 percent in 1998-‘99, with consequent rise in the proportion of deposits, both savings
and fixed. Details regarding fixed deposits of KBCWWF are given in the Table 5.10.
Total expenditure of the KBCWWF went up from Rs 409.5 lakh in 1996-‘97 (excluded fixed
and savings deposits) to Rs 1244.6 lakh in 1999-2000, with an annual average growth rate
of 48 percent (Table 5.9). Welfare payments in 1996-‘97 occupied 76 percent of total
expenditure (excluding deposits); the proportion marginally declined to 70 percent in 1997-
‘98, but rose to 79 percent in 1998-‘99 (Table 5.11). Beneficiary payment as percentage of
contribution increased from 21.4 percent in 1996-‘97 to 35.3 percent in 1988-‘99 but de-
creased to 12.5 percent in 1999-2000.
The low proportion of disbursements is a matter of concern, since it implies that hardly any
meaningful social security is provided to the members. The fact that the disbursements do
not reflect either the contributions or the accumulated funds could give rise to problems of
credibility in the long run (Kannan K.P, 2002). It also implies that the present generation of
workers may be benefiting at the cost of past generations. These tendencies are not desir-
able, since the proclaimed aim of the Fund is to cater to the welfare of the construction
workers. It may also lead to the credibility of the KBCCW falling in jeopardy as the mem-
bers might accuse that the resources are not being used for the welfare of the workers.
Source of Income Income (Rs in Lakh)
1996-97 1997-98 1998-99 1999-2000
Credit balance 0.09 0.07 0.15 0.06
DD in Transit 0.1 62.1 38.1 0.03
Savings & Fixed Deposits
(Including Banks, Treasury,
Post office, UTI, Kisan vikas
patra and Interest) 5089.7 6966.2 12248.9 2331.9
Contributions 1462.3 2109.6 1685.1 7759.9
Government Grant 1.0 1.0 - -
Benefit undelivered 19.9 0.5 22.1* -
Loans Returned - - 2.40 7.04
Miscellaneous 2.6 8.9 19.22 57.2
Total 6575.8 9148.4 14015.9 10156.2
Table 5.8 Income Statement of KBCWWF, 1996-‘97 to 1999-2000
Source: Administrative Report of KBCWWF, Various Years
* With the KBCWWF
Table 5.9 Details of Fixed Deposits of KBCWWF as on 31 March 2000
Source: Administrative Report of KBCWWF, Various Years.
Bank Amount
(Rs. In Lakh)
Indian Bank 649.2
Canara Bank 334.8
Federal Bank 211.8
South Indian Bank 279.8
Union Bank of India 829.1
Nedungadi Bank 617.4
Syndicate Bank 65.3
Indian Overseas Bank 18.1
United Bank of India 1.6
Lord Krishna Bank Ltd 715.8
Dhanalekshmi Bank Ltd. 468.4
Tamil Nadu Marcantaile Bank Ltd 493.5
Catholic Syrian Bank Ltd. 1000.0
Corporation Bank 300.0
Bank of Maharashtra 650.0
State Bank of Hyderabad 169.9
Dena Bank 192.7
Oriental Bank of Commerce 305.5
Thiruvananthapuram Dist. Co-Op Bank 170.0
Kollam Dist. Co-Op Bank 37.3
Kottayam Dist. Co-Op Bank 34.8
Idukki Dist. Co-Op Bank 20.1
Ernakulam Dist. Co-Op Bank 32.0
Palakkad Dist. Co-Op Bank 45.0
Malappuram Dist. Co-Op Bank 57.3
Kozhikode Dist. Co-Op Bank 59.0
Wayanad Dist. Co-Op Bank 7.0
Kannur Dist. Co-Op Bank 98.0
Kasargod Dist. Co-Op Bank 20.1
Indira Vikas Patra 100.0
Kissan Vikas Patra 702.0
Post Office Time Deposit 712.0
Treasury Savings Bank 10.5
Total 9408.0
Table 5.10 Expenditure Statements of KBCWW: 1996-‘97 to 1999-2000
Source: Administrative Report of KBCWWF, Various Years
Note: Savings and fixed deposits in 1996-‘97 was Rs 4807.3 lakh, in 1997-‘98 Rs 6353.9 lakh, in 1998-‘99
Rs 13250.8 lakh, and in 1999-2000 Rs 8911.6 lakh, which are included in the expenditure part.
Though it has been accepted in general that the administrative cost of the Welfare Funds
should not exceed 10 percent of the total income, the majority of the Funds are operating
above the stipulated limit (Government of Kerala, 1989). The administrative expenditure of
the KBCWWF increased by 304 percent from Rs 63.6 lakh in 1996-‘97 to Rs 193.67 lakh in
1999-2000. But remained at about 16 percent of the total expenditure (excluding deposits) in
all these years (Table 5.11).
Instead of expressing administrative cost as a percentage of total income, it is more mean-
Table 5.11 Relationship between Welfare Payment & Expenditure of KBCWWF:
1996-‘97 to 1999-2000
Source: KBCWWF; Note: Total Expenditure excludes fixed and savings deposits other than in item number - 4.
Item Expenditure (Rs in Lakh)
1996-97 1997-98 1998-99 1999-2000
Administration Expenditure 63.6 110.2 118.8 193.67
Capital Expenditure 6.0 6.3 17.3 4.3
Deposits (Telephone, Rent etc) 0.4 - - -
Payment of Welfare Benefits 312.3 478.2 542.3 874.9
Loans Granted - - 52.23 95.3
Miscellaneous (Bank charges,
MO Charges etc) 4.9 0.07 5.5 0.13
Suspense Accounts (Cash & Stamp) - - 0.2 0.13
In transit (Mail transfer / DD/
Telephonic/Cheque Transfer 2.4 62.1 6.7 76.2
Benefit Undistributed 19.9 23.2 22.1 -
Total 409.5 680.0 765.1 1244.6
Particulars Year
1996-97 1997-98 1998-99 1999-2000
Administrative expenditure as a
percentage of total expenditure 15.5 16.2 15.5 15.6
Beneficiary payments as
percentage total Expenditure 76 70 78 78
Administrative Expenditure as
a Percentage of Welfare payments 20.37 23.04 21.91 22.14
Savings& Fixed Deposits as a
percentage Total Expenditure 92.15 90.33 94.54 87.75
Beneficiary payment as a
percentage to contribution 21.36 22.67 35.28 12.50
ingful to express it as a percentage of the total welfare payments – a kind of transaction cost
of welfare distribution. If this cost exceeds the benefit transferred, it has undesirable impli-
cations (Kannan KP, 2002). But, administrative expenditure as a proportion of welfare pay-
ments of the KBCWWF has always remained lower than one-fourth. It went up from 20.4
percent in 1996-97 to 23 percent in 1997-98, and remained at 22.1 percent in 1999-2000.
Expenditure on the account ‘in transit,’ including mail transfer, DD, Telephones, and Cheque
transfer, increased from one percent of total expenditure in 1996-‘97 to six percent in 1999-
2000; this item needs to be contained for the sustainability of the Fund in the long run.
In brief, it may be stated that the major objective of welfare benefit namely of helping the
needy - is not yet achieved, even after significant gains in several other areas (Table 5.12).
Diversification of welfare schemes to cater to the need of the construction industry, is
essential. At the same time, the situation of benefits remaining undistributed, which came to
six percent of total benefits in 1996-’97 also needs correction as justification to the welfare
motto of the Fund.
Table 5.12 Growth Indices Relating to KBCWWF (Base 1996-‘97)
Source: KBCWWF
Particulars Growth Indices (1996-‘97 = 100)
1997-98 1998-99 1999-2000
Members 131 146 188
Beneficiaries 90 155 160
Benefits 154 215 339
Expenditure 135 269 195
Administrative Expenditure 173 187 305
Savings & Fixed Deposits 132 276 185
6. Kerala Building and Other Construction Workers Welfare Board – A brief
review of its finances
In this section a brief survey of the financial condition of the Board is attempted. As stated
earlier, the Board’s primary objectives are to provide a measure of social security and pro-
tection for construction and allied workers, by mobilising finance for the purpose from
workers and employers. For the construction workers the Board offers the following social
security benefits.
1. A monthly pension on attaining superannuation. (completion of 60 years of age);
2. Pension for the family (at reduced rate) on the death of the pensioner;
3. Lump sum death benefit for the family in the event of the worker meeting with an
accident or dying during working period;
4. Disability pension to the worker in case of his/her total disablement during the period of
service; and
5. Medical care and other benefits.
The main sources of finance are mandatory contributions from employers as well as contri-
bution from employees. There is also a provision for government grants to support the
scheme. The Fund services benefits using these sources as well as the earnings from assets
created by the Fund.
Methods of estimating the solvency of the fund
The solvency of the Fund is defined as the ability to meet all the benefit commitments
promised under the scheme as and when they fall due for payments without any default at all
times in the future. According to this definition, it is not enough if for a particular year the
accounts show a credit balance for the Fund because what will happen in the future is not
clear from such annual statements of accounts. This is very important because of the long-
term nature of the liability contracted by the Fund.
Take for instance a pensioner who has just retired. The committed monthly pension for a
retired worker at the time of our data collection ranged from Rs 200 to Rs 300. If we take
the lower side, that is Rs 200, the annual pension commitment comes to Rs 2400. The Board
has to pay Rs 2400 per year so long as the pensioner is alive. When the pensioner dies the
pension reverts to his/her spouse at a reduced rate and will continue so long as the spouse is
alive.
If we assume that the pensioner would live for a period of 20 years from the date of
retirement, and that upon his/her death the spouse would survive for another five years, the
committed pension benefit reaches out into the future for at least 25 years. The enormity of
the pension commitments becomes clear; it comes to around Rs 50, 000 per person!
Therefore, to determine the solvency, the financial implication of this long-term benefit
outgo would have to be reckoned. Similarly on the contribution side, an estimation of the
likely contribution receivable by the Fund in the future is also required. If we assume that a
person becomes a construction or allied worker at the age of 30, on the average and that he/
she may be expected to continue in the trade till superannuation, the annual contribution
representing this worker would continue for as long as 30 years.
For handling financial arrangements of such long-term nature both on the contribution side
and on the benefit side, specialised, actuarial techniques are required.
The method
The benefits promised by the Fund fall into four major categories: payable on accidental
death while continuing as worker, payable following disability to continue work, payable on
survival after superannuation and miscellaneous lump-sum payments to take care of illness
and other contingencies. Any valuation process to determine the solvency would have, there-
fore, to be based on a Mortality model, a Disability model, a Survival model, and a Sickness
model.
A mortality model is required to estimate the probability of death due to accident. Using this
model, as on the date of valuation, it is possible to estimate the number of workers on the
rolls who are likely to die annually due to accidents in the future. This estimate gives an idea
of the probable annual outgo in the shape of accident benefits in the future.
Some of the workers on the rolls would become disabled annually in the future and become
unable to carry on work. From statistics, the annual outgo of disability benefits in the future
could be calculated.
A survival model is required to estimate the annual outgo of pension payments in the future.
The model provides an index of the probability of survival of pensioners each year in the
future. It also helps determine the probability of death of a pensioner and therefore deter-
mine the pensionary outgo for his/her spouse.
From a sickness table, it should be possible to estimate the number of workers likely to fall
sick and the length of the average sickness episode each year in the future. The outgo as
sickness benefits for the workers during each year in the future may be calculated from this
table.
Similarly the contribution, which would flow into the Fund from the work force on the rolls,
during each year in the future has also to be estimated using a survival model for the work-
ers. Clearly, contributions would come only if a worker remains on the rolls and works. If
he/her dies or leaves the trade, his/her contributions would cease. Therefore the estimation
of contribution in the future depends on the survival as workers of the existing work force.
This number may be estimated appropriately employing a suitable survival model for workers.
Decision criterion for solvency
The decision criterion for solvency is based on traditional actuarial practice. A traditional
actuary determines the question of solvency by comparing the monetary value of the stream
of benefits flowing out of the Fund with the value of the stream of contribution flowing into
the Fund, in respect of the workforce as on the date of valuation. If the value of the benefits
exceeds the value of the contributions including receipts from available assets, the Fund is
not in a position to meet the committed liability, has therefore to be regarded as not solvent.
On the contrary, if the value of the contribution exceeds the value of the benefits, the Fund
is in a position to meet the committed liabilities as and when they unwind in the future. Thus
the shortfall of the value of the contribution over the value of the benefits – Valuation Deficit
– indicates a measure of the lack of financial strength of the Fund. Similarly, the excess of
the value of the contribution over the value of the benefits – Valuation Surplus – is a measure
of the financial strength of the Fund to meet the committed liabilities.
In this study we employ an abridged version of this traditional actuarial technique to deter-
mine the solvency or otherwise of the KBCWWF.
Data base for valuation
Data with regard to contribution flow were available at the headquarters from the statements
of accounts and reports published by the Fund annually. Information on administrative ex-
penses for the Fund as a whole was also available on a yearly basis. Though information on
benefits other than pensions paid to members and on the beneficiaries was not available, data
on the aggregate pay-outs on these benefits could be gathered from the annual statements of
accounts.
A cursory examination of the costs of the various benefits promised by the Fund was made
in consultation with a professional actuary. The actuary found, after going through the
statements of accounts and available other information, that the major item of cost for the
Fund was its commitment of monthly pension to the members and pension to families
following the death of members. It was therefore decided to estimate the aggregate cost of
the pension benefit as on 31-3-2002. For this purpose details on pensioners existing as on
31-3-2002 were collected. Since the pension payments are sanctioned and regulated by the
headquarters of the Fund, registers were available district-wise information on the existing
pensioners such as name, date of birth, date of enrolment, date of retirement, date of com-
mencement of pension, and monthly pension sanctioned.
It was not possible to collect information on pensioners for all the 14 districts because of
time and resource constraints. Our personnel had to work without obstructing the routine
work in the offices. Therefore it was decided to settle for a sample of six districts selected
at random. The districts selected were Kollam, Idukki, Kozhikode, Wayanad, Kannur, and
Kasargod.
The age-wise distribution of pensioners in the selected districts as on 1 April 2000 is shown
in Table 6.1.
Table 6.1 Age-Specific Distribution of Pensioners as on 1-4-2002 in Selected Six Dis-
tricts
Source: Pensioners Register Maintained at KBCWWF
Calculation of value of pension benefits as on 01-04-2002
It is seen that there were 7203 pensioners in the age group of 60 to 72, in these districts. In
Table 6.2 the value of pension commitment as on 1 April 2002 in respect of these 7203
pensioners is shown. The method of calculation of the pension value is as follows. Using
the LIC 1996-‘98 mortality table, the probability of survival of a pensioner is estimated.
Thus the amount of pension payable in every future year since 1 April 2002 is calculated
and the probability of making that payment is estimated. For instance, probability of a pen-
sioner aged 60 as on 1 April 2002 to survive and receive pension payment during 2002-‘03
is 98.91 percent. The total pension payment at the rate of Rs 200 per month per annum is Rs
2400.
The present value of this Rs 2400 payable in one-year is worked out by discounting it by
applying the rate of interest of 8 percent. The value of Rs 2400 payable in one-year is hence
equal to Rs 2400 (1.08). This present value is multiplied by the probability factor because
the payment will be made only if the pensioner survives. Therefore the survival adjusted
present value of the pension payment of Rs 2400 per annum is equal to 2400/1.08 x .9891 =
2198. In this way the present value of all possible future payments is calculated and added
up to determine the value of the pension commitment for a person aged 60 on 1 April 2002.
If there are 2000 pensioners aged 60 then the total value will be 2000 times the value for a
single pensioner.
Age Kannur Wayanad Kasargod Idukki Kozhikode Kollam Total
58 0 0 0 0 0 0 0
59 0 0 0 0 0 0 0
60 3 18 0 0 0 6 27
61 0 1 0 6 0 477 484
62 0 40 88 165 9 556 858
63 0 31 189 174 89 242 725
64 98 33 109 102 228 121 691
65 420 21 93 51 186 171 942
66 698 43 144 49 259 122 1315
67 594 30 82 27 299 76 1108
68 429 4 64 16 193 33 739
69 152 1 20 2 75 4 254
70 43 1 2 3 6 2 57
71 0 0 1 0 1 0 2
72 0 0 0 1 0 0 1
73 0 0 0 0 0 0 0
Total 2437 223 792 596 1345 1810 7203
Table 6.2 Age-specific distribution of pensioners in the Scheme as on 1-4-2002
Note: Monthly pension = Rs200, Discount Rate = 0. 08,
Sources: Reports of KBCWWF, Annual Account of KBCWWF, Pensioners Register Maintained at KBCWW,
LIC 96-98 Mortality Table (Appendix II)
In Table 6.2, under column 3, the value of pension payment of Re 1 per annum is shown for
each age. Under column 4 the product of 2400 and column 2 and column 3 for each age is
recorded. This gives the value of the pension commitment for each age. Under column 5, 10
percent of column 4 is taken, as roughly the value required for servicing the family pensions
on the death of the pensioner. This is not at all an over estimate. In Column 6 the aggregate
value of the pension commitment (column 4 + column 5) is shown. Thus from Table 6.2 we
get the estimated value of the pension commitment in respect of 7203 pensioners in the six
selected districts.
Age Number of Annuity Present value Present value Total value
pensioners Factor of Member of Family of pension
pension pension commitment
50 0 11.45211 0 0 0
51 0 11.33638 0 0 0
52 0 11.21622 0 0 0
53 0 11.09326 0 0 0
54 0 10.96716 0 0 0
55 0 10.83747 0 0 0
56 0 10.70369 0 0 0
57 0 10.56523 0 0 0
58 0 10.42122 0 0 0
59 0 10.27144 0 0 0
60 27 10.11562 655479 65547.9 721027
61 484 9.953435 11561792 1156179.2 12717971
62 858 9.784392 20148414 2014841.4 22163255
63 725 9.599943 16704000 1670400 18374400
64 691 9.401889 15592415 1559241.5 17151657
65 942 9.192001 20781462 2078146.2 22859608
66 1315 8.971973 28315895 2831589.5 31147485
67 1108 8.743382 23250272 2325027.2 25575299
68 739 8.507705 15088902 1508890.2 16597792
69 254 8.266282 5039106 503910.6 5543017
70 57 8.020294 1097193 109719.3 1206912
71 2 7.770754 37300 3730 41030
72 1 7.518496 18044 1804.4 19848
73 0 7.264163 0 0 0
Total 7203 158290274 15829027 174119301
The estimate of the number of pensioners that may exist in the remaining eight districts and
the value of the pension commitment for them are given in Table 6.3.
Table 6.3 Statistics showing Registered members in the Welfare Scheme (continuing
as workers)
Name of District
As on 31-3-
99
As on 31-3-
2000
Pensioners as
on 1-4-2002
Rema
Trivandrum 90368 121090 3156 Estim
Kollam ** 39864 48220 1810 actua
Pathanamthitta 25852 37400 975 Estim
Alappuzha 35322 40250 1049 Estim
Kottayam 28659 37104 967 Estim
Idukki ** 15329 24573 596 actua
Ernakulam 61353 68567 1787 Estim
Thrissur 55254 77117 2010 Estim
Palakkad 62432 87086 2270 Estim
Malappuram 52062 67304 1754 Estim
Kozhikode ** 59716 75610 1345 actua
Wayanad ** 8860 10643 223 actua
Kannur ** 75228 91935 2437 actua
Kasargod ** 21769 25392 792 actua
Total for selected 6 districts 276373 7203
Total Estimated Registered in 14
Districts
812291
Note: ** indicates selected districts for the study
Sources: Reports of KBCWWF, Annual Account of KBCWWF, Pensioners Register Maintained at KBCWWF,
LIC 96-98 Mortality Table (See Appendix- II)
The method of estimation is as follows. Details of registered construction workers existing
as on 31-3-1999 and 31-3-2000 were collected from the headquarters of the Board. Dis-
trict-wise particulars for all the 14 districts are available and these have been recorded in
Table 6.3. Under column 4 of Table 6.3, the number of pensioners as on 1-4-2002 in respect
of the six districts for which data were collected has been recorded. In respect of other
Annuity factor for age 60 a
60
=
Discounting Factor = V
15
= 1/(1+.08)
15
=
Present value of monthly pension of Rs200 payable at age 60
for a person aged 45 as on 1-4-2002 =
200 x (
15
P
45
) x a
60
x v
15
=
Value of Pension commitment in respect of members in active work as o
2002= 812291 x 6939.504099 =
Value of Pension commitment in respect of existing pensioners (6 districts)
Value of Pension commitment in respect of remaining 8 districts
Total required Fund
Total Fund available as on 31-03-2000
Estimated Fund Size as on 31-3-2002
(It is assumed that Rs 25 Cr will be collected every year in respect of the ex
members for the next 15 years)
The present Value of these 15 annual contributions @ 25 Cr per annum =
Total Value of the assets as on 1-4-2002
Less Administrative Expenses @Rs3.5 Cr per annum
Value of Fund available as on 1-04-2002
districts for which pensioner data could not be collected, estimates were made using the
registered work force as on 31-3-1999 and 31-3-2000 as bases for projection. Roughly the
number of pensioners is about 26 percent of the work force.
The total estimated pensioners in the State as on 1-4-2002, including the 7203 enumerated
from the six districts earlier mentioned, come to 21,171. Information on the age distribution
of the 7203 pensioners is available, but we have no information on the age distribution of the
13,968 pensioners in the remaining eight districts (21,171 – 7203 = 13,968). Assuming that
their average age is 62, using the LIC mortality table and a rate of interest of 8 percent per
annum for discounting; the liability value in respect of these estimated 13,968 pensioners
was determined and recorded in Table 6.3. Thus the total value of the pension commitment
in respect of all surviving pensioners was determined to be Rs 51,17,70,057.
We had a workforce of 2,76,373 as on 31-3-2000. These persons constitute a potential
pension liability for the Fund. Hence we have to determine the value of pension commitment
for these 2,76,373 persons who will eventually retire; they would draw pension for them-
selves as long as they live and after their death their families would draw pension. In Table
6.3 we have estimated the amount involved for paying pension by taking the average age of
the work force as 45, using the LIC mortality table and calculating the amount at 8 percent
rate interest for discounting. The cost of pension liabilities in respect of the existing work
force amounts to Rs 563,68,96,724. This amount must be added to the liability value in
respect of existing pensioners. The aggregate pension value for pensioners and existing
work force together comes to Rs 614, 86,66,781.
There is need to find methods to meet the escalating cost. One source is the available assets
of the Board as on 1-4-2002. From the accounts of the Fund the value of the available
assets, as on 1-4-2002 was estimated at Rs 154,90,89,596. There is another source namely
the annual contribution by employers made as long as the workforce remained in employ-
ment. It is difficult to gather exact information about this source. But, by considering the
statements of accounts during the past 5 to 6 years, it was estimated that not more than Rs
25 cr per annum in respect of the existing work force will flow into the Fund during the next
15 years. The present value of Rs 25 cr per annum during the next 15 years was determined
by discounting them at a rate of interest of 8 percent per annum. This amounts to Rs
213,98,69,672. In this way the total value of the assets already available and also those in the
making during the next 15 years amounts to Rs 368,89,59,268 (Rs 154,90,89,596 + Rs
213,98,69,672 ).
After studying the accounts of the Fund for the past five years, it was estimated that for
servicing the benefit and for administering the Fund about Rs 3.5 cr per annum will be
required for the next 15 years. The present value of the administrative expenses was simi-
larly determined using 8 perecent per annum interest for discounting; it came to Rs
29,95,81,754.
The true available financial source will thus be Rs 338,93,77,514 (Rs 368,89,59,268 – Rs
29,95,81,754) against the value of pension liability of Rs 614,86,66,781. This means that
there exists an estimated deficit as on 1-4-2002 amounting to Rs 275,92,89,267 (614,86,66,781
– 338,93,77,514 = 275,92,89,267). If we spread this deficit for the next 15 years the annual
deficit would work out to Rs 32, 23,66,509.
Thus, a crying need is found to exist for reformulating the benefit package and also the
contribution factors so as to make the Fund totally self-financing. Unless corrective meas-
ures are taken the Fund will have to face serious financial consequences in the coming
years. Even with Rs 200 as monthly pension, we have found that the Fund would move to
a position of not being solvent in the not-too-distant future. The doubling of the benefit
without finding matching resources to finance additional commitments would only acceler-
ate financial strains and the process towards insolvency.
7. Construction Workers in Mazhuvannur Panchayat
Being in the unorganised sector, the socio-economic background of construction workers,
in particular of the elderly among them, is not at all better than that of the other vulnerable
groups. The discussion in this section is based on a survey of the socio-economic charac-
teristics of the construction workers of Mazhuvannur Panchayat in the Kunnathunadu taluk
of Ernakulam district.
Mazhuvannur panchayat was inhabited from very early periods by construction workers,
since this area has rich laterite stone mines. Historians have traced the origin of the name of
the panchayat Mazhu-vannur (Mazhu being the implement used for cutting stone), to ‘the
stone cutting workers who dominated the village’ (V.K.Valathu).
Location
Mazhuvannur panchayat is located in the Mazhuvannur and Airapuram villages of Vadavukodu
Block panchayat. Kunnathunadu is the Assembly constituency and Muvattupuzha the Parlia-
ment constituency. Vengola and Rayamangalam villages fall on the North of Mazhuvannur,
and Aykkaranadu panchayat on the South. Payipra and Kunnathunadu panchayats are lo-
cated in the East and the West of the Mazhuvannur, respectively. The total area of the
panchayat is 4911 sq. km.
Physiography
The diversified physiography of the panchayat characterises a typical Kerala midland re-
gion. The undulating topography alternating with hills, valleys, and forests shows the rich-
ness of natural resources in the panchayat. Like the diversity and richness of land re-
sources, Mazhuvannur is also well-endowed with water resources in the form of ponds,
streams, and canals. The annual rainfall is 330cm. Nevertheless, during the summer months
water shortage is a common phenomenon. The water scarcity is accentuated by the con-
struction of the Periyar Valley Canal, which has led to the disappearance of a number of
ponds.
Agriculture
The topographic diversity of the area has attracted a variety of farm activities in the panchayat.
The major crops cultivated include rice, coconut, rubber, and pineapple (Table 7.1).
Agricultural labourers dominate the working population in the panchayat.
Demographic features
According to the 1991 Census, the total population of the panchayat was 29,508 persons;
14,866 males and 14,642 females. The density of population in the panchayat (601 persons
per sq km) is lower than the State average (819 persons per sq.km). Of the 6062 households
in the panchayat nearly 48 percent are under abject poverty. Among the 2901 families
Table 7.1 Area under Important Crops
Source: Panchayat Development Report, 1996 of Mazhuvannur panchayat
below the poverty line (BPL), 201 belong to SC/ST (Development Report, 1996). Ward-
wise distribution of families below the poverty line is given in Table 7.2. Poverty-ridden
families are found in larger numbers in ward numbers five, six, eight, and eleven than in the
other wards. These four wards together account for more than 50 percent of the BPL
families in the panchayat.
Table 7.2 Ward-wise Distribution of Families below Poverty Line
Source: Panchayat Development Report, 1996 of Mazhuvannur panchayat
Of the total number of 8729 buildings in the panchayat, 69 percent are houses. Concrete
buildings accounted for 27 percent and other Pucca buildings for 66 percent of the total
number of buildings in the panchayat (Table 7.3).
Construction workers – Primary survey
The present study of construction workers in the Mazhuvannur panchayat is based on the
Crops Area (Ha)
Rice 1140
Coconut 940
Rubber 1100
Pineapple 240
Banana & other Plantains 97
Horticulture 60
Tapioca 47
Pepper 40
Others 141
Ward No. Families below Poverty Line SC / ST-BPL Families
1 198 13
2 259 12
3 227 1
4 194 32
5 314 26
6 429 30
7 71 10
8 321 -
9 279 24
10 208 53
11 401 -
Total 2901 201
Table 7.3 Details of Building in the Panchayat
Source: Mazhuvannur Panchayat Development Report, 1996
primary survey conducted in two wards of the Panchayat (Ward Nos. 6 and 7). The period
of survey was February 2002 to June 2002.
Construction workers were divided into three groups: members of the KBCWWF, non-
members, and pensioners. From each group 50 samples were selected. Quantitative and
qualitative methods were used for collecting data. Semi-structured pre-tested and interview-
administered questionnaire was the main tool used. Besides, focus group discussions (FCD)
and key informant interviews were carried out at the ward level to supplement the informa-
tion collected through the survey. Trained investigators collected the data through house-
to-house visits. The timings of data collection were varied to suit the respondents. Data
collection, focus group discussions, and open-ended interviews were conducted simultane-
ously.
Sample selection
By adopting the stratified sampling method, 150 samples were selected from the three groups.
The selection was completed in two steps. Initially details of workers were collected from
the voters’ list with the help of the panchayat members and people’s representatives. On
preliminary observation it was found that the majority of the working population in the ward
Nos. 6 and 7 were engaged in the construction sector. And, again as we have seen in Table
7.2, these two wards stood at the two extremes with regard to poverty. Poverty-ridden
families were the maximum in Ward 6 (429) and the minimum in Ward 7 (71). Therefore,
samples were selected from these two wards.
Identified samples were streamlined through focus group discussions and key informant
interviews. The criteria adopted for a construction worker to be included in the sample
selection were the following: he/she should be a person who is employed for wages doing
any work in connection with building construction including any work relating to supply of
building materials who gets his/her wages directly, or indirectly from an employer or from a
contractor, and who is specified as worker in any of the categories in Schedule-I of the
Construction Workers Welfare Fund Act. An opinion survey was also conducted to analyse
the workers’ perceptions of the Welfare Board. Opinions of non-members were also re-
corded.
Type No. Percent
Total buildings 8729 100.0
House buildings 6062 69.4
Concrete 2359 27.0
Pucca 5800 66.4
Kutcha 520 6.0
Multi-storeyed 50 0.6
Socio-economic profile of construction workers
Occupation
The majority of the employed construction workers belonged to the agricultural sector. The
construction sector engage 14 types of workers including brick workers, masons, carpen-
ters, black smiths, plumbers, and painters. Out of the 100 samples selected, including both
members and non-members of the KBCWWF, 39 percent are helpers in the construction
sector followed by masons and rock workers (13 percent each). In the structural classifi-
cation of construction workers much variation could not be seen between members and
non-members. Helpers constituted more than one-third of the construction workers. Among
the regular workers, masons and rock-mine workers were numerically the highest account-
ing for 13 percent each.
Table 7.4 Classification of Construction Workers by Occupation
Source: Field survey
Sex ratio
As we have seen earlier, the sex ratio in the panchayat was 985 females per thousand males
as against 1058 females per thousand males for the State as a whole (Table 7.5). In the
sample households 73 percent of construction workers are males. The work participation
rate among females is extremely low (15.4). Only 27 percent of the construction workers
are found to be females. Among the women workers 59 percent have taken membership in
the KBCWWF, which shows that women workers are highly conscious of their security.
Type of Work Members Non-Members Total
No. % No. % No. %
Brick Worker 3 6 2 4 5 5
Mason 8 16 5 10 13 13
Carpenter 5 10 2 4 7 7
Black Smith 2 4 4 8 6 6
Plumber 2 4 2 4 4 4
Painter 3 6 2 4 5 5
Helper in Construction Site 15 30 19 38 34 34
Fitter - - - - - -
Electrician 3 6 4 8 7 7
Road Worker - - - - - -
Welder - - - - - -
Seawall Worker - - - - - -
Rock Mine Worker 6 12 7 14 13 13
Marble Worker 3 6 3 6 6 6
Others - - - - - -
Total 50 100 50 100 100 100
Table 7.5 Classification of Construction Workers by Sex
Source: Filed survey
Age composition
Forty-one percent of the workers in the age group of 18-60 years belong to the age group of
35-45 years, and persons above 55 years constituted only seven percent of the total work
force (Fig. 7.1 and Table 7.6). The older workers always bother about their social security;
54 percent of workers above 45 years of age have taken membership in the KBCWWF,
whereas the corresponding figure was only 45 percent for workers below 35 years of age.
Table7.6 Age Composition of Construction Workers
Source: Filed survey
Marital, community, and educational status
Among the 100 sample workers 83 percent are married; widowed, divorced, and separated
constituted only four percent (Table 7.7). Scheduled Castes constituted 26 percent of which
54 percent are outside the social security umbrella of the KBCWWF (Table 7.8). Workers
belonging to other backward communities accounted for 50 percent of the construction
sector in the area and 54 percent of them are members of the KBCWWF. Membership rate
among forward community workers was only 46 percent.
Table 7.7 Martial Status of Construction Workers
Source: Field survey
Sex Members Non-Members
No. % No. %
Male 34 68 39 78
Female 16 32 11 22
Total 50 100 50 100
Age Group Member Non-Member
No. % No. %
18 – 35 10 20 12 24
35 – 45 20 40 21 42
45 – 55 17 34 13 26
> 55 03 06 04 08
Total 50 100 50 100
Type Members Non-Members
No. % No. %
Married 41 82 42 84
Unmarried 7 14 6 12
Widowed 1 2 0 0
Divorced / Separated 1 2 2 4
Total 50 100 50 100
Table 7.8 Construction Workers by Community
Source: Field survey
Even though the State claims to have achieved hundred percent literacy, in the study area 30
percent of the construction workers are found illiterate (Table 7.9). The average rural
literacy rate in the taluk is 82 percent (Government of Kerala, 2001). But, educational status
does not seem to have made any significant influence on the workers’ awareness of their
social security needs and membership rates. For instance, out of 15 illiterate construction
workers, 7 (47 percent) are members and 8 (53 percent) are non-members. Among work-
ers with primary level education, 30 out of 55 (55 percent) are members. In the higher
categories of the educated with secondary and higher secondary levels of education or
professional education the proportion of members is lower than of non-members.
Table 7.9 Educational Status of Construction Workers
Source: Field survey
Health status
Owing to several physical strains the chances of injury during certain types of construction
work are common, necessitating temporary stay off from work. In the study area 36 per-
cent of workers reported some sort of injury, disease, or weakness which hampers their
usual work. Male workers (38 percent) reported more cases of ill health than their female
counterparts (30 percent). Among the unhealthy workers 46 percent of males and 63 per-
cent of females are members of the Welfare Fund (Fig. 7.2 and Table 7.10). Thus, the
Social Group Members Non-Members
No. % No. %
Scheduled Caste 12 24 14 28
Scheduled Tribe 0 0 0 0
Forward Community 11 22 13 26
Other Backward
Community 27 54 23 46
Total 50 100 50 100
Educational Status Member Non-Members
No. % No. %
Illiterate 7 14 8 16
Lower Primary
Education 14 28 11 22
Upper Primary
Education 16 32 14 28
Secondary 5 10 6 12
Higher Secondary 4 8 6 12
Graduate/
Postgraduate 0 0 0 0
Professional 4 8 5 10
Total 50 100 50 100
benefit coverage of unhealthy construction workers under the Welfare Benefit Scheme of
the KBCWWF among the sample households is only 55 percent. Injury led to permanent
disability to two percent of the workers, and partial disability to another five percent.
Table 7.10 Health Status of Construction Workers
Source: Field survey
Political background
Workers in Kerala are in general politically active and most of them are either members of
trade unions or active members of political parties. Trade unions emerged as a powerful
labour institution in the Mazhuvannur panchayat a long time ago and historical factors played
an important role in this development. But, such factors could not make any impact on the
construction workers. Among the sample construction workers 65 percent are sleeping
members of political parties; among them only 40 percent are members of the KBCWWF
(Table 7.11). On the other hand, active members of political parties and trade unions consti-
tuted only 10 percent, and of which 60 percent were members of the Welfare Fund. Thus,
it could be seen that there is a positive correlation between active participation of workers in
trade union and political activities and membership in the Welfare Fund.
Factors affecting work
Being in the unorganised sector, construction work is determined to a great extent by a
number of factors including availability of raw materials and imlements, weather, and health
status of workers. Among the samples selected 48 percent of the workers got only 15 or
less number of days work per month (Table 7. 12). Avaliability of work is reflected in the
work participation rates, 51.5 for males and 15.38 for females in the district.
Health factors, household responsibilities and alternative employment opportunities some-
Health Status Members Non-Members Total
Male Female Male Female Male Female
No. % No. % No. % No. % No. % No. %
Healthy 21 42 11 22 24 48 8 16 45 70.3 19 29.7
Weak & Frail 8 16 3 6 10 20 2 4 18 78.3 5 21.7
Anaemic 0 0 1 2 1 2 0 0 1 50 1 50.0
Physical Disability 0 0 0 0 1 2 0 0 1 100 - -
Chronic Diseases 2 4 1 2 0 0 1 2 2 50 2 50.0
Disability due to 1 2 0 0 0 0 0 0 1 100 - -
Accident during
the work
i)Leading to
permanent
Disability
ii) Stay of for a
short period 2 4 0 3 6 0 0 5 100 - -
Total No. of Workers 34 68 16 32 39 78 11 22 73 73 27 27.0
times keep workers out of the construction work for short periods. In our analysis 59
percent of the construction workers lost their work temporarily due to health reasons and
household responsibilities (Table 7.13). The corresponding proportion for women workers
alone was 67 percent. Construction workers are found to be engaged in other agricultural
and non-agricultural activities on holidays and free days without affecting their construction
work, due to fairly high wage rates prevailing in this sector.
Table 7.11 Political Background of Construction Workers
Table 7.12 Work Availability for Members and Non-Members
Source: Field survey
Table 7.13 Reasons for Absence from Work
Source: Field survey
Background Members Non-Members
No. % No. %
Members of Trade Union 8 16 2 4
Active Members of
political parties 6 12 4 8
Moderate Members of
political parties 10 20 5 10
Sleeping members of
political parties 26 52 39 78
Total 50 100 50 100
Average Number of Members Non-Members
days per month
No. of days % No. of days %
0 to10 3 6 5 10
10 to 15 22 44 18 36
15 to 20 14 28 15 30
20 to 25 11 22 12 24
> 25 0 0 0 0
Total 50 100 50 100
Reasons Members Non-members
Male Female Male Female
No. % No. % No. % No. %
Health 16 32 8 16 10 20 4 8
Household
Responsibilities 9 18 3 6 6 12 3 6
Other employment 0 0 0 0 0 0 0 0
Others 0 0 0 0 0 0 0 0
Total 25 50 11 22 16 32 7 14
Daily wage rates of construction workers in Kerala are given in Table 7.14. The wage rates
existing in the construction sector are one of highest in the unorganised sector.
Table 7.14 Daily wage Rates of Construction Workers
Source: Census of India – 2001, Provisional Figures
Reaching the work sites and meeting consumption requirements during work involve ex-
penditure. On an average the daily personal expenditure a construction worker incurred for
performing his work and reaching the work site stood at Rs 40, of which 55 percent
constituted expenditure on food (Table 7.15). Travel expenditure constituted another 22
percent. Cigarettes and beedi smoking and pan consumption are quite common among the
construction workers. Consumption of liquor is also widespread among them (Table 7.16).
Around 70 percent of construction workers consume liquor and toddy, 33 percent being
regular consumers. The average monthly consumption expenditure for liquor and toddy
among the construction workers stood at Rs 840.50, which constituted 21 percent of the
monthly personal income of the male workers. Consumption expenditure for intoxicants
among non-members of the Welfare Fund was found 10 percent higher than that of mem-
bers, a fact which highlights the higher security awareness of members than of non-mem-
bers.
Table 7.15 Average Daily Expenses on Working Days
Source: Field survey
The major source of income of the workers is wages. The average monthly personal in-
come of the construction workers in the study area was Rs 3352, an amount hardly suffi-
cient to ward off poverty from their families. Gender-wise disparity could be seen in the
personal income distribution of the construction workers, as the female workers’ earnings
was 42 percent lower than that of their male counterparts (Table 7.17). Earnings from
Construction Worker Daily Wages (Rs.)
Rural Urban
Carpenter First class 172.52 172.84
Carpenter Second class 152.78 152.88
Mason First class 170.20 171.73
Mason second class 153.41 152.11
Unskilled male Labour 123.43 124.30
Unskilled female Labour 102.76 103.98
Background Average Daily Expenditure (Rs.)
Members Non-members
Travel 8.5 9.0
Food 21.6 22.7
Cigarettes, Beedi, Pan 9.0 8.9
Other 0 0
Total 39.1 40.6
activities other than construction work constituted 16 to 17 percent of the monthly income
of the workers. It is also seen that income of the non-members is nine percent higher than
that of the members.
Table 7.16 Workers’ Consumption of Intoxicants
Source: Field Survey
Table 7.17 Average Monthly Wage Income of Workers
Source: Field survey
Construction workers usually stick to their profession, even though construction activity
forms part of the unorganised sector. Among the sample workers 85 percent have experi-
ence of more than 10 years, and seven percent, of more than 40 years in the construction
sector (Fig. 7.3 and Table 7.18). This finding implies that the new generation seldom enters
this field. For example, only five percent of workers have service of less than five years and
none in this group were women.
Table 7.18 Experience in Construction Work by Year-groups
Source: Field survey
Item No. of workers who consumes Avg. Monthly
Consumption
Daily Occasionally Once in While Expenditure
(Rs.)
Mem. N.M Mem. N.M Mem. N.M Mem N.M
Liquor 7 10 14 13 - 7 521 580
Toddy 2 4 5 2 1 0 280 300
Ganja / Charas - - - - - - - -
Drugs - - - - - - - -
Other Intoxicants - - - - - - -
Work Average Monthly Personal Income (Rs.)
Members Non-Members
Male Female Male Female
Construction Work 3352 2293 3465 2409
Other Work 483 300 607 500
Total 3835 2593 4072 2909
Years of Experience No. of Workers
Members Non-Members
Male Female % Male Female %
0-5 3 0 6 2 0 4
5-10 4 2 12 4 0 8
10-20 6 3 18 10 4 28
20-30 9 5 28 13 4 34
30-40 10 4 28 8 2 20
> 40 2 2 8 2 1 6
Household details of the construction workers
Even though the sex ratio in the panchayat area is biased against women, it was not so
among the sample households, the ratio was found to be 1207 females per 1000 males.
Non-working members (aged below 15 years and above 55 years) comprised 16 percent of
the population (Table 7.19).
Table 7.19 Household Details of Construction Workers according to Members and
Non-Workers
Source: Field survey
Item Member Non-Member
No.s % No.s %
Total Population 201 - 225 -
Avg. Strength of the Family 4.2 - 4.5 -
Male Population 90 45 103 48
Female Population 111 55 122 52
Total 201 100 225 100
Age Composition of Workers
Children 33 16 43 19
< 18 8 4 11 5
18 - 55 132 66 135 60
> 55 28 14 36 16
Total 201 100 225 100
Marital status (>18)
Married 105 52 123 54
Unmarried 46 23 46 20
Total 151 75 169 76
Educational Status
Illiterate 60 36 59 33
Primary School 33 20 40 21
Secondary School 47 28 50 28
Graduate and above 8 5 6 3
Professional 3 1 4 2
Skilled Members 18 10 23 13
Total 169 100 182 100
Employment Status of the Population (18-55)
Agriculture 20 13 4 2
Non Agriculture 83 52 95 56
Govt. Jobs 6 4 5 3
Unemployed 23 14 19 11
Not in the Labour Force 28 17 48 28
Total 160 100 171 100
Around 69 percent of the adult household members are married, and illiterates constituted
36 percent of total household adult population. Unemployment rate is 19 percent, 78 per-
cent of working population being employed in the non-agriculture sector.
Benefits received from KBCWWF
The major benefits received from the Welfare Fund include marriage assistance, funeral
assistance, and scholarship for children of the members. Among the 50 sample members of
KBCWWF only 28 percent received any benefits. House building assistance in three slabs at
the rate of Rs 5000, Rs 10,000, and Rs 20,000 was received by five members. The different
types of benefits received and the number of beneficiaries are shown in Table 7.20.
Table 7.20 Benefits Received from the Welfare Board
Source: Field survey
Family income
As discussed earlier, the wage income of the construction workers is hardly sufficient to
sustain a decent life for a family of 4-5 members. The family income of one-fifth of the
workers was lower than Rs 3000 per month (Table 7.21). Only 15 percent had incomes
higher than Rs 6000. The average monthly family income of the members of the Welfare
Fund was found lower than that of the non-members; it must be the low income that forced
them to join the Welfare Fund for social security.
Table 7.21 Monthly Family Income of Sample Households
Source: Field survey
Item No.of Persons Amount
Per person (Rs.)
Marriage 5 2000
House Building 2 5000
1 10,000
2 20,000
Medical 2 Spectacles
Funeral 1 2000
Education 1 2000
Income Group Members Non-Members
No. of Families % No. of Families %
<1000 0 - 0 -
1000-2000 7 14 5 10
2000-3000 6 12 4 8
3000-4000 10 20 7 14
4000-5000 10 20 13 26
5000-6000 11 22 12 24
6000-7000 4 8 5 10
< 7000 2 4 4 8
Housing conditions
Housing includes not only the physical structure providing shelter but also the immediate
surroundings and the availability of related community services and facilities. The Environ-
mental Hygiene Committee (1949) of India had recommended the following standards for
rural housing (Government of India, 1949).
1. There should be at least two living rooms.
2. Ample veranda space may be provided.
3. The built up area should not exceed one-third of the total area.
4. There should be a separate kitchen with a paved sink or platform for washing utensils.
5. The house should be provided with a sanitary latrine,
6. The window area should be at least 10 percent of the floor area,
7. There should be a sanitary well or a tube well within a quarter of a mile from the house.
8. It is unsanitary to keep cattle and livestock in dwelling houses. Cattle sheds should be at
least 25 feet away from dwelling houses. A cattle shed should be open on all sides; and 8ft
x 4ft area is sufficient for each head of cattle.
9. There should be adequate arrangement for the disposal of wastewater, refuse, and gar-
bage.
Among the sample households these norms are not seen to be maintained. Being poor they
could not maintain high housing standards. Thirty-two percent of the houses of the sample
households are of the Kutcha type. Sanitary latrine facilities, as had been insisted by the
Environmental Hygiene Committee were not available in 23 percent of the houses; however,
three-fourths of the houses were electrified and had drinking water facilities including own
dug wells or community well and taps (Table 7.22). Firewood, kerosene, and LPG were the
fuels used for cooking purposes in these households.
Land area owned and agriculture practices
The size of the land holdings owned by workers is comparatively low and 17 percent had
less than 10 cents of land (Table 7.23). However, more than one-fourth of them owned
more than 50 cents.
By way of homestead farming, 42 percent of workers among the sample households
cultivated coconut, tapioca, rubber, etc. Nearly 40 percent of the workers cultivated
paddy. Around 70 percent of the construction workers in the study area owned livestock
assets including cattle and poultry (Table 7.24). One could not find any difference between
members and non-members in this regard.
Ownership of household durables
Being a consumer society, undergoing strong demonstration effect, huge investments are
found to have been made in consumer durables. Not much difference is observed in this
respect among various income groups. Among the sample households, 51 percent of work-
ers owned TV sets, 16 percent phones, and 11 percent owned motor vehicles (Table 7.25).
Radio, mixer, and bicycles are also quite common.
Table 7.22 Housing Conditions of Workers
Source: Field survey
Table 7.23 Land Area Owned by Workers
Source: Field survey
Condition Member Non-Member
No. % No. %
House Type
Kutcha 14 28 18 36
Old & Dilapidated 11 22 8 16
Semi-Pucca 19 38 16 62
Pucca 6 12 8 16
Residential Status
Owned 50 100 50 100
Rented 0 - 0 -
Rent Free 0 - 0 -
Electrified Houses 39 78 42 84
Latrine Facility
Water Sealed 36 72 40 80
Open Pit 1 2 0 -
No Latrine 13 26 10 20
Drinking Water
Owned Well 26 52 18 36
Community Well 5 10 6 12
Owned tap 2 4 4 8
Public tap 2 4 4 8
Other 15 30 18 36
Cooking Fuel
Fire wood 50 100 50 100
Charcoal 0 - 0 -
Kerosene 12 24 16 32
LPG 8 16 4 8
Others 0 - 0 -
Land Size No. of People
Members Non-Members
< 5 Cents 2 0
5 – 10 Cents 9 6
10 – 50 Cents 23 33
50 –100 Cents 15 11
> 100 Cents 1 0
Table 7.24 Livestock Owned by Workers
Source: Field survey
Liabilities
Conspicuous consumption with low levels of income creates problems for these house-
holds. Medical treatment, marriage ceremonies, housing loans, and education loans are their
major liabilities. Among the sample households 133 cases of liabilities were reported of
which 16 percent were of liabilities of more than Rs 20,000 each (Table 7.26). Marriage
expenditure created liability in 42 families, of which 8 families had an average liability of
more than Rs 50,000. In fact it was this item which constituted 80 percent of the reported
liabilities of the construction workers.
Table 7.25 Details of Household Durables Owned by Workers
Source: Field survey
Source-wise liability distribution of construction workers, as given in Table 7.27 shows that
friends and relatives, moneylenders, co-operative societies and banks are their major sources
of funds. Friends and relatives and co-operative societies dominated this sector in 66 per-
cent of cases.
Live Stock Members Non-Members
No. % No. %
Cattle 7 14 6 12
Goats 8 16 12 24
Buffalo 0 - 1 2
Pigs 0 - 0 -
Poultry 16 32 13 26
Duck 2 4 0 -
Others 2 4 3 6
Item Members Non-Members
No. % No. %
Television 28 56 23 46
VCR / VCP 2 4 2 4
Refrigerator 0 - 0 -
Radio 20 40 26 52
Phone 7 14 9 18
Sofa Set 4 8 7 14
Other Furniture 3 6 2 4
Mixer 11 22 13 26
Grinder 1 2 0 -
Cycle 19 38 22 44
Scooter / Bike 4 8 6 12
Other Motor Vehicle 1 2 0 -
Table 7.26 Liabilities of Workers
Source: Field survey
Savings
Savings in Post office, Chit funds /Kurys and Jewellery constituted the major forms of
savings (Table 7.28). Investment in Jewellery and savings in Post office constituted 76
percent of total savings. But insurance coverage was found only in eight percent of
cases.
Table 7.27 Source-wise Liabilities of Workers
Source: Field survey
Table 7.28 Structure of Savings of Workers
Source: Field survey
Household expenditure
Consumption expenditure is divided broadly into food and non-food expenditures. Non-
Amount (Rs.) House loan Treatment Education Marriage
Mem N.M Mem N.M Mem. N.M Mem. N.M
< 1000 0 0 0 0 0 0 0 0
1000 – 5000 7 3 9 8 3 2 5 6
5000 – 10,000 5 6 6 8 1 1 6 6
10,000 –20,000 3 5 6 5 2 1 4 4
20,000 –50,000 2 1 2 3 0 0 2 1
> 50,000 2 0 0 0 0 0 3 5
Total 19 15 23 24 6 4 20 22
Source Members Non-Members
No. % No. %
Friends & Relatives 11 22 12 24
Money Lenders 4 8 8 16
Co-op Societies 13 26 10 20
Banks 3 6 4 8
Others 4 8 1 2
Institutions Members Non-Members
No. % No. %
Provident Fund 0 - 0 -
Insurance 4 8 6 12
Banks 0 - 3 6
Post Office 24 48 21 42
Chit funds / Kury 16 32 19 38
Others (Jewellery) 26 52 32 64
food items comprise electricity, drinking water, fuel, newspapers, treatment of diseases,
transport, and house maintenance. The average monthly expenditure for food constituted
Rs 1365, and for non-food Rs 780 (Table 7.29). Around ten percent of workers expended
more than Rs 2000 per month for food items.
Table 7.29 Monthly Consumption Expenditure
Source: Field survey
Lump sum expenditures for medical treatment, acquisition of consumer durables, and in-
vestment in land were quite high among the construction workers. During the past three
years around one-half the sample workers invested in land, buildings, vehicles, and in con-
struction and renovation of buildings (Table 7.30).
Table 7.30 Percentage Distribution of Average Lump-sum Expenditure of the Past
3 Years
Source: Field survey
The average amount expended for the purchase of land and buildings was Rs 77,917 per
transaction, and the expenditure of members of Welfare Fund under this item was 37 per-
cent higher than that of non-members (Table 7.31). In the construction of buildings and
purchase of vehicles also the expenditure of members was higher than that of non-mem-
bers. On the other hand, non-members’ expenditures on marriage ceremonies, medical treat-
ment, and purchase of durable goods exceeded by 25 percent of those of the members.
Group (Rs.) Members Non-Members
Food Non-Food Food Non-Food
< 500 0 10 0 13
500 – 1000 7 26 8 26
1000 – 1500 30 11 26 10
1500 – 2000 8 3 12 1
> 2000 5 0 4 0
Purpose Members Non-Members
. No. % No. %
Purchase of Land /
Building 4 8 6 12
Construction /
Renovation of building 17 34 15 30
Purchase of Vehicle 3 6 6 12
Purchase of Other
Durable Goods 4 8 2 4
Marriage / Ceremonies 9 18 12 24
Medical Treatment 28 56 23 46
Redemption of Loan 0 - 0 -
Other 0 - 0 -
Table 7.31 Average Amount Expended for Major Purposes
Source: Field survey
Opinion of the workers about KBCWWF members
Members
As part of the field survey an opinion poll on the Welfare Board was also conducted among
members as well as non-members. Opinions regarding the present functioning of the Wel-
fare Board, benefits and social security coverage, and need for new benefit schemes were
collected from the members; and the perceptions of the non-members about the Welfare
Fund were recorded. Regarding the present functioning of the Welfare Board, 54 percent of
members were satisfied; whereas 36 percent were unsatisfied. But, 84 percent of the
members were of the opinion that existing benefits are inadequate and 78 percent empha-
sised the need for improvement in social security assistance.
The majority of the members of KBCWWF expressed the view that improvement in welfare
benefits should be linked to hike in monthly contributions. While extending the welfare schemes
first preference should be given to maintenance of houses and then to medical allowances.
Enrolment of new members was the only possible way for enhancing welfare benefits.
Even though the Welfare Fund model of social security system was constituted for the
welfare of workers in the unorganised sector, it could not reach each and every worker due
to the voluntary nature of membership. Usually workers are attracted to join the Welfare
Funds with expectations of benefits.
Non-members
One-half the construction workers still remain outside the security network of the KBCWWF.
Unawareness of the functioning of Welfare Fund was not the reason reported for keeping
away from the Fund; the reluctance is due to their position of social security already achieved.
Among the non-members 58 percent of workers opined that they are not bothered about the
Welfare Fund model of social security. However, financial stringency prevented 26 percent
from joining the Fund.
The Construction Workers Welfare Fund was constituted in 1990, but the benefits perco-
Source Average Amount (Rs.)
Members Non-Members
Purchase of Land /Building 90,000 65,833
Construction / Renovation of Building 17,529 15,633
Purchase of Vehicles 13,000 9,833
Purchase of other durable goods 4165 7,500
Marriage / Ceremonies 68,333 83,833
Medical Treatment 9,500 11,233
Redemption of Loan 0 0
Others 0 0
lated to the grassroots level and reached the rural areas only a couple of years ago. As a
result, a good number of old construction workers remain outside the security network of
KBCWWF; in the study area eight percent of the non-members belong to this latter group.
Regarding the question on the information about members who have benefited from the
Welfare Board, non-members opined that 92 percent of their brethren who are members
were not getting any benefit at all. Thus, it could be seen that unawareness and illiteracy are
not the factors, which prevented the workers from joining the Welfare Board; the determi-
nant factor is the attractiveness of benefits expected.
Socio-psychological analysis of pensioners
The National policy on older persons views life cycle as a continuum, of which the post-60
phase of life is an integrated part. It does not view the age of 60 years as the cut-off point for
beginning a life of dependency. It considers 60 plus as a phase when the individual should
have choices and opportunities to lead an active, creative, productive, and satisfying life.
As part of the socio-economic analysis of the construction workers, a separate study on the
socio- psychological behaviour of the pensioners from among the retired construction workers
was conducted. Fifty pensioners from the Mazhuvannur panchayat were selected through
random sampling. This analysis not only depicts the social and psychological aspects of the
elderly construction workers; it also gives a general idea of the problems faced by the elderly
population in the State as a whole. During a period of rapid socio-cultural transition and
emerging generation gaps the psychological problems faced by the elderly are complex.
The breakdown of the joint family system and the emergence of the nuclear family system
have created tensions in the normal lifestyle of the elderly population.
Social security, financial security, and psychological security are the three pillars on which
the foundation of the human social life persists. Social security is a product of cultural
transitions and socio-political balance emerging in the society and the resultant family net-
work. A great anxiety of old age relates to financial security. It is attached to the potential
income-generation capacity of the elderly through employment, assets or whatever the me-
dium which is socially accepted as adequate and necessary. Potential future income stream
is connected with the past ownership of assets and employment. Being in the unorganised
sector potential income-generation capacity at the old age is an unimaginable task and it is in
such situations, the role of pensions becomes important. Even though the amount of pen-
sion given by the Welfare Board is small, that itself creates potential income generation
capacity based on which the psychological security increases. Healthy relationships existing
among members of the family, respect and care given to the elderly including the care given
to meeting their basic needs and medical attention are all supportive of psychological secu-
rity.
The main thrust of the welfare benefit scheme will have be to identify the more vulnerable
among the old persons such as the poor, the disabled, the infirm, the chronically sick and the
destitute, and to provide welfare services to them on a priority basis.
Since the KBCWWF was constituted only about a decade ago the majority of the present
pensioners are not too old; very old construction workers remaining mostly outside the
social security fabric of the Welfare Board. In our analysis only six percent of the elderly
construction workers were getting pension for more than four years, and 80 percent were
getting the same for less than two years.
Pension from KBCWW, as we discussed earlier, is a product of the workers’ contribution
and the period of payment. It ranged from a minimum of Rs 200 per month to a maximum
of Rs 400. In Mazhuvannur panchayat 66 percent of pensioners were getting the minimum
pension.
Even though the working capability diminishes with old age, human desires and family
needs go on increasing and at least the partial fulfilment of which (other than the personal
basic needs) is essential for psychological satisfaction. In our sample, 94 percent of the
pensioners complained that their pensions are inadequate. Unless other sources of income
were found, attaining even the basic needs through pension alone is difficult. Among the
sample pensioners only 34 percent had some livelihood options other than income from their
children.
Table 7.32 Pensioners’ Perceptions on Pension
Source: Field survey
Status in the family
Family is the most cherished social institution and the most vital non-formal social security
for the elderly. Elderly persons stay with one or more of their children, particularly when
independent living is no longer feasible. It is this arrangement that is found to be the most
preferred and also the most satisfying to the elderly. It is important that this traditional
support system continues to be functional and the ability of the family to discharge its caring
responsibilities is strengthened through other support services. Family activities constitute
the major engagement of the elderly. Under the nuclear family system, the elderly look after
their children and grandchildren, in return for the care they take for the elderly. Among the
sample households the family size of the pensioners was found to be around seven persons,
four in the same household and three (grand children) of neighbouring households in which
their children live.
Even though the pensioner happens to be, in almost all cases, the senior-most citizen of a
household, he may not be the head of household in most cases. Income generation capacity,
activity status and capacity to handle family and social issues, determine the status of a
member in the family. Pensioners headed 50 percent of the surveyed households in the
sample households in Mazhuvannr panchayat. Sons of pensioners were the heads in 28
percent of the cases. In 18 percent of the cases, it was women members who headed the
households.
Period No. of Pensioners %
Adequate for needs 0 0
Inadequate 47 94
Barely Adequate 3 6
Old persons have become soft targets for criminals. In some cases, they also become
victims of neglect and physical and emotional abuse within the household. The members of
their own families may force them to part with their ownership rights. Rights of inheritance,
occupancy and disposal of widows are at times violated by own children and relatives.
Being the senior-most and the most experienced person in the family, important family
decisions are either taken directly by the elderly or taken under their advice and approval. In
92 percent of cases their advice was sought; but only in 60 percent it was regularly sought.
Thus, it is found that irrespective of whether the pensioner is heading the house or not,
important family decisions tend to be taken after consultation with him/her.
Activity status
Elderly construction workers should not be treated merely as consumers of goods and
service; they are good resource persons too. They render useful services in the family and
outside. Opportunities and facilities need to be provided to them so that they could continue
to contribute effectively to the family, the community, and the society. Elderly construction
workers usually enjoy their retirement life with their children and grandchildren. But per-
sonal and family liabilities compel some of them to engage in certain kinds of work and earn
a living. In Mazhuvannur panchayat, 44 percent of pensioners are still working, and of
them 14 percent worked regularly.
With the gradual break-up of the joint family system and the decreasing financial and other
support from children, the economic status of the elderly construction workers is become
increasingly critical. Financial dependency makes the problems of the elderly difficult of
solution. It was poverty or unemployment of the other members of the family which often
compelled the pensioners to engage in work (Table 7.33).
Table 7.33 Reason for Pensioners for Engaging in Work
Source: Field survey
Generation gap
The National Policy on the Elderly envisages an age-integrated society by strengthening
integration between generations, facilitating two-way flows and interactions, and strength-
ening bonds between the young and the old (CSO, 2000). Owing to various factors like
nuclear family structure, employment of men and women and integration of youth with
other places to which they move in search of employment, it is becoming more and more
difficult to extend due care and attention to the elderly, forcing them to live lonely lives
during old age. Fulfilment of the psychological needs of the elderly is inevitably associated
with their relationships with the members of the family and in particular with their grandchil-
Reason No. of Workers %
Poverty 8 33
Unemployment of Members of the Family 6 25
Personal Expenses 3 13
Insufficient Family Income 7 29
dren. Among the pensioners, nearly 90 percent have grandchildren with all of whom they
maintained fond and constructive relationship.
Most often the relationship between the elderly and their grandchildren is strengthened through
solving problems related with academic and financial matters, sports and games, religious
and cultural observances, and food and clothing practices. Around 50 percent of the pen-
sioners in the study area regularly supported their grandchildren in these matters.
Interestingly, every four out of five pensioners reported that their close contracts with their
grandchildren have given them a new meaning in life. Generation gaps that usually emerge
and manifest in cultural and socio-economic approaches were not, according to them,
unbridgeable gaps. It is the strength of the bonds of affection maintained within families
that keeps generation-gaps at bay.
Attitude towards life
A characteristic feature of the health status of the elderly is that the majority of them suffer
from more than one disease making medical treatment inevitable difficult and prolonged.
Prevalence of various types of physical disabilities was found to be widely prevalent among
the elderly construction workers. During old age the majority of people try to prepare a
balance sheet of their own in their mind based on material achievements on the one side and
psychological satisfaction on the other. Whatever may be their past experiences, they derive
pleasure from the company of children and grand children with whom they live, provided
the relations are cordial. The pensioners in our sample belonged to the following groups.
1. Around two-thirds felt disappointed due to failure in achieving goals;
2. Financial difficulties regularly affected 56 percent;
3. Health problems haunted 84 percent;
4. Ill treatment from members of the family, rendered 56 percent of them fell despondent
and helpless.
5. One- half of the pensioners felt life in isolation and neglect.
Programmes will have to be developed to promote family values, sensitise the young on the
necessity and desirability of inter-generational bonding and continuity and of meeting filial
obligations. Values of caring and sharing need to be reinforced. Society needs to be sensi-
tised to accept the role of married daughters of sharing the responsibilities of supporting
parents in the present day changing social context in which parents have only one child or
two, in some situations only a daughter. This would require some adjustments and changes
in the perceptions of in-laws in regard to sharing of the caring responsibilities by sons and
daughters especially in the light of the equal rights of inheritance to all children irrespective
of sex granted by courts of law and the greater emotional attachment that daughters have
with their parents.
8. Conclusion
The structure of a welfare state rests on its social security fabric. Labour welfare is welfare
accorded to labour. Welfare Funds are raised by levying cess on production, sale or export
of specified goods, or by collecting contributions from various sources including employers
and employees, as well as the Government, and are used for meeting expenditures on the
welfare of workers.
The Government, employers, and trade unions in Kerala generally agree that Labour Welfare
Funds have gone a long way in ameliorating the conditions of life of labour outside their
work premises and in the society at large. But the multiplicity of Boards has resulted in
heavy expenditure or overheads, thus draining the amounts available for benefit spending.
Further, each Board covers only specific groups of workers, neglecting many of the needy.
It is therefore essential to co-ordinate the activities of the various Welfare Boards, or to
amalgamate them into a common administrative set-up for the sake of economy and effi-
ciency of welfare activities. In spite of several limitations, Welfare Boards, as they function
today, provide one of the most important ways of reaching workers in the unorganised
sector.
Labour in the unorganised/informal sector accounts for about 85 percent of the working
population in Kerala. Welfare Funds of social security for workers in the unorganised sector
have a history of more than three decades in Kerala. Social security benefits are given
mainly in the form of provident funds, paid to workers on superannuation, monthly pen-
sions, and gratuity. Social insurance is given in the form of ex gratia payment in the event
of disability or death; a modest payment is made in the event of treatment for ill-health.
Welfare assistance consists of financial assistance for housing, education of children, and
marriage of daughters.
The majority of Welfare Funds in the State expend a large chunk of their incomes as estab-
lishment charges. It means that a sizeable proportion of the savings of the informal sector
workers is used to finance the salaries and perquisites of formal sector workers in govern-
ment service. Higher costs of administration raise basic questions about the basic purpose
of running Welfare Funds. A solution to this problem rests as indicated earlier on establish-
ment of a unified and common administrative body to manage all the Welfare Funds; the
danger imminent in such a solution has in the development of a monolithic bureaucratic
structure. With regard to Government contributions and workers’ contributions to the Wel-
fare Funds, there exist no well-stated principles; therefore, out of the 19 Welfare Funds
formed in the State only 15 get Government contribution. Employers’ contributions are also
irregular. The coverage ratio of Welfare Funds in Kerala is quite dismal too due to the poor
attractiveness of expected benefits. Further, funds mobilised by the majority of Welfare
Funds are insufficient to meet their disbursements.
According to the 1991 census, Kerala’s work participation rate was 38 percent and the total
number of workers was 120 lakh. Around 12 lakh workers were in the organised sector,
and the remaining 108 lakhs, in the informal sector. Leaving out farmers, workers in the
informal sector came to 90 lakh, of which 26 lakh (29 percent) are covered under Welfare
Funds, leaving the rest uncovered by social security measures. The voluntary nature of
membership and the unattractiveness of benefits also are attributed to the low coverage.
In Kerala, Building and Construction Workers Welfare Fund (1990) was constituted as per
the Kerala Construction Workers Welfare Fund Act of 1989. Major welfare schemes taken
up by the Fund include pensions, death benefits, accident benefits, cash awards and schol-
arships to members’ children, medical expenses, marriage and maternity benefits, and invalid
pensions. By the middle of the 1990s there were five lakh construction workers in the State;
of this only 3.5 lakh (70 per cent) became members of the Fund. The total number of
members was 8.12 lakh in March 2000. Given the nature of employment in the unorganised
sector and its geographical spread, the coverage of workers should be reckoned as impres-
sive.
Resource mobilisation for reimbursement of welfare expenditure workers occupies an im-
portant stage in the functioning of a Welfare Fund. The KBCWWF Act (1989) fixed slabs of
Rs 10, Rs 15, and Rs 25 as the monthly contribution of members. Contribution of the
employer is one percent of the construction cost (annual contribution made by the contrac-
tors was in the range of Rs 100 to Rs 1000); and 10 percent of initial members’ contribution
per annum was the contribution of the Government. Fund collection in 1999-2000 was Rs
2331.92 lakh.
The basic objective of the KBCWWF is to provide a measure of social security and insur-
ance cover for construction workers who are vulnerable to risks and uncertainties and do
not have any other institutional protection arising from their employment status. In 1999-
2000, 0.30 lakh workers benefited from the Welfare Fund, with a total amount of Rs 1049.6
lakh. The coverage of workers in the construction sector has been quite impressive when
compared to that in other Welfare Funds; yet, substantial improvement, in particular in
backward districts, is quite urgent. In other words, the major objective of giving welfare
benefits to all those who are in need, still remains an unachieved target.
As on 1.4.2002 there is an estimated number of 21,171 pensioners and 2,76,373 workers
registered with KBCWWF. The present value of the pension commitment as on 1.4.2002 in
respect of the pensioners and work force calculated using actuarial methods amounts to Rs
615 cr. The value of assets available to the Fund as on 1.4.2002 (less future administration
costs) comes to Rs 339 cr. But, it is found that the Fund is moving rapidly towards a
position of insolvency, due to the increasing disbursements of benefits, in particular, of
pensions. The deficit works out to Rs 276 cr. The annual additional funding needed to fill
the deficit of Rs 276 cr is Rs 32 cr per annum for the next 15 years. The doubling of the
benefits without finding matching resources to finance additional commitments would only
accelerate the process of serious financial strains and lead the Fund to insolvency.
The household survey of construction workers conducted in the Mazhuvannur Panchayat
revealed that the social status of construction workers was not higher than that of the other
poverty-ridden groups. Literacy levels, health status, and housing conditions of construc-
tion workers are below the State average. Among the construction workers, a positive
correlation was found between active participation of workers in trade union activity and
membership in Welfare Fund. Construction workers engaged themselves during their free
time in agricultural and other non-agricultural activities. Wage rates existing in the construc-
tion sector are one of the highest in the unorganised sector in the State.
Income from construction work is hardly sufficient to meet basic family requirements.
Even though new generation seldom enters this field, the unemployment rate among the fami-
lies of construction workers is quite low (19 percent). The average monthly family income of
the members of the Welfare Fund was found to be lower than that of the non-members; it
must have been the low incomes that forced them to join Welfare Fund as a means of social
security.
Even though the majority (54 percent) of the construction workers is satisfied with the
present functioning of the KBCWWF, 84 percent opined that existing benefits are inadequate
to meet their needs. Despite the fact that KBCWWF was constituted for the welfare of
construction workers in the unorganised sector, it could not reach every worker due to the
voluntary nature of membership and poor attractiveness of the provisions of the Fund. Lack
of awareness and illiteracy was not found to be the major factor which prevented the con-
struction workers from joining the Welfare Fund; the determinant factor was undoubtedly
inadequacy of the anticipated benefits.
Socio-psychological analysis of the pensioners showed that the breakdown of the joint
family system and the emergence of the nuclear family system create socio-psychological
tensions in the lives of the elderly population. Personal and family liabilities compel a good
proposition of the elderly construction workers to engage in some kind of economic activi-
ties. Programmes will have to be developed to promote family values and sensitise the young
generation on the necessity and desirability of inter-generational bonding and continuity.
We offer the following comments and suggestions to improve the welfare of the construc-
tion workers and the activities of KBCWWF.
1. The more vulnerable among the construction workers (such as the poor, the disabled, the
infirm, the chronically sick and those without family support) may be identified and special
welfare schemes may be instituted for them on a priority basis;
2. With regard to the security of the elderly, the ability of the family to discharge its caring
responsibilities must be strengthened through support services;
3. KBCWWF operates without substantial improvement in its revenue collection, it is likely
to become insolvent after six to seven years.
4. New members will have to be enrolled in large numbers during the next 15 years since
much larger amounts by way of contributions are necessary for the Board for meeting its
commitments; such contribution should not be used to fill the deficit of the Fund.
5. There is crying need for reformulating the benefit package and strengthening its sources
of contribution in order to make the Fund totally self-financing. Unless corrective measures
are taken, KBCWWF would face serious financial consequences in the very near future.
6. All construction workers should be made members of the KBCWWF; and banks and
other financial institutions should be involved the collection of contributions.
7. The contribution of employers / contractors should be substantially enhanced from their
existing levels.
Appendix Table 1
Welfare Funds in Kerala and their Major Functions
Sl.No. Name of the Fund Beneficiary Group Funding
& year of Starting
1 2 3 4
1. Kerala Toddy
Workers Welfare
Fund, (1969)
(KTWWF)
2. Kerala Labour
Welfare Fund,
1977 (KLWF)
3. Kerala Head Load
Workers Welfare
Fund, 1983
(KHEDLWWF)
4. Kerala Motor
Transport Workers
Welfare Fund, 1985
(KMOTWWF).
Persons directly or indirectly
engaged in tapping and collec-
tion and distribution of toddy
for their livelihood. All toddy
shops/premises are covered
under the Fund
a. Government : Nil
b. Employer : 13% of
workers’ wage
c. Employee: 8% of
workers’ wage
Workers in Factories and
Plantations employing 10
workers or more, shops and
commercial establishments
employing two workers or
more, and co-operative
institutions employing 20
workers or more.
a. Government: Varies from
year to year. So far 40
lakhs have been allotted
b. Employer : Rs.8 per half
year per worker
c. Employee : Rs.4 per half
year per worker
‘Head Load Workers’-
(Individuals who work for an
establishment either directly or
through a contractor for
wages, in loading, unloading,
and carrying on head or in a
trolley, any article from any
place).
a. Government: Nil
b.Employer: 25 % of the
Workers’ wage (including
Gratuity 5%)
c.Employee: 10 % of wage
for general fund
Persons with at least three
months of service in a mo-
tor transport undertaking di-
rectly or through an agency,
working in a professional
capacity in a transport vehi-
cle as driver, conductor,
cleaner, or as station staff,
checking staff, cash clerk,
time keeper, watchman or
attender.
a.Government: Nil
b.Employer: 13% of
workers’ wage
c.Employee: 8% of work-
ers’ wage.
5
6.
7.
8.
Keral a Advocat es’
C l e r k s We l f a r e
Fund,1985
(KADCLWF)
Persons, who function as
Advocates’ clerks, regis-
tered under the Kerala Ad-
vocates’ Clerks Welfare Act,
and who are within the age
group of 20 years to 70
a. Government: Rs 90/
year/member
b. Employer: Nil
c. Employee: Rs.60/
Annum/ Member
Kerala Artisans and
Skilled Workers
Welfare Fund, 1986
(KARSWWF)
Workers from the Informal
Sector such as Tree Climbers,
Gold Smiths, Carpenters,
Shoe-Makers, Beedi-Makers,
Potters, Chakku Oil Extrac-
tors, Cycle Rickshaw Work-
ers, Gunny bag collectors,
Cycle Repairers, Watch Re-
pairers, Milk and News Paper
Distributors, Ice- Makers, Milk
Extractors, Photographers,
Tailors, Barbers, Dhobies, and
also all other workers who are
not covered by any of the
welfare schemes (Between 20
years and 58 years of age)
a. Government: Rs2/Every
Rs10 contributed by
the workers
b. Employer: Nil
c. Employee: Rs 10/
month/worker
Kerala Cashew Workers
Relief & Welfare Fund,
1988 (KCSHWWF)
Cashew Workers and their
dependants with a minimum
service of five years in the in-
dustry and annual income not
exceeding Rs.3600 (Not cov-
ered by ESI/maternity benefit
scheme)
a.Gvernment: Twice the
amount contributed by
employee
b. Employer: Rs.1/day /
worker
c. Employee: Rs.0.50/day/
Worker
Kerala Khadi Workers
Welfare Fund, 1989
(KKHWWF)
Workers who work for wages
under employers, contractors,
co- operative societies or who
are self-employed under Khadi
industries.
a.Gvernment: 10 % of
the workers’ wage
b. Employer: 10 % of
the workers’ wage
c. Employee: 10 % of
wage
9.
10.
11.
Kerala Coir Workers
Welfare Fund,
1989(KCORWWF)
Workers, Agents or Contrac-
tors and persons who depend
mainly on the coir industry for
livelihood, and persons self-
employed in the coir industry.
The scheme also covers de-
pendants of workers.
a. Government: Grant
which is twice the
amount contributed by
workers
b. Employer:
i. 1% of turnover
ii. Co-op Society: Rs.1/
month/worker
c. Employee: Rs.1/
month/ worker
Kerala Fishermen
Welfare Fund, 1989
(KFMWF)
All Fishermen who are em-
ployed for wages in fishing
vessels or are self-employed
fishermen who are registered
as members of Fishermen’s
Welfare Society.
a. Government:Contribution
for pension and group
insurance premium
b. Employer:
i. Dealer- 1% of turnover
ii. Vessel owner- Rs.1/
month
ii. Net owner- Rs.1/month
iv. Farm owners- 2% of
value of fish caught
c. Employee:
ii. 3 % of value of fish or
wage
iii. Rs.30/year/ worker
Kerala Handloom
Workers Welfare Fund,
1989 (KHNDLWWF)
Persons directly or indi-
rectly employed in the
Handloom sector. This
scheme also covers
dependents of workers.
a. Government: Twice
the workers’ contribu-
tion
b. Employer: 1% of the
turnover and an amount
equal to workers contribu-
tion
c. Employee
i. Rs.1/month
ii. Rs.2/month/
selfemployer
12.
13.
14
15.
Kerala Abkari Workers
Welfare Fund, 1990
(KABWWF)
Arrack and Foreign Liquor
Workers who are not cov-
ered by the Toddy Work-
ers Welfare Fund
a.Government: Rs.1Lakh
for pension purpose
b. Employer: 15% of wage
including 5% gratuity
c.Employee: 10% of wage
Kerala Construction
Workers Welfare
Fund,1990
(KCONWWF)
Workers employed in any
construction such as Ma-
sons, Carpenters, Brick
Workers, Workers en-
gaged in quarrying includ-
ing stone crushing, but
excluding supervising
functionaries like
engineers
a.Government: 10% of
initial member
contribution per year
b. Employer:
i. 1% of construc-
tion cost
ii. Annual contribution by
Contractors (Rs 100-
1000)
c. Employee: Monthly
contribution per
member on slab basis
Kerala Agricultural
Workers Welfare
Fund,1990
(KAGWWF)
Agricultural Workers in
the age group of 18-60
a.Government: Nil
b. Employer:
i . Rs.0.5-Rs.1/hectare
ii. >1Hecter – Rs.15/year
c. Employee: Rs.2/
Month/Hectare
Kerala State Lottery
Agents Welfare Fund,
1991 (KLOTAWF)
Regular agents holding valid
identity folders as mentioned
in the Kerala State Lottery
Rules, 1977
a.Government: 20% of
members’ contribution
b. Employer: Nil
c.Employee: Category A/B:
Rs.15/Rs.10 per month
16
17
19.
KeralaDocumentWriters,
Scribes and stamp
Vendors welfare Fund,
1991 (KDSVWF)
Person holding valid li-
cense under the Kerala
Document Writers (Li-
cense Rule) Or the Kerala
Manufacture and Sale
Stamp Rule,1960 and
aged below 60 year
a. Government: 10% of
workers’ contribution
b. Employer: Nil
c.Employee: Category A/
B:Rs.15/Rs.10 per month
Kerala Auto Rickshaw
Workers’ Welfare Fund
1991 (KAURWWF)
Persons directly or indi-
rectly engaged in the pro-
fession within the age
group of 28 to 58 and the
scheme is voluntary.
a. Government: 10% of
workers’ contribution
b. Employer: Rs.10/month/
worker
c.Employee: Rs.20/month/
worker
Kerala Anganwadi
Workers & Helpers
Welfare Fund, 1991
(KAWHWF)
18.
Health Workers,Teachers
and Helpers working in
Anganwadis.
a. Government& Employer:
10% of workers’
contribution
b. Employee:
i. Worker - Rs.20/month
ii. Helper- Rs.10/month
Kerala Tailors’
Welfare Fund, 1994
(KTAWWF)
Tailors directly or indi-
rectly employed by em-
ployers, contractors, and
agents or by themselves
through ownership of tai-
loring shops.
a.Government: 10% of
workers’ contribution
b.Employer:Rs.5month/
worker
c.Employee:
ii.Rs.15/self employer/
month
i. Rs.10/worker /month
Table 4.2 Details of Welfare Fund Benefits (Note this table also)
Name of
the Fund
Pension PF, Gratuity etc Disability,
Death
Children’s
Education
Med
KTWW
F
A pension
scheme has
recently been
evolved and
it offers
Rs.100 per
month to
retirees who
has up to 10
years
membership
and also
offers an
additional
amount of
Rs.10 per
month of
every year
that comes
after 10
th
year
at the Fund
Net credit to
the account of
the worker
(provident fund
a/c) and
gratuity paid
with interest
(currently 11%)
on superannua-
tion, retire-
ment or on his
death. Gratuity
is 50% of the
monthly
average of
wages for each
com-pleted
year of service
subject to
maximum of
20 month’s
wages.
Disability
allowance
Rs.125 per
month.
Funeral
expense
Rs.2000
Non
refundable
advance
(deducti-
ble) from
his contr-
ibution
Rs.1200 or
50% of his
contribu-
tion,
whichever
is lower.
Non
refu
adv
his
mon
or 5
his
con
whi
is lo
For
trea
will
Rs.3
gran
ded
KLWF No provision Since the
Fund is in
Insurance
Fund, there is
no retirement
benefit.
Ex-gratia
Rs.1000,
perma-nent
disabled
Rs.2500,
Funeral
Expense
Rs.200.
Scholars-
hip on the
basis of
merit. It
varies from
Rs.50 to
Rs.1000 per
year
(primary to
professi-
onal).
Med
gran
ded
Rs.1
(ma
amo
KHEDL
WWF
Pension
scheme not yet
evolved
Every
member will
be paid an
amount at the
rate of 10
percent of
total wages
earned during
the entire
period of
service. This
is their lump-
sum
retirement
benefit or
gratuity. If
there is no
much amount
Rs.10000 as
special
superannu-
ation
assistance is
disbursed,
provided he
should have
100 days of
work in each
year.
Ex-gratia
benefit
Rs.2000.
Rs.100 per
month to
perma-nently
disabled
members till
his death or
lump sum
amount of
Rs.10000.
Under group
insurance
scheme
Rs.20000, if
accident
death occurs.
And funeral
expenses of
Rs.500.
Education
grant
Rs.100 per
year per
child and
scholarship
varies from
Rs.100 to
Rs. 2000.
KADCL
WF
No provision At the time
of retirement,
he will be
paid
according to
his service.
If he
completed 30
years, he will
be paid
Rs.10000
Since there is
special
provision for
an advance
clerk who is
aged between
35 and 70
years,
exgratia
varies from
Rs.1000 (up
to 60 years)
to Rs.2500
(for 71-75
years)
Funeral
assistance is
Rs.500.
No
provision
No
KARSW
WF
No provision Since there is
no provision
of P.F&
gratuity, the
net amount at
the Fund
(only
membership
contribution)
with interest
is given back
at the time of
retirement or
death. This
amount
varies from
Rs.600 to
Rs.50000
depending on
service.
Ex-gratia
Rs10,000,
Disability
allowance
Rs.100 per
month,
Funeral
expenses
Rs.500
Scholar-
ship ranges
from Rs.300
to Rs.1500
Med
up t
(inj
cou
wor
KCSH
WRWF
Minimum two
year member-
ship, 60 years,
Rs.100 per
month for
ordinary
worker and
Rs.200 per
month under
staff category.
Family pension
in the event of
death of the
pensioner.
Since the
Fund is an
Insurance
Fund, No
provision for
P.F, gratuity
and other
lump-sum
retirement
benefit
Ex-gratia
Rs.2500
under special
consideration
like death,
illness or
perman-ent
disablem-ent.
Funeral
expense of
Rs.500 for a
member and
Rs.250 for
pensi-oner
but it is dedu-
ctible from
his contr-
ibution.
Scholars-
hip Rs.500
to Rs.2000
per annum.
Cash award
of Rs. 1000
per sudent
(only for
SSLC and
Pre-degree
students)
KKHW
WF
Minimum 10
years as a
member, 60
years, Rs.60 to
Rs.180 per
month
depending on
service. If his
service is less
than 10 years,
he is eligible to
get only his
contributi-on.
Family pension
in the event of
death of the
pensioner at the
same rate.
Since the
funds is an
insurance
Fund, No
provision for
P.F, gratuity
and other
lump-sum
retirement
benefit.
Rs.5000, if
perma-nent
disability
occurs.
Funeral
assistance
Rs.350.
Non-
refundable
advance of
Rs.1500 or
25% of
contribut-
ion can be
withdrawn
for higher
education.
Education
grant (non-
deductible)
Rs.250.
KFMW
WF
Rs.100 pr
month
Since the
fund is an
insurance
fund, No
provision for
PF, Gratuity
and other
lump-sum
retirement
benefit
District wise
cash award
for SSLC
students
which ranges
from Rs.300
to Rs.1000
District
wise cash
award for
SSLC
students
which
ranges from
Rs.3000 to
Rs.1000.
KHNDL
WWF
Rs.100 per
month
Since the
fund is an
Insurance
Fund, No
provision for
P.F gratuity
and other
lump-sum
retirement
benefit
Ex-gratia
Rs.5000
Non-
refundable
advance for
workers
childrens
education
(maximum
advance
Rs.1000).
KABW
WF
Minimum three
years, 60 years,
Rs.200 to
Rs.300
(maaximum)
per month.
At the time
of retirement
a member is
entitled to
obtain only
graruity as
the
retirement
benefit and
the net credit
(balance) in
the provident
Fund account
is kept for
financing
their pension
scheme.
Ex-gretia Rs.
5000,
Funeral
expense
Rs.500.
Scholars-
hip for
higher
education
(Pre-degree
to
professional
course).
KCON
WWF
Minimum one
year
membership,60
years,Rs.75 per
month to
Rs.300
(maximum) per
month
(depending on
service)
Since the
Fund is an
Insurance
Fund, No
provision for
P.F, gratuity
and other
lump-sum
retirement
benefit
Ex-gratia
Rs.5000,
Funeral
expense
Rs.500.
Non-
refundable
advance of
Rs.1000 per
education
purpose.
Scholarship
Rs.300 to
Rs.1200 on
the basis of
merit.
KAGW
WF
No provision Only lump-
sum
retirement
benefit. If a
member
covers 40
years, he is
entitled to
Rs.25000. If
it is three
years
(minimum),
he will be
paid Rs.5000
Ex-gratia
benefit
Rs.1000
Scholars-
hip ranging
from Rs.500
to Rs.1500
KLOT
WF
No provision Retirement
age 60 years
and above.
Lum-sum
retirement
benefit
depending on
his service.
If he
completed 40
years, he will
be paid
Rs.62,700.
Ex-gratia
benefit for A-
class
members Rs.
10000 and B-
class
members
Rs.7000.
No
provision
KDSV
WF
No provision Retirement
age 60 years
and above,
lump-sum
retirement
benefit
depending on
services. If
he completed
35 years, he
will be paid
Rs.37,749.
Ex-gratia
benefit for A
class
members
Rs.10000 and
B-class
members
Rs.7,000.
No
provision
KAUR
WWF
No provision Retirement
benefit
depending on
completed
years of
service.
Retirement
age58. If he
completed 40
years, he will
be paid
Rs.125000
Ex-gratia
Rs.10000.
Not yet
disbursed.
KCOR
WWF
Minimum two
year
membership,
60 years, Rs.75
per month and
family pension
in the event of
death of the
pensioner.
Since the
Fund is an
Insurance
Fund, No
provision for
P.F, gratuity
and other
lump-sum
retirement
benefit
Ex-gratia
benefits
Rs.5000, if
disability
occurs.
Rs.100 per
month till
retirem-ent
age (60
years) and
funeral
expense of
Rs.200
Scholarship
for higher
education –
Rs500 to
Rs.1500 per
year on the
basis of
marit
KMOT
WWF
No provision Net amount
in the PF
account and
gratuity paid
with interest
(currently
9%) at the
time of
superannuati
n or on his
death
Ex-gratia
benefit
Rs.5000 and
Funeral
assistance
Rs.1000
Non-
refundable
advance for
education
which
should not
exceed
Rs.1200.
Provision
for
Scholarsh-
ip
Source: Government of Kerala, (1996) Social Security initiatives in Kerala, State Planning Board, Thiruvananthpuram
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doc_212607965.pdf
The large gaps existing between the rich and the poor and the unorganised workers and the organised workers have led in several countries to attempts at providing social and economic security to the poor and to the unorganised sectors.
Social Security and Labour Welfare
with Special Reference to
Construction Workers in Kerala
C. P. John
Discussion Paper No. 65
Kerala Research Programme on Local Level Development
Centre for Development Studies
Thiruvananthapuram
Social Security and Labour Welfare with Special
Reference to Construction Workers in Kerala
C.P.John
English
Discussion Paper
Rights reserved
First published 2004
Editorial Board: Prof. S. Neelakantan, Prof. P. R. Gopinathan Nair, H. Shaji
Printed at:
Kerala Research Programme on Local Level Development
Published by:
Dr K. N. Nair, Programme Co-ordinator,
Kerala Research Programme on Local Level Development,
Centre for Development Studies,
Prasanth Nagar, Ulloor,
Thiruvananthapuram
Cover Design: Defacto Creations
ISBN No: ISBN No. 81-87621-68-0
Price: Rs 40
US$ 5
KRPLLD 2004 0500 ENG
Contents
1. Introduciton 5
2. Social security and labour welfare in the unorganised sector 9
3. Welfare fund model of social security measures 22
4. Social security schemes and labour welfare funds of Kerala 28
5. Kerala building and other construction workers welfare fund:
Scope, function, and performance 33
6. Kerala building and other construction workers welfare fund:
A brief review of its finances 44
7. Construction workers in Mazhuvannur Panchayat 54
8. Summary and conclusion 76
9. Appendix 79
10. References 93
Social Security and Labour Welfare with Special Reference
to Construction Workers in Kerala
C. P. John
1. Introduction
The large gaps existing between the rich and the poor and the unorganised workers and the
organised workers have led in several countries to attempts at providing social and eco-
nomic security to the poor and to the unorganised sectors. In Kerala, the introduction of
modern techniques of production and the growth of capitalist production relations had im-
portant implications for the traditional crafts as well as craftsman in Kerala. One of its
implications has been the breakdown of the conventional social security set-up. Craftsmen
in Kerala belonged to a specific caste group, namely, Kammala or Viswakarma. The social
security system among craftsmen was embedded in the craft and caste traditions and prac-
tices. The customs and practices of the craft as well as of caste groups were eroded in the
processes of change that transformed caste-based occupational traditions and the social
structure itself.
The search for alternative institutions to fill the gap caused by social transformation was a
long-drawn out process. The establishment of Welfare Fund Boards has been a major land-
mark in this pursuit. Labour welfare legislations, and the institutions constituted under them
seem to have had a major impact on the informal labour markets of the State. They are also
supposed to have added a new dimension to the social security system of Kerala. Yet,
several issues involved in providing social security to workers in informal labour markets
appear to have not received the attention they deserve. The present study on construction
workers is an attempt to analyse the problems revolving around the Welfare Fund created
for them, its impact on the lives of construction workers, and the financial solvency of the
Fund in the long run.
The Kerala Building and other Construction Workers Welfare Scheme was introduced in
1989, and has been in operation since 1990. According to the latest information available
ACKNOWLEDGEMENTS: I wish to express my deep sense of gratitude and indebtedness to Dr K.N.
Nair, Programme Co-ordinator, KRPLLD, for his guidance, expert advice, and unfailing interest at all
stages of my work. The number of researchers, friends, and family members from whom I have received
constant encouragement and guidance is so large that I cannot even hope to mention them all. A few of them,
however, standout in my mind, without whose active involvement, this work would not have been in the
shape in which it is now. First, I must acknowledge my gratefulness to Mr K.V. Surendra Nath, Ex.MP, and
the Secretary of the Achutha Menon Centre and Library, Thiruvananthapuram, and Dr K.N. Harilal, CDS
for encouraging me to do this work. I would be failing in my duty if I did not thank the staff of the Centre.
I also grateful to Mr Chidamparam, practising Actuarial expert, for the benefit of personal discussions that
enabled me to sharpen some of the arguments presented here. My sincere thanks are due to Mr Anil Kumar
P for the constant assistance at all stages of my work including primary data collection and computer work.
I owe a deep sense of gratitude towards Dr Balachandran and Dr Reji D Nair for their assistance.
C. P. John is Member, State Planning Board, Thiruvananthapuram.
there are about 15 lakh construction workers in the State. Up to March 2000 the Welfare
Board could enrol more than 8 lakh workers, who belong to both the traditional and the non-
traditional sectors. For getting enrolled in these schemes, the workers should have completed
the age of 18 years and should be below 60 years. In this scheme 26 types of workers are
eligible to be enrolled, which include Brick workers, Masons, Carpenters, Blacksmiths, Plumbers,
Fitters, Helpers, Electricians, Road workers, Welders, Seawall workers, and so on.
The Kerala Building and Other Construction Workers Welfare Fund (KBCWWF) has already
mobilised around Rs 88 cr from workers and builders, and from the State Government. The
main source of income of the Fund is the interest income accruing from its deposits in
banks. The Fund has formulated several benefit schemes such as pensions, death benefit,
accident/disease benefit, health and maternity benefit, housing assistance, family pensions,
and grant for marriage of children. The number of workers receiving the benefits and the
amounts involved has been increasing steadily.
Scope of the study
The sustainability of the Welfare Fund is crucially dependent on the state of its receipts and
disbursements. Evidence suggests that the Construction Workers Welfare Fund is unlikely
to encounter any major financial crisis in the near future. The Fund managers can take pride
in the huge amount of deposits they have accumulated over the years. But a close look at the
data on disbursements, especially their trends, would reveal certain disturbing tendencies.
Apparently disbursements are growing at a pace more rapid than that of receipts.
These trends call for a detailed examination of the source of income as well as items of
expenditure. It would be interesting to make projections of the incomings as well as outgo-
ings of the Fund to examine how and if they would balance over the long run. Incidentally,
there seems to be scope for improving the proceeds from some of the sources including
contributions from contractors. The scope for regulating the outflow of disbursements as
well as of administrative expenditures also appears to be not too insignificant. The study
would also make an attempt to analyse the activities of the Fund from the point of view of
the workers. A comparison of the living conditions of members of the KBCWWF with
those of non-members would help us understand the attainments of the Fund as well as its
shortcomings.
Objectives
The major objectives of the study are the following:
1. To account for the emergence of the Welfare Fund model of social security in Kerala
with emphasis on the construction workers welfare fund, its organisational structure, and
mode of functioning;
2. To analyse the sources of funds and payment commitments of the welfare fund;
3. To study the impact of the welfare funds on the social security environment of construc-
tion workers;
4. To study the socio-economic background of the construction workers with emphasis on
socio-psychological characteristics of the elderly among them; and
5. To suggest policy measures to improve the functioning of the Welfare Fund.
Methodology
The evaluation on the functioning of the KBCWWF is made on the basis of information
collected from secondary sources such as the annual reports of the Welfare Fund. In order
to analyse the solvency of the Fund over the long run, the actuarial method is employed. For
this purpose 30,000 entries relating to pensioners in six selected districts of the State were
collected.
To study the impact of the welfare schemes on the construction workers and their families,
a primary survey was conducted using semi-structured pre-tested and interview adminis-
tered questionnaires. The survey was supplemented by detailed key-informant interviews
and focus-group discussions among workers. It was not be possible to attempt a census
survey of all the members of the KBCWWF given the limitations of time and resources
available for the study. Therefore, an area-specific study based on Mazhuvannur Panchayat
of Kunnathunadu taluk in Ernakulam district was attempted. The operations of the Welfare
Fund activities were found to be widespread. Samples of workers were drawn from both
urban and rural areas.
The sample workers were divided into three groups: (1) Members of the KBCWWF, (2)
Non-members, and (3) Elderly workers who are pensioners. From the census data of the
taluk, construction workers were identified with the help of knowledgeable persons in the
locality and people’s representatives. Fifty households from each of the three categories
were selected at random.
Studies of the working and living conditions of workers in the informal sector in India are
few. Based on a sample survey in Delhi, Johri. CK and SM Pandey (1972) found that
extension of social security to the unorganised sector was not merely a matter of extension
of existing organised sector schemes to new groups but it involved development of a differ-
ent and more diversified set of schemes. Subrahmanya (1994) defined the concept of social
security in its broadest sense, as support provided by the society to the individual to enable
him to attain a reasonable standard of living and to protect the standard from falling due to
any contingency.
Jayadevadas (1980), based on his study of coir workers, suggested that the model before
the trade unions in Kerala was that of modern industrial employment characterised by high
wage rates, stable employment, fair working conditions, non-wage benefits, and long-term
economic security. According to Harilal (1986) construction workers are overwhelmingly
rural landless migrants compelled to seek employment in the construction sector due to
indebtedness, inadequate employment and insufficient income.
Based on their study on building industry in Pune, Rao and Deo observed that self-help
organisations constitute the sole agencies, which guarantee the minimum standards of social
and economic security to workers in non-traditional and informal sectors of the society.
K. P. Kannan (2002) stated that the ever-increasing demand for Welfare Funds for each and
every sub-sector of the informal sector may be viewed as a desperate reaction of the work-
ers for a measure of social security in an unprotected labour market.
Guha has argued that given the multiplicity of sectors, and employment and socio-economic
patterns in each State, as well as of grassroots organisations and NGOs, it is undesirable to
impose uniform patterns on social security systems (Thakurtha Guha, 1980).
Though these studies provide valuable insights into the informal labour markets, none of
them has undertaken analysis of real situations and socio-economic realities of construction
workers and activities of Welfare Boards, at micro levels. The present work is an attempt in
this direction.
Scheme of the study
The study has two major dimensions. The first pertains to the Welfare Fund: its functioning;
sources of receipts; disbursements; commitments; future prospects. The second dimension
is related to the impact of the Welfare Fund, especially on the welfare of the workers and the
social implication of the welfare fund model of social security.
The study is divided into eight sections. A discussion of development strategies and existing
status of labour welfare schemes in operation in the unorganised sector is made in the
second section. In the third section, the Welfare Fund model of social security arrangements
is briefly examined. An evaluation of the functioning of Labour Welfare Funds in Kerala is
undertaken in the fourth section. The analysis of the Kerala Building and Construction
Workers Welfare Fund and its operation and financial security is undertaken in the fifth
section. In the sixth section the solvency and existence of the KBCWWF is examined by
using the actuarial method. The seventh section contains a discussion of the socio-eco-
nomic status of construction workers. The final section summarises the findings of the
study and makes a few recommendations.
2. Social Security and Labour Welfare in India: A review
Social security is one of the pillars on which the structure of a welfare state rests, and it
constitutes the hard core of social policy in most countries. It is through social security
measures that the state attempts to maintain every citizen at a certain prescribed level below
which no one is allowed to fall. It is the security that society furnishes through appropriate
organisation, against certain risks to which its members are exposed (ILO, 1942). Social
security system comprises health and unemployment insurance, family allowances, provi-
dent funds, pensions and gratuity schemes, and widows’ and survivors’ allowances. The
essential characteristics of social insurance schemes include their compulsory and contribu-
tory nature; the members must first subscribe to a fund from which benefits could be
drawn later. On the other hand, social assistance is a method according to which benefits
are given to the needy persons, fulfilling the prescribed conditions, by the government out of
its own resources. The present section reviews labour welfare activities in India with par-
ticular emphasis on the unorganised sector.
Although provisions for workmen’s compensation in case of industrial accidents and mater-
nity benefits for women workforce had existed for long, a major breakthrough in the field of
social security came only after independence. The Constitution of India (Article 41) laid
down that the State shall make effective provision for securing the right to public assistance
in case of unemployment, old age, sickness and disablement and in other cases of unde-
served want. The Government took several steps in compliance of the constitutional re-
quirements. The Workmen’s Compensation Act (1926) was suitably revised and social in-
surance programmes were developed for industrial workers. Provident funds and gratuity
schemes were introduced in most industries, and maternity legislation was overhauled.
Subsequently, State governments instituted their own social assistance programmes.
The provisions for old age comprise pension, provident fund, and gratuity schemes. All the
three provisions are different forms of retirement benefits. Gratuity is a lumpsum payment
made to a worker or to his/her heirs by the company on termination of his/her service due to
retirement, invalidity, retrenchment or death (Bajpayee and Shanker, 1950).
Concept of labour welfare
In its broad connotation, the term welfare refers to a state of living of an individual or a
group in a desirable relationship with total environment – ecological, economic, and social.
Conceptually as well as operationally, labour welfare is a part of social welfare which, in
turn, is closely linked to the concept and the role of the State.
The concept of social welfare, in its narrow contours, has been equated with economic
welfare. Pigou defined it as “that part of general welfare which can be brought directly or
indirectly into relations with the measuring rod of money” (Pigou, 1962). According to
Willensky and Labeaux, social welfare alludes to “those formally organised and socially
sponsored institutions, agencies and programmes which function to maintain or improve the
economic conditions, health or interpersonal competence of some parts or all of a popula-
tion” (Willensky and Labeaux, 1918). As these goals may not always be realised by individu-
als through their efforts alone, the government came into the picture and gradually began to
take over the responsibility for the free and full development of human personality of its
population.
Labour welfare is an extension of the term Welfare and its application to labour. During the
industrialisation process, the stress on labour productivity increased; and brought about
changes in the thinking on labour welfare. An early study under the UN observed as follows
“in our opinion most underdeveloped countries are in the situation that investment in people
is likely to prove as productive, in the purely material sense, as any investment in material
resources and in many cases, investment in people would lead to a greater increase of the
flow of goods and services than would follow upon any comparable investment in material
capital” (UN, 1951). The theory that welfare expenditure, especially expenditure on health
and education, is productive investment has led to the view that workers could work more
productively if they were given a fair deal both at the work place and in the community.
The concept of labour welfare has received inspiration from the concepts of democracy and
welfare state. Democracy does not simply denote a form of government; it is rather a way
of life based on certain values such as equal rights and privileges for all. The operation of
welfare services, in actual practice, brings to bear on it different reflections representing the
broad cultural and social conditions. In short, labour welfare is the voluntary efforts of the
employers to establish, within the existing industrial system, working and sometimes living
and cultural conditions of the employees beyond what is required by law, the custom of the
industry and the conditions of the market (A. J. Todd, 1933).
The constituents of labour welfare included working hours, working conditions, safety,
industrial health insurance, workmen’s compensation, provident funds, gratuity, pensions,
protection against indebtedness, industrial housing, rest rooms, canteens, crèches, wash
places, toilet facilities, lunches, cinemas, theatres, music, reading rooms, holiday rooms,
workers’ education, co-operative stores, excursions, playgrounds, and scholarships and
other help for education of employees’ children. All labour welfare measures have the fol-
lowing objectives:
1. Enabling workers to live richer and more satisfactory lives;
2. Contributing to the productivity of labour and efficiency of the enterprise;
3. Enhancing the standard of living of workers by indirectly reducing the burden on their
purse;
4. Enabling workers to live in tune and harmony with services for workers obtaining in the
neighbourhood community where similar enterprises are situated;
5. Based on an intelligent predictions of the future needs of the industrial workers, design-
ing policies to cushion off and absorb the shocks of industrialisation and urbanisation to
workers;
6. Fostering administratively viable and essentially developmental outlook among the
workforce; and
7. Discharging social responsibilities.
Principles of labour welfare
Certain fundamental considerations are involved in the concept of labour welfare. The
following are the more important among them.
Social responsibility of industry
This principle is based on the social conception of industry and its role in the society that is,
the understanding that social responsibility of the state is manifested through industry. It is
assumed that labour welfare is an expression of industry’s duty towards its employees.
Social responsibility means that the obligation of the industry to pursue those policies, to
take such decisions, and to follow those lines of action which are desirable in terms of the
objectives and values currently obtaining in the society. The values of the Indian community
are enshrined in the constitution of the country.
Labour welfare is not embroidery on capitalism nor the external dressing of an exploitative
management; rather, it is an expression of the assumption by industry of its responsibility
for its employees (Maurioce Bruce, 1961). Industry is expected to win the co-operation of
the workers, provide them security of employment, fair wage, and equal opportunity for
personal growth and advancement, and make welfare facilities available to them.
Democratic values
The principle of democratic values of labour welfare concedes that workers may have
certain unmet needs for no fault of their own, that industry has an obligation to render them
help in gratifying those needs, and that workers have a right of determining the manner in
which these needs can be met and of participating in the administration of the mechanism of
need gratification. The underlying assumption to this approach is that the worker is a mature
and rational individual who is capable of taking decisions for himself/herself.
Adequacy of wages
The third principle of labour welfare is adequacy of wages; it implies that labour welfare
measures are not a substitute for wages. It will be wrong to argue that since workers are
given a variety of labour welfare services, they need be paid only low wages. Right to
adequate wage is beyond dispute.
Efficiency
The fourth principle of labour welfare lays stress on the dictum that to cultivate welfare is to
cultivate efficiency. Even those who deny any social responsibility for industry do accept
that an enterprise must introduce all such labour welfare measures which promote effi-
ciency (Marshall, 1950). It has been often mentioned that workers’ education and training,
housing, and diet are the three most important aspects of labour welfare, which always
accentuate labour efficiency.
Re-personalisation
Since industrial organisation is rigid and impersonal, the goal of welfare in industry is the
enrichment and growth of human personality. The labour welfare movement seeks to bring
cheer, comfort, and warmth in the human relationship by treating man as an individual, with
quiet distinct needs and aspirations. Social and cultural programmes, recreation and other
measures designed after taking into consideration the workers’ interests go a long way in
counteracting the effects of monotony, boredom, and cheerlessness.
Co-responsibility
The sixth principle of labour welfare recognises that the responsibility for labour welfare lies
on both employers and workers and not on employers alone (Moorthy, 1958). Labour
welfare measures are likely to be of little success unless mutuality of interest and responsi-
bilities are accepted and understood by both the parties, in particular the quality of responsi-
bility at the attitudinal and organisational level.
Totality of welfare
The final principle of labour welfare is that the concept of labour welfare must permeate
throughout the hierarchy of an organisation, and accepted by all levels of functionaries in the
enterprise.
Social security and unorganised labour
Social security is the protection 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 in earnings resulting from sickness, maternity,
employment injury, unemployment, invalidity, old age and death; provision of medical care,
and the provision of subsidies for families with children (ILO, 1989). The system of social
security was started with the organised sector. However, owing to pressures brought on
the state and the society by the growing awareness within the unorganised sector, concern
is increasingly being expressed and attention given to expanding legislative and social secu-
rity protection to the unorganised sector.
Social security schemes should be linked to economic security, including employment, in-
come, and assets. There should be a convergence of the ways of reaching sustainability and
of attaining expanded coverage. The growing demands of the unorganised labour force and
their attempts to organise themselves can be met by a decentralised participatory social
security system. It will lead to a release of the people’s creative energies and a rapid growth
of social security for the organised sector. Extending social security to the unorganised
sector is not merely a matter of extending existing organised sector schemes to new groups
for the following reasons (Getupig, et al, 1992).
1. Unorganised sector is not a homogenous category;
2. Identifying the employer in this sector is difficult;
3. Unlike the organised sector, where steady and regular employment is a given fact, unor-
ganised sector workers need employment security, income security, and social security
simultaneously; and
4. Needs of the unorganised sector workers vary from those of the organised sector.
Welfare amenities stipulated in the Factories Act, Mines Act, Plantations Labour Act, etc.,
are employment-based, in the sense that such Acts are applicable to undertakings employing
the minimum prescribed number of workers. Outside the realm of these Acts, there are a
large number of small-scale establishments, which have no obligation, statutory or other-
wise, to provide welfare amenities to their workers. These establishments are located in
both urban and rural areas, and are engaged mostly in processing primary products or in
supplementing the existing large-scale industries in transportation, construction, and retail
trade. (Ghosh Subratesh, 1996). The precise estimate of their employment strength and
their wage, welfare and working conditions are not known.
The very nature of industry, the frequent collusion between the employer and his workmen
and place of work often being in the backyard of the employers’ dwelling are some of the
social problems which stand in the way of bringing the real picture of labour conditions to
light. In the absence of any reliable data necessary for policy recommendations, one could
take stock of the situation only in terms of opinions expressed by knowledgeable sources.
Social security measures in unorganised sector in India
Social security comprises two types of measures, promotional and protective. Promotional
measures consist mainly of employment, training, and nutrition schemes, by which persons
are enabled to work and earn a livelihood. On the other hand, protective measures consist of
schemes by which the State provides the means of livelihood when a person is not able to
work (Sankaran, T.S, 1993). ILO standards relating to social security are mainly protective
and have been designed primarily for workers in the organised sector. Both promotional and
protective measures are necessary to provide adequate social security facilities.
Medical care
According to ILO recommendation No.69, medical care should be provided either through
a social service medical care service, with supplementary provisions by way of social as-
sistance, to meet the requirements of people in need who are not covered by social insur-
ance, or through a public medical service (ILO, 1984). It requires that complete preventive
and curative care be available, care which is rationally organised and co-ordinated with
general health services. In India, medical care is provided largely by the public medical
service, by private doctors and hospitals, and to a limited extent by social insurance schemes,
welfare funds, and voluntary health associations. Some of the Welfare Funds in Kerala have
adopted the reimbursement of the cost of medical care at standard rates or actuals,
whereas the Employees State Insurance Scheme is based on providing the service directly
under an integrated arrangement in which the financing and the medical services vest
with the same organisation. On the other hand, some of the public sector establishments
provide service indirectly by entering into contract with doctors, diagnostic centres, and
hospitals.
Sickness benefit
Sickness benefit is payable when an insured person has to stop work due to his poor health
conditions, and such a stop in work usually entails reduction or stoppage of earnings. Cash
benefit is designed to replace in whole, or in part, the lost earnings. In India, there is provi-
sion for payment of sickness benefit under the Employees State Insurance Scheme (Gov-
ernment of India, 1996). Employees of Central and State governments and some public and
private sector establishments are entitled to medical leave on half-pay.
Maternity benefit
One of the earliest conventions adopted by ILO was the Maternity Protection Convention in
1919. The purpose of this Convention was to ensure that a woman worker would be able to
sustain herself and her baby during the period immediately before and after her confinement.
Maternity benefit is usually provided under a social insurance scheme along with medical
care and sickness benefit. In India maternity benefit is provided under the Maternity Benefit
Act (as an employers’ liability) the Employees State Insurance Act (as a part of the health
insurance scheme), the Beedi and Cigar (Conditions of Employment) Act, Beedi and Cigar
Labour Welfare Fund Act, and the various State government schemes for social assistance.
The National Social Assistance Programme also provides for payment of maternity benefits
in lump sum.
Employment injury benefit
Employment Injury Benefit is the most widely adopted branch of social security, and is also
known as workmen’s compensation. According to ILO Recommendation No.67 concern-
ing income security, the contingency for which compensation for employment injury should
be paid, is traumatic injury, or disease in the course of employment, and not injury brought
about deliberately, or by serious and wilful misconduct of the victim, which results in tem-
porary or permanent disability or death (ILO, 1984). This is a cash benefit but is often
associated with medical care. In India, employment injury benefit is provided under the
Workmen’s Compensation Act and the Employees State Insurance Act. While the former
Act is applicable to some employment in the unorganised sector, such as the construction
industry, the latter Act is applicable mainly to workers in the organised sector.
Old-age bnenefit
Old age, invalidity, and survivors’ benefits are the main long-term social security benefits,
which are of great importance in any social security scheme. ILO conventions stipulate that
the pensionable age should not be more than 65 years, unless required by demographic,
economic, and social criteria, and that there should be a lower age for persons engaged in
arduous occupations. Old age pension may be at a flat rate, or be related to one’s past
earnings. The current trend appears to be toward building a multi-tiered system consisting
of a basic minimum pension and one or more earnings-related pensions. In India old-age
benefit is provided as follows (Ministry of Labour, 1996).
(a) Government employees:
Paid by respective governments on the basis of employers’ liability.
(b) Employees’ pension scheme:
Workers covered under the Employees Provident and Miscellaneous Provisions Act.
(c) Destitutes and persons below the poverty line:
Paid under national old age pension scheme and old age pension schemes of State gov-
ernments.
There exist no pension schemes for the self-employed, or for workers employed on a casual,
temporary or intermittent basis who are not destitute, and who are not covered by the
Employees Provident Fund and Miscellaneous Provisions Act.
Invalidity benefit
Invalidity benefit is meant for people who have permanently lost their capacity to earn to the
extent prescribed. According to ILO Recommendation No.67 concerning income security,
the contingency in which invalidity benefit is payable is the inability to engage in any substan-
tially gainful activity, because of a chronic condition due to disease or injury, or because of the
loss of a member or its proper functioning. The relevant ILO convention specifies 15 years of
contribution or employment or 10 years of insurance. But usually one requires only a few
years’ insurance, say five years, a part of which needs to be immediately preceding the inva-
lidity. In India, the Employees Pension Scheme introduced in 1995 provides for invalidity
benefits.
Survivors’ benefit
This benefit is meant primarily for widows and children of persons covered by Social Secu-
rity Schemes who cease to have any financial support on the death of their breadwinner.
However, national legislation often recognises claims of other dependents provided there are
no primary beneficiaries. A widespread practice is to base the survivors’ pension on the rate
of the old age pension the deceased was receiving or would have received (Sankaran, T.S,
1993). In India, survivors’ benefit is provided under the Employees State Insurance Act and
Workman’s Compensation Act in case of death of a person engaged in any employment
covered under these Acts. This benefit is provided under the Employees Provident Fund and
Miscellaneous Provisions Act in case of the death of a member of the scheme for any
reason. Insurance schemes of the Life Insurance Corporation and General Insurance Cor-
poration also provide this benefit. The National Family Benefit Scheme extends this benefit
in case of the death of the breadwinner of a family which lies below the poverty line.
Unemployment benefit
The underlying principle of unemployment benefit is that if a person, through no fault of his, is
deprived of his income, he has a right to expect income support, at least for the necessities of
life while he remains available for work. According to ILO recommendations No.67, the con-
tingency in which unemployment benefit should be paid is loss of earnings due to a state of
unemployment of an insured person who is ordinarily employed, a person who is capable of
regular employment in some occupation and is searching for suitable employment or due to
part time unemployment (Government of India, 1995-‘96). Its main purpose is to deal with
temporary unemployment of employed persons and not the extensive and prolonged unem-
ployment and under-employment found in many developing countries. The payment of the
benefits depends on satisfying the qualifying clause of covered employment, and a waiting
period may also be applied.
Family benefit
ILO Recommendation No.67 says that society should co-operate with parents, and give
general assistance designed to secure the wellbeing of children. This benefit is intended to
assist families in raising their children. Although there are no family benefit schemes in India,
which provide for the payment of cash allowances to families for the maintenance of chil-
dren, there exist many schemes which help families of Scheduled Castes/Tribes, minorities
and other weaker sections of society, in the discharge of their responsibilities for education
of their children, marriage of their daughters, construction of houses, and meeting funeral
expenses.
Strategies for social security in unorganised sector
The majority of the Social security schemes implemented in the country were in the organ-
ised sector, keeping large numbers outside the realm of the Social security net (Berman,
1995). A beginning has been made lately to provide social insurance for workers in the
unorganised sector, with the help of the Central and the State governments. These schemes
are administered by government agencies, co-operatives or NGOs, and are a combination of
social assistance and social insurance.
Insurance schemes
The Life Insurance Corporation of India has developed group insurance, which is akin to
social insurance based on large numbers, and has the potential to provide social security to
persons in the unorganised industrial and agricultural sectors. There exist now several other
group insurance schemes for the unorganised sector workers such as milk producers,
handloom weavers, rickshaw pullers, shop assistants, beedi workers, and fish farmers. The
schemes of the LIC provide mainly survivor benefits; however, some also provide old-age
pensions. The General Insurance Corporation (GIC) of India also administers a few social
security schemes for poor families, a Hut Insurance Scheme, and a Solatium Fund. In
addition, GIC has introduced a Health Insurance Scheme, and has been administering the
comprehensive Group Insurance Scheme for the Central Government. The schemes of the
General Insurance Corporation provide invalidity benefits, or health insurance, or protection
against loss of property.
National Social Assistance Programme
Of the various protective schemes in existence for workers in the unorganised sector, the
most important is the National Social Assistance Programme introduced in 1955 (Wadhawan,
1989). It provides social assistance to poor households in the case of old age, death of the
breadwinner, and maternity through the National Old Age Pension Scheme, National Family
Benefit Scheme, and the National Maternity Benefit Scheme respectively. Under the National
Old Age Pension Scheme, Central assistance is provided to States for payment of old age
pension to persons who are of the age of 65 years or more. In addition to the National Old
Age Pension Scheme, all State governments and Union territories have their own old-age
pension schemes.
Other pension schemes
Apart from the old-age pension schemes already referred to, the States Kerala, Tamil Nadu,
Karnataka, Andhra Pradesh, Maharashtra, and Gujarat have pension schemes for agricul-
tural workers. Many states have extended the old-age pension scheme benefits to destitute
widows, physically and mentally retarded persons, freedom fighters and indigent artists;
and some have also set up homes for destitute widows and deserted /divorced women.
Under the Family Benefit scheme assistance is given to families below the poverty line on the
death of their breadwinner; under the National Maternity Benefit scheme assistance is given
to pregnant women for the first two childbirths.
Welfare Funds
Welfare funds represent one of the models tried in India for providing social security protec-
tion to workers in the unorganised sector. There exist broadly two types of welfare funds
– contributory and tax-based. The Government of India has set up tax-based welfare funds
for mine workers, beedi rollers, cine workers, and workers in the building industry; these
funds are financed by cess levied on the production or export of specified goods. They
provide mainly medical care, assistance for the education of children, housing and water
supply, and recreational facilities. There are nearly 20 Welfare Funds constituted by Gov-
ernment of Kerala for the benefit of different target groups such as agricultural workers,
head-load workers, construction workers, coir workers, cashew workers, motor transport
workers, autorickshaw workers, toddy workers, and artisans the majority of which are
contributory.
Existing models of social security and labour welfare
Since India has committed to the welfare of the marginalised sections of the society the
government has taken upon itself the delivery of all types of social services and social
security. This pattern is reflected in existing models of social security delivery as may be
seen from Table 2.1. There are mainly three types of social security models: employers’
liability, social insurance, and social assistance. The last category includes welfare funds of
Central government, welfare funds of State government, subsidised insurance schemes,
and other forms of social assistance. The beneficiaries of the first (employers’ liability) are
mainly workers in the organised sector, whereas under social assistance the beneficiaries
are both workers in the organised sector and workers in the informal sector. The latter
belong in generally to the marginalised sectors. In the context of growing privatisation of
services on the one hand and the growing awareness and organisation of the oppressed
sections of workers on the other, it is necessary to search for models of effective social
security provision to all the unorganised sector workers.
Table 2.1 Existing Models of Social Security
Administrative/
Model Nature of Benefit Beneficiaries Financial
Arrangement
1.Workermen’s comp.
1.Employers’ Liability 2.Maternity Benefit Workers in the Employers manage
3.Gratuity Organised Sector and pay exclusively
4.Retrenchment comp. .
2.Social Insurance (A) 1.Medical Care
2.Sickness Workers in the
3.Maternity Organised sector
4.Occupational
Injury
.
(B)1.Old-age benefit
2.Invalidity benefit
3.Survivors’ benefit
4.Provident Fund
3.Social Assistance (A) 1.Medical care 1. Mine workers
2.Education 2. Beedi workers
3.Housing 3. Cine workers
4.Water Supply 4. Building works
(B) 1.Education
2.Old-age Benefit
3.Survivors’ Benefit
(b) Welfare Funds of 1.Old-age Benefit
Kerala Government 2.Meical Care
3.Education
4.Assistance for
marriage, housing etc.
Administered by
Employees’ State
Insurance Corporation
financed out of
contributions from
employers, employees
and State Governments
Workers in the organ-
ised sector and some
sections of workers in
the unorganised sector
Administered by
central Board of
Trustees, financed by
contributions from
employers, employees
and central govern-
ment.
(a)Welfare Funds of
Central Government
Administered Depart-
mentally financed by
special levies in the
form of cesses.
Workers in the
unorganised sector,
such as handloom
workers, Coir
Workers and
Cashew Workers.
Administered by
autonomous boards
financed by contribu-
tors from employers,
workers and others.
Social security for the unorganised workers cannot be reached by centralising and standard-
ising schemes; they can be reached by ‘letting a hundred flowers bloandencouraging work-
ers themselves to take initiative (Subramanya, 1994). People remain weak and vulnerable
partly because they are unorganised and hence isolated and powerless. The provision social
security can itself be a means that would lead the unorganised sector workers to organise
and become empowered. Security of needs like food, health care, housing and child care, is
empowering for vulnerable unorganised sector workers and helps them to alter their bar-
gaining positions in the market (Sen and Dreze, 1990). Centralised non-participatory sys-
tems tend to be dis-empowering, while participatory and beneficiary-run systems lead the
workers to organise themselves.
Labour welfare in the construction industry
The construction industry has several features that distinguish it from most other industries
so far as the welfare of workers is concerned. The majority of construction sites are of a
temporary nature, since most structures require little attention of construction workers
once construction is completed. This factor, making for mobility of labour in the construc-
tion industry, raises special problems on sites, where temporary arrangements must suffice
for the provision of welfare amenities. The desirable and practicable amenities would be
different according to the duration of the individual work sites, which may widely vary from
one another. Some works may be completed in a matter of days, some may last for weeks
or months and a few large sites may last for several years.
Mobility of certain construction work-places may also affect the provision of welfare facil-
ity. Some work-places such as house construction sites are stationary, while others such as
those for the laying of pipelines, and construction of road ways, canals, railways, and water
mains, move as the work progresses, so that the site conditions are even more temporary
(Anand, 1986). It is clear, particularly in cases in which the distance travelled on any one
Source: Government of India, Annual Report, 1995-‘96.
(c) Subsidised 1.Survivors’ benefit
Insurance 2. Invalidity benefit
(d) Other Forms of 1.Old-age benefit
Social Assistance 2.Maternity benefit
3.Surviovrs’ benefit
4. Assistance for:
employment
training
education etc.
Vulnerable groups
of workers such as
agricultural workers
and handloom
workers.
Administered by LIC
and GIC, financed by
contributions from
central and state
Governments
Persons outside the
job market and
below the poverty
line, destitutes,
orphans, deserted,
and divorced
women, widows,
disabled persons,
SCs., STs., OBCs,
etc.
Administered Depart-
mentally financial from
general revenues
job may be appreciable, that any structures associated with the provision of welfare facilities
would have themselves to be mobile so as not to become too far removed from the work
place.
Sometimes the nature of construction industry results in many sites being not only far away
from workers’ homes, but also from the normal social and health amenities associated with
community line (Subrahmania, et al, 1982). In such cases, in addition to temporary hous-
ing, a whole range of social amenities are to be arranged, which might require careful
planning and expenditure. It means that the presence or absence of social amenities in the
immediate neighbourhood would have considerable bearing on welfare requirements at the
site itself.
The welfare facilities provided on construction sites would in many cases depend on the
number of workers engaged. In many countries the rules themselves specify the require-
ment of certain standard welfare amenities at the construction site. When a number of
different firms employ labour to carry out works on the same site, it may be possible to pool
resources in the provision of welfare amenities (Rao and K.P.Deo, 1979). Under joint man-
agement, collaboration among contractors may greatly facilitate provision of adequate wel-
fare amenities.
When workers do not normally live in the neighbourhood of the works it may be necessary
to provide for a whole series of welfare facilities, such as transport, periodic home leave,
canteens and social amenities depending on the distance of the homes of the workers from
the work place. On sites of long duration it may be desirable and practicable to provide
housing and other amenities for the workers’ families.
Work in cement production plants and plants associated with manufacture of building mate-
rials differs from construction work proper, due to exposure of workers to dust and other
pollutants, a menace which calls for special welfare amenities (Thakurtha, 1980). Adequate
installations, such as ‘Cyclones’ or other devices should be provided in order the exhaust
dust. Protective clothing, in particular coats and gloves, should also be supplied to them in
order to prevent spoliation of their apparel with cement dust, which might ‘cake’ should the
clothing become moist, as during a shower, and also to protect their skin from allergic
reactions.
The need for provision of most welfare facilities arises primarily from considerations of
safety and hygiene. Thus the provision of protective clothing and facilities for drying cloth
may be called for by the particular conditions of the work and the exposure to which
workers are subjected. The arrangements for disinfection, first aid and sanitary, dietary and
sleeping facilities in hostels for workers must satisfy the hygienic and safety requirements
of the situation.
The International Labour Organisation (1950) has put forward important guidelines for la-
bour welfare facilities in construction industry (Table 2.2). The facilities include shelter,
meals, protective clothing, accommodation, sanitary facilities, recreation, transportation,
and leave.
Source: ILO (1950), Welfare in Construction Industry
Sl.No. Area of Facility Amenities Required
1 Shelter (i) Type of structure required under different
conditions (ii) Supervision and maintenance
2. (i) Cooking facilities for workers for preparation of
meals.
(ii) Dining facilities
(iii) Kitchen arrangements
Meals and Canteens (iv) Mobile canteens
(v) Catering control
(vi) Sharing of catering costs by employers and
workers
3. (i) Accommodation for drying and storage
(ii) Heating arrangements
Clothing (iii) Provision for protective clothing
(iv) Renewal
(vi) Laundry arrangements
4. (i) Type of structure required for sleeping
Accommodation (ii) Heating, lighting and ventilation arrangements
(iii) Provision of beds and bedding
5. Washing and (i) Sources, purification and distribution of water
sanitary facilities supply
(ii) Water-heating arrangements
(iii) Structural requirements
(iv) Shower baths
(v) Latrines and water closets
(vi) Sewage disposal
(vii) Disinfection arrangements
6. Recreation and Cultural (i) Organisation of games, lectures,
Activities cinema shows competitions etc.
(ii) Organisation of camp libraries
7. General Environment (i) Layout, appearance and maintenance of camp
of site camps (ii) Pathways, fencing, grass plots etc
8. Transportation facilities (i) Standard of transportation
(ii) Payment to workers in respect of travelling time
9. Indemnities and home (i) Purpose and amount of indemnity
leave for workers on (ii) Frequency
distant sites (iii) Payment for travelling time
(iv) Provision for visits by families
10. Organisation and control At all levels
Table 2.2 Labour Welfare Facilities in the Construction Industry
3. Welfare Fund Model of Social Security Measures
Welfare Funds represent one of the models developed in India for providing social security
protection to workers in the unorganised sector. Funds are raised by levying a cess on the
production, sale or export of specified goods, or through contributions from various sources
including employers, employees, as well as the government; the funds are used for meeting
expenditure for the welfare of workers.
The present section reviews the growth and functioning of Welfare Funds in the country.
The major limitations of the Welfare Fund model of social security are reviewed. The need
for unification of the different Welfare Funds for the purpose of transparency and adapta-
tion on practical grounds is also discussed.
Historical growth
The need for organised welfare activities for industrial labour was forcefully brought out by
the Textile Labour Enquiry Committee, in its report to the Government of Bombay in 1937
(TLIC, 1938). As a result, a number of labour welfare activities came to be established
particularly during the Second World War period. In 1944, the Government of India prom-
ulgated through an ordinance the Coal Mines Labour Welfare Fund. A Scheme to set up
Labour Welfare Trust Funds formulated by the government was discussed at the eighth
meeting of the Standing Labour Committee (SLC) held in March 1946. The Scheme was
also considered at the seventh and the ninth sessions of the Labour Ministers’ Conference,
and again at the twelfth session of SLC. A draft bill was prepared in the light of these
discussions and submitted to the Indian Labour Conference (ILC) for consideration at its
eleventh session. In 1954, the Government of India wrote directly to several employers’
and workers’ organisations impressing upon them the need to institute Welfare Funds. Mean-
while, the States also instituted Funds for industrial welfare.
Labour Welfare Funds may be categorised into industry-wise funds, State-level funds, and
enterprise-level funds (Giri V.V, 1962). Industry-wise funds exist in coal, mica, iron ore,
gold-mining, and sugar industries, plantations, and toddy tapping. State-level funds are framed
under the jurisdiction of State-level boundaries. Enterprise-level funds exist in most under-
takings of the Central Government, such as Post and Telegraphs, Ordnance Factories, and
Railways.
Kerala has set up more than 20 Welfare Funds for the benefit of workers. The include funds
for abkari workers, agricultural workers, autorikshaw workers, cashew workers, coir work-
ers, construction workers, and transport workers. A statutory fund was created for financ-
ing welfare measures for plantation workers in Assam. Similar funds have been set up also
in Gujarat, Maharashtra, Karnataka, and Punjab.
The Welfare Funds have been set up by special Acts of Parliament. For example, Beedi
workers are covered by the Beedi Workers Welfare Fund Act of 1976, Mine workers by the
Iron Ore, Manganese Ore And Chrome Mines Labour Welfare Fund Act, 1976; and building
workers by the Building and Other Construction Workers (Regulation of Employment and
Conditions of Service) Act of 1996. In addition, separate laws have been enacted for collect-
ing cess. The Welfare funds set up by the Central Government are financed by levying a
cess on specified goods (Table 3.1). Wide variations are seen in the rate structure of the
cess. The duty on mica is on an ad valorem basis, whereas the duties on other commodities
are at specific rates, ranging from Rs 0.50 to Rs 4 per metric tonne.
Table 3.1 Financing of the Central Welfare Funds
Source: Ministry of Labour, Annual Report, 1995-‘96
Benefits provided by Welfare Funds
As mentioned earlier, Welfare Funds are broadly grouped into tax-based and contributory.
The funds set up by the Central government are tax-based, while those set up by the Gov-
ernment of Kerala are mostly contributory. A contributory scheme is akin to social insur-
ance. In India, there is only one social insurance scheme, namely the Employees Social
Insurance Scheme, the experience of which has not been encouraging. Nor has been the
experience of Kerala with contributory schemes with limited coverage, satisfactory. In-
creasing difficulty is experienced in collecting contributions. In Indian conditions, from the
practical point of view, tax-based schemes would appear to work better.
The end-use of the Welfare Funds is prescribed in the laws or schemes concerned. The
majority of Welfare Funds are used, inter alia, for improvement of public health and sanita-
tion; prevention of disease; and provision and improvement of medical care, water supplies
Sl.No. Name of the Act Cess Levied on Amount of cess
1. Mica mines Labour Welfare Value of exports 4.5 percent
Fund Act, 1946 of mica
2. Lime Stone and Dolomite mines Production of 50 paise/ metric
Labour Welfare Fund Act,1773 limestone, dolomite tonne
3. Iron ore, Manganese ore and Production of Iron ore Rs.1/MT
Chrome ore mines labour Welfare Manganese ore Rs. 2/ MT
Cess Act,1976 Chrome ore Rs. 4/MT
4. Beedi Workers Welfare cess Manufacture of 50 paise/
Act,1976 Beedis 1000 Beedis
5. The Cine Workers Welfare Production of a.Hindi films
Cess Act, 1981 feature films Rs.10,000/Film
b.South Indian
Rs 5000/ Film
c.Marathi& Bangali
Rs 3000/ Film
d.Other Films
Rs2000/ Film
6. The Building and other Cost of Construction 2 Percent
Construction Workers
Welfare Cess Act
and washing, and educational facilities; improvement of standards of living, including hous-
ing and nutrition; amelioration of social conditions; provision of recreational facilities; and
family welfare including family planning, and other services (Ministry of Agriculture and
Co-operation, 1995-‘96). In actual practice, most of the expenditure from the Welfare Funds
has been on health, education, and housing.
The Central Welfare Funds have adopted the integrated model of health care and undertaken
to provide medical services directly. The assistance and facilities provided for medical care
include purchase of spectacles for persons with ophthalmic problems, reimbursement of
actual expenditure for heart disorders, kidney transplants and cancer, reservation of beds in
hospitals that treat tuberculosis and for domiciliary treatment for those with tuberculosis,
grant for treatment, diet, and transportation charges, subsistence allowance for those with
mental disorders or leprosy, and the supply of artificial limbs for orthopaedic problems
(Ministry of Rural Areas and Employment, 1996). Table 3.2 shows the number of workers
covered under the welfare funds and the expenditure incurred on their health during the
year, 1993-’94.
Table 3.2 Expenditure of Central Welfare Funds on Health, 1993-‘94
Source: Ministry for Welfare, Annual Report, 1995-‘96
Owing to increasing specialisation of health care and rapid spread of private and public
hospitals, the model of actual service provision has proved to be neither popular nor viable in
the case of welfare funds (Desai, 1988). Welfare funds are adopting the model of reimburs-
ing expenditure, or providing the services indirectly, by entering into agreement with the
providers of the service, confining their own function to the financing of the services.
Shelter is one of the basic needs of the people. Mineworkers and Beedi workers’ schemes
include housing. But considering the present costs of construction it is doubtful if the scale
of assistance provided is adequate. Another thrust area has been the education of the work-
ers children as it was felt that this would bring a qualitative improvement in their lives on a
lasting basis. Among other things, scholarships, school uniforms, textbooks, and stationary
have been provided.
The benefits offered to members of Welfare funds have been extended by entering into
Group Insurance Schemes, the funds themselves paying the premium for their members.
Over one million beedi workers are covered by the LIC’s Group Insurance Scheme. Fifty
percent of the premium is paid by the Welfare Fund, the balance being subsidised by the
LIC. The Building and Other Construction Workers Act also envisages protection of work-
ers under Group Insurance Schemes and paying the premium from the welfare funds. If
Sl. Welfare Funds No. of Workers Expenditure Per capita
No. Benefited on Health
(Rs In Lakhs) (Rs. In Lakhs) (Rs. In Lakhs)
1. Iron ore, etc 0.78 62.92 79.65
2. Lime stone 0.54 51.49 96.15
3. Beedi 27.34 681.54 24.92
similar arrangements are made for other groups as well, the cost of providing survivor
benefit may work out to be less than self insurance (Krishnan T.N, 1995). Welfare funds of
Kerala have already entered into agreement with the Life Insurance Corporation under rel-
evant group insurance schemes for which they function as nodal agencies, collecting and
paying the premium on behalf of their members and helping in the settlement of claims.
Regarding old age pension, which welfare funds need to include in the benefits they provide,
an important issue is whether only a basic minimum pension should be given leaving it to the
individuals to make their own arrangement for supplementing it, as under the Kerala schemes,
or they should provide income-related pensions as under the Employees Pension Scheme.
Limitations of Welfare Funds
Other than medical care, the Welfare Funds set up by the Central government have no
provisions for meeting the expenditure on any of the well-recognised branches of social
security such as sickness benefit, occupational injury benefit, maternity benefit, invalidity
benefit, old age benefit, survivor benefit or unemployment benefit. In other words, these
Welfare Funds cannot be considered to be providing social security, but they have the scope
and the potential to become instruments of social security if suitable amendments are made
to the laws (Subrahmanya, RKA, 1995). Such amendments were made to the Building and
Construction Workers Welfare Fund, which provides the benefits of immediate assistance in
case of accident, payment of pension, loans and advances for construction of houses,
payment of premiums for group insurance schemes, financial assistance for the education
of children, payment of medical expenses for the treatment of major ailments, payment of
maternity benefit, and provision and improvement of other welfare measures and facilities.
The Kerala Welfare Fund Schemes provide a wide range of benefits, including many secu-
rity benefits included in the ILO convention concerning minimum standards of social secu-
rity. The Kerala Fishermen Welfare Fund Act provides the benefits of distress relief in the
event of destruction of huts due to natural calamities, payment for injury in any accident
sustained while fishing, a lumpsum assistance to dependants in the event of death, old-age
pension, assistance for funeral expenses, interest-free loans for the marriage of daughters,
educational assistance, and medical facilities. However, in actual practice the Welfare Funds
in Kerala are not able to provide all the benefits because of resource constraints, and it has
been reported in the case of Fisherman Welfare Fund that ‘there are twelve schemes but
only pension is being met by the government’ (State Planning Board, 1996). That is, the
Central and the Kerala models represent two extremes, one the minimalist approach, the
other of the maximalist approach. Neither can be considered ideal for the future develop-
ment of Welfare Funds in India as far as benefits are concerned. What actually needed is to
prepare a standardised list of benefits which may be provided from the Welfare Funds and to
prioritise them, such as invalidity, health care, old age and survivor benefits, maternity and
child care, housing, and educational assistance.
The Central Welfare Funds are administrated by the Ministry of Labour through Welfare
Commissioners appointed by the Government, with the help of advisory committees, which
have no financial or administrative powers. They tend to be bureaucratic and lacking in
initiative. Moreover, an unnecessary multiplicity of funds has led to administrative problems
and proved uneconomical. There is no doubt that if the Welfare Funds can be integrated
there would be a great saving on overheads.
The problem of multiplicity is also seen in the working of the Welfare Funds constituted by
the Government of Kerala, which are administrated by autonomous boards. There are as
many Boards as there are funds. Multiplicity of Boards has resulted in heavy overhead
expenditure reducing the amount available for benefit expenditure.
Another major problem of central Welfare funds is the identification of beneficiaries. These
welfare funds do not have a system of registration; instead they have introduced the system
of identity cards. The identity cards are required to be issued by the employers, who have
not been responsive to the needs of workers. On the other hand, in Kerala the system of
registration exists but the schemes being optional the number of workers who have regis-
tered varies according to the scheme, in some case the coverage being very low.
One of the major problems of welfare funds is that they cover only selected categories of
workers and ignore many of the needy categories such as agricultural labour, forest work-
ers, and home-based workers (Getubig I P, et.al, 1992). Even within the mining sector there
are many groups such as stone, salt, etc, which have been left out. Though the Acts under
which the central Welfare Funds have been set up do not prescribe any ceiling, in practice
there exists a ceiling in the application of the benefits of the Welfare Funds.
In spite of the various problems associated with the Welfare Funds and their implementa-
tion, they provide one of the most important ways of reaching workers in the unorganised
sector. By establishing Boards for the industry as a whole and using the mechanism of cess
collection on the products of industry, they overcome the problem of identifying individual
employers, which often constitutes a major obstacle in the unorganised sector.
Unification of Labour Welfare Funds
The Government, employers, and trade unions generally agree that the Labour Welfare Funds
have gone a long way in ameliorating the conditions of labour outside their work premises
and have brought a measure of cheer in workers’ lives. At the same time, it has been
increasingly felt that various funds need to co-ordinate their activities more than what has
been done (Lokanthan, 1929). Better still, they could be amalgamated into a common admin-
istrative set-up for economy and efficiency of operations.
The existing pattern of operations of funds tends to create significant differentials in work-
ers’ social conditions. In mining, those employed in coal mines enjoy better civic conditions
and more social services than their counterparts working in mines not covered by any
welfare fund. Similarly, workers employed in different industries within the same State may
enjoy unequal benefits from labour welfare funds. Despite genuine effort to co-ordinate
activities, duplication has been found unavoidable. Too much of bureaucracy is expensive
and reduces the quantum of money available for developing welfare services for labour
(Singh, 1963). The Committee on Labour Welfare (1969) suggested the following func-
tions of the Labour Welfare Boards for the unification.
1. Community and social education centres including reading rooms and libraries;
2. Community necessities;
3. Games, sports, and other programs of physical fitness;
4. Excursions, tours, and holiday homes;
5. Entertainment and other forms of recreations;
6. Home industries and subsidiary occupations for women and unemployed workers;
7. Corporate activities of social nature;
8. Such other activities as would, in the opinion of the State Government, improve the
standards of living and promote health, family planning, and social conditions of labour.
The primary purpose of the labour welfare funds is the socio-economic upliftment of work-
ers, to secure for them better civic and social services and to bring a measure of cheer in
their lives. A unified system of administering and financing extra-mural labour welfare
schemes will also benefit workers employed in unorganised industrial sector or in such
industries remain uncovered for obvious reasons, and thus suffer more (Saxena, 1963).
Funds are a way out to extend welfare measures to a large number of workers.
Labour in the informal or unorganised sector contributes 85 percent of the working popula-
tion in Kerala (State Planning Board, 1996). Nearly three-fourths of them are wage workers
and the remaining comprises small cultivators, small-scale industrialists, contractors, shop-
keepers, etc. Cultivators, small-scale producers, and ancillary and dependent establishments
of the organised sector, as well as other sections of the working population including the
employees and workers of the organised sector, employ wage-workers of the unorganised
sector who, in effect, constitute a reserve army of under-employed and unemployed prole-
tariat at the beck and call of an oppressive and exploitative socio-economic order (Charyulu,
1975). The majority of them are settled in rural areas.
Labour relations in the unorganised sector are chaotic. For the vast majority of the workers,
formal employee-employer relationship does not exist; even in cases in which it exists, it is
of a casual nature. Infighting among workers for job opportunities is common. Anarchical
tendencies worsen relations between workers and small-time employers. Institutions to give
training and specialisation in different trades and vocations have not come into existence.
Skilled jobs in many sectors continue to be a male prerogative; unskilled and semi-skilled
jobs involving hard physical labour and environmental hazards often get reserved for women
workers.
The existing labour relations in the unorganised sector are hardly conducive to specialisation
and skill development, an essential prerequisite for productivity and technology improve-
ment (Jose, 1984). The numerous legislations for regulating labour relations in the sector so
far attempted are rendered infractuous because they all rely on the highly centraslised bu-
reaucracy for implementation. The fact that the state’s unorganised sector will continue to
play a vital role in social production for a long time to come, underscores the need for
immediate reforms in the sector.
Social security in the unorganised sector
Social security measures such as old-age pension, gratuity, provident fund, ESI, and other
insurance schemes are non-accessible to workers of the informal sector. Consequently
employment in the unorganised sector is looked down upon by the society. Most workers
in this sector themselves perceive it only as a transitory phase. This kind of situations
prevails throughout the country but it is quite conspicuous in Kerala because of the com-
paratively high incidence of casual wage labour and the high degree of labour mobility in the
State’s economy.
Working class movements in the unorganised sector have been demanding not only
minimum wages but also benefits such as old age pension, gratuity, provident fund, and
health and other insurance cover which are normally available only in the organised sector.
Legal measures for ensuring permanent employee-employer relationship and setting up of
formal training institutions replacing the hereditary and caste-based institutions for voca-
tional training are also some of the demands raised by workers’ movements (Muraleedharan,
1996).
4. Social Security Schemes and Labour Welfare Funds of Kerala
Toddy Tappers Welfare Fund, Provident Fund, and Old-Age Pension Schemes for Agricul-
tural Workers, Motor Workers Welfare Fund, and Head Load Workers Welfare Fund are
some of the schemes initiated or implemented for meeting the demands of the working class
movement (Duvvury and Sabu, 1997). Of all these legislations, the Head Load Workers Act
was unique. It has accepted the need for rationalising the employee-employer relationship
with the help of a statutory Labour Board and Tripartite Committees. But this statute was
addressed to a specific category of workers and was to be administrated mainly by the
bureaucracy with only very nominal role for grassroots-level organisations and participation
by the workers themselves.
Administering efficiently a large number of schemes and statutes addressed to different
categories of workers is found neither feasible nor practical because of the huge bureau-
cratic machinery needed for the purpose. It would have been desirable if the requirements of
different categories of workers for social security and of the terms of their employment
were met by a single scheme or statute which covers all sections of workers and all aspects
of labour relations in the unorganised sector.
Labour Welfare Funds of Kerala
The welfare fund model of social security for the unorganised sector workers in vogue in
Kerala is now more than three decades old. The pioneer in this field is the Toddy Tappers
Welfare Fund, which was constituted in 1969. Proper functioning of the welfare funds
requires active participation of both workers and the government (Lindel, 1996). In Kerala,
the State played and continues to play a leading role in the initiation and management of
Welfare Funds. Participation of the employers is found, to a great extent of, a pragmatic
proposition within the framework of their economic rationality for accumulation.
The establishment of Welfare Funds for the collective care arrangements was neither in the
agenda of the workers’ unions, nor of the political parties to which they are affiliated.
Labour relations in the State are characterised by stratification and segmentation embedded
in the traditional order. In a situation of high unemployment, the strategies followed by
labour unions in Kerala strengthened the segmentation characteristics by falling back on
caste and gender considerations (Kannan, K.P, 2001). These strategies were related to their
goal of maximising earnings of the ‘insiders’ by controlling entry into the labour market.
However, trade unions found it difficult to approximate to such a situation in the unorgan-
ised sector.
One of the major objectives of trade union activities in the State was to improve the condi-
tions of work, earnings, and the economic security of workers through improving labour
status and income. It means that the trade unions are intended to bring about a movement
away from vulnerability towards stability in employment and income of workers. In this
line the unions have succeeded to a remarkable extent in breaking down the conventional
differences between the organised and the unorganised (or formal and informal) sectors,
and establishing in their place another labour market phenomenon of insiders versus outsid-
ers (Kannan, K.P, 2001). The insiders comprised workers with primary union membership
with or without stable employment. In this process a number of labour institutions includ-
ing Minimum Wage Committees and Industrial Relations Committees were transplanted
into the realm of informal sector workers. It was the failure of the labour co-operatives in
terms of economic viability to take care of employment and social security requirements of
their workers that gave rise to the setting up of Welfare Funds in the state.
Trade unions faced difficult situations with regard to employment security of workers in
coir-weaving, cashew processing, and other traditional industries. They were forced there-
fore, to resort either the setting up of labour co-operatives or adoption of a closed-shop
strategy with regard to labour market entry. The major labour co-operatives constituted in
the state included those of toddy tappers, beedi workers, handloom weavers, and a few
groups of casual labourers in loading and unloading work. Unfortunately these co-opera-
tives did not have the managerial and even the organisational capabilities to sustain within the
prevailing competitive market framework (John Kurien, et al, 2001). The closed-shop strat-
egy lead to the exclusion of workers who were unable to get into the unions and thus to the
labour market. Thus, union membership has become the primary criterion for occupational
identity for purposes of eligibility in social security arrangements such as receiving state
pension and membership in welfare funds.
The establishment of Welfare Funds in Kerala was a consequence of the limitations of the
wage bargaining processes at the end of which the employers chose to abandon business; it
was in this background that the Toddy Tappers Welfare Fund was set up in 1969 with the
active participation of government. For over a decade, the question of extension of collec-
tive care to other sections of workers in the unorganised sector remained neglected. How-
ever, in 1977 the Kerala Labour Welfare Fund was setup for workers in small-scale facto-
ries, plantations, shops, and co-operative institutions. The eighties witnessed the formation
of nine Welfare Funds covering workers in such diverse occupations as loading and unload-
ing, motor transport, advocates’ clerks, artisans, fish workers, and handloom workers (Nata
Duvvury, et al, 1997). To this list should also be added workers in women-dominated activi-
ties such as cashew and coir-processing. The broad political acceptance of this form of
collective care arrangements under the supervision of the government in the State, led to the
setting up of seven more welfare funds in the nineties (Appendix Table 1).
The philosophy of this kind of collective care was the result of a spirit of mutualism which
took care of individual risks though collective contributions and provided some sort of
security at the end of a person’s working life (State Planning Board, 1997). Given the
political nature of workers’ mobilisation and the existence of a democratic State, the estab-
lishment of Welfare Funds was an institutional innovation which ensured participation of as
well as contribution by employers, and organisational support of the government. Social
insurance in the event of sickness, accidents and death, assistance for housing, education of
children and marriage of daughters, etc., are all part of the social assistance provided to
workers though the Funds.
Functioning of Welfare Funds
The administration of Welfare Funds is vested with the Government, and the Funds function
like other government departments. The Government nominates members to the Boards of
Directors and more or less equal representation is given to wokers’ unions, and Govern-
ment. Although the Boards of Directors are the ultimate body for deciding the policies and
functioning of the Funds, the concerned government department wields considerable pow-
ers. The establishment expenses are borne out of the receipts of the respective Funds; the
expenses include fees and allowances to Board members, salaries and other benefits to
administrative staff, other routine administrative expenses, and contribution to provident
funds of the staff. The majority of Welfare Funds in the State expend a large chunk of their
income for establishment charges (Kannan, KP, 2002). It means that the savings of the
informal sector workers are used to finance the employment of government service person-
nel.
The government contribution and the contributions of workers to the Welfare Funds are
seldom fixed on the basis of well-stated principles; out of the 19 Welfare Funds formed in
the State only 15 get government contribution. Employers’ contributions were also received
only irregularly. The coverage ratio of Welfare Funds in Kerala is also dismal due to poor
attractiveness of expected benefits.
The basic objective of all Welfare Funds is to provide a measure of social security and
insurance for workers who are vulnerable to risks and uncertainties and do not have any
other institutional protection arising from their employment status (Vijaya Sankar, P.S, 1986).
The major social security benefits are provident funds given to workers on superannuation,
monthly pension, and gratuity. Social insurance is in the form of an ex gratia payment in the
event of disability or death and a modest payment in the event of treatment for ill-health
(Appendix Table2). Welfare assistance consists of financial assistance for housing, educa-
tion of children, and marriage of daughters.
The Welfare Fund model of social security is complementary to the basic social security
provided by the state. The Welfare Funds which now cover workers in the informal sector,
both in agricultural and non-agricultural occupations, have sought to address the concerns
of social security, insurance, and welfare albeit only in the minimalist sense. Together with
the general and basic social security programmes such as food security, access to school
education, and primary health care, the State-assisted social security programmes in Kerala
have imparted a sense of dignity and self-esteem to the workers in the informal sector
(Harilal K. N, 1986). The evolution of such a broad-based social security arrangement in the
State has been the result of labour movements and the pro-poor state policies.
Certain fundamental weaknesses have been observed which act as hurdles to the smooth
functioning of the Welfare Funds in the State. Structural characteristics of the State economy
– a low-income agrarian sector, low per capita income, and low industrial productivity
persisting in the State act as constraints to the enhancement of the scope of social security
arrangements in general and Welfare Funds, in particular. These constraints can be tackled
only through a higher rate of investment and structural transformation of the economy.
However, these weaknesses cannot be held as an excuse for all the laxity in the functioning
of the Welfare Funds.
The prescribed criteria for contributions and benefits show wide variations among different
Funds; there is need for uniformity. It has been suggested that the State should contribute
large amounts only to those Funds in which the total contribution from the employers and
the workers is found insufficient to meet the stipulated benefits (Johri C.K and S.M Pandey,
1972). The majority of the workers in the informal sector remain outside the coverage of
Welfare Funds. As per the 1991 Census, Kerala’s work participation rate was 38 percent
which implied a workforce of about 120 lakh workers. Around 12 lakh were in the organ-
ised sector and the remaining 108 lakh in the informal sector. Leaving out farmers, the
workers in the informal sector came to 90 lakh, of which 26 lakh (29 percent) were covered
under the Welfare Funds, leaving out the rest (71 percent) without my social security pro-
tection (Kannan.K.P, 2002). The voluntary nature of membership and the non-attractive
nature of benefits are attributed to the low coverage.
Funds mobilised by the majority of the Welfare Funds are found insufficient to meet their
expenditure incurred on evaluating investments and making collections from and disburse-
ments to members. High costs of administration of the majority of the Welfare Boards raise
basic questions on the rationale behind running of these Funds. In reality there takes place
very little by way of welfare payments despite collection of contributions from the stakeholders.
A solution suggested to this problem is the setting up of a unified and common administra-
tive body to cater to all the Welfare Funds (Vijaya Sankar, 1986). It seems therefore essential
to think in terms of administrative arrangements which would ensure participation of work-
ers and employers and would be responsive to their specific needs and problems.
5. Kerala Building and Other Construction Workers Welfare Fund: Scope, func-
tions, and performance
The Kerala Building and other Construction Workers Welfare Fund (1990) was constituted
as per the Kerala Construction Workers Welfare Fund Act of 1989. The preamble to the Act
elucidates its objective thus “To provide for the constitution of a Fund to grant relief, to
promote the welfare of, and to pay pension to, the construction workers in the state.” The
Act also defines the construction worker as, “any person who is employed for wages to do
any work in connection with a construction work, and who gets his wages directly or
indirectly from an employer or from a contractor including supply of materials for con-
struction works.” The majority of workers in this group are masons, carpenters, painters,
concrete workers, road workers, and earth workers. Schedule–I of the KBCWWF Act
(1989) contains 26 categories of construction works (Table 5.1).
The Board consists of 15 directors, five each from the workers, employers, and the Gov-
ernment. The Government appoints one of the Directors of the Board as the Chairman. The
Government also appoints a Chief Executive Officer and other officers to assist the Board in
the discharge of its functions and duties
The major characteristics of the KBCWWF are:
1. Provision of a measure of social security and welfare assistance to workers.
2. Creation of a tripartite body consisting of the representatives of the workers, employers,
and the government with veto powers for the government on policy issues.
3. A bureaucratic organisational mode with Chief Executive appointed by the government
departments
4. Mandatory financial contribution from the workers and employers with the exception of
a few ‘voluntary’ funds.
5. Minimal financial contribution by the government except in cases in which the workers
are directly under the government activities (i.e., Government as employer) or the paying
capacity of the workers is deemed very low (Kannan. K. P, 2002).
Table 5.1 lists the categories of workers who are eligible to receive KBCWWF
benefits.
The major welfare schemes taken up by the KBCWWF include pensions, death benefits,
accident benefits, cash awards and scholarships to members’ children, medical expenses,
assistance for marriage and maternity benefit, and invalid pension. Members completing 60
years of age are eligible to pensions in the range of Rs 200-Rs 400, depending upon their
period of membership and contributions. Invalid pension at the rate of Rs 75 per month is
available to permanent disability due to diseases and accidents. Accident benefit with a maxi-
mum of Rs 50,000 is given for disability and injuries. Workers and children of members are
eligible to get marriage assistance at Rs 2000 to 3000. Maternity benefit is limited to two
child births (Table 5.2).
Table 5.1 Construction Workers who are entitled to get the KBCWWF Benefits
Source: KBCWWF Act, 1989
The style of functioning of the KBCWWF is just like that of a government department,
since the administration of the Fund vests with the government. The considerable innova-
tive skills evident in the designing and coverage of the Fund are not deployed in the admin-
istrative set-up (Kannan K. P, 2002). Even though the Boards of Directors are the ultimate
body for deciding the policies and functioning of the Fund, the government departments
wield considerable control.
Membership
Every construction worker in the age group 18-60 years who is not a member of any other
Welfare Fund and has been engaged in construction work for not less than 90 days during
the year preceding the date of registration is eligible to became member (Government of
Kerala, 1989).
Sl. No. Construction Workers
1. Brick masons
2. Rubble masons
3. Laterite masons
4. Laterite cutters
5. Brick moulders
6. Carpenters
7. Blacksmiths
8. Fitters
9. Plumbers
10. Painters
11. Sawyers other than sawmill workers
12. Workers engaged in laying iron rods for concreting
13. Casual (Maikadu)workers connected with construction works
14. Workers engaged in collecting sand and gravel
15. Mosaic workers
16. Tunnel workers
17. Rock breakers and quarry workers
18. Electricians
19. Concrete workers
20. Workers engaged in thatching and spreading tiles
21. Marble/Kadappa stone workers
22. Road workers
23. Earth workers connected with construction work
24. Workers engaged in processing lime
25. Welders engaged in construction work
26. Workers engaged in anti-sea erosion works.
Table 5.2 Welfare Schemes of KBCWWF
Source: KBSWWF
By the mid-1990s there were five lakh construction workers in the State (Department of
Economics and Statistics, 2001). Of this, only 3.5 lakh workers were registered under the
KBCWWF with a coverage ratio of two-thirds; the courage went up by 131 percent in
1999-2000. The total number of workers registered as of March 2000 was 8.12 lakh (Ta-
bles 5.3). The annual growth rate of members was high in 1997-‘98 (30.55 percent) over
1996-‘97 with the addition of 1.32 lakh new members (Table 5.4). An important yardstick
of the effectiveness of the Welfare Funds would be their coverage; in this respect KBCWWF
has achieved tremendous progress. The average coverage ratio of all Welfare Funds in the
State was under 50 percent. It needs to be pointed out that the enrolment of workers in a
Welfare Fund is a positive function of the attractiveness of the expected benefits (Ahmad
Type of Benefit Beneficiary Eligibility Benefit Amount
(Rs)
Pension Member Completion of 75-300
60 years
Death Benefit Dependent Death before 100,000
60 years
Maternity Benefit Woman Worker Limited to two 500
deliveries
Accident Benefit Member Injury/ Disability Up to a maximum
of 50,000
Cash Award Children of Marks in 1000
Members SSLC Exam 750
500
Merit Scholarship Children of Student Merit 300-1500
Members
Other Credits Members/ Treatment/ Interest free
Dependent Education/ loans
Marriage
Medical Expenses Members Fatal Diseases 1000
Immediate
Assistance for Dependent Death of a Member 1000
Funeral Expenses
Assistance for Children of
Marriage Members/ Members Marriage 2000-3000
Permanent
Invalid Pension Member disability due to 75/ Month
diseases / accidents
Refund of Member/ Attainment of 60 Amount of
Contribution Dependent Years / Retirement/ Subscription
Death with Interest.
Ehtisham, 1991). Given the nature of employment in the unorganised sector and its geo-
graphical spread, the coverage of workers under KBCWWF should be reckoned as impres-
sive.
Resources mobilisation
The major sources of funds for the KBCWWF consisted of contributions from members,
employers, and the Government, as well as the license fees levied from contractors. An
important aspect of the fund collection is the fixing of the contributions of the workers,
employers, and the Government. The KBCWWF Act (1989) fixed slabs of Rs 10, Rs 15,
and Rs 25 for the monthly contribution of members, one percent of construction cost for
employers (annul contribution made by the contractors came to Rs 100 to Rs 1000); and 10
percent of initial members’ contribution per annum for the Government.
Fund collection in 1996-‘97 was Rs 1463.27 lakh; the corresponding figure was Rs 2331.92
lakh in 1999-2000 (Table 5.5). Employers contributed 57 percent in 1996-‘97, but only 52
percent in 1999-2000; consequently, workers’ contribution went up from 42 to 48 percent,
over the corresponding period. There are different opinions among policy makers regarding
collections from the different types of contributors (Sinha, PK, 1980). Wherever the prod-
uct market allows the employer to shift the burden to the consumer, there has been less
resistance in paying contributions; but when the employers are the price takers, their unwill-
ingness becomes quite open.
Table 5.3 District-wise Distribution of Members Registered under KBCWWF, 2000
Source: Administrative Report of KBCWWF, Various Years
District Number of Members
1990-96 1996-97 1997-98 1998-99 1999-00 Total Percent
Thiruvana- 53,562 6,769 23,445 6,592 30,722 1,21,090 14.9
nthapuram
Kollam 14,690 8,959 10,737 5,478 8,356 48,220 5.9
Alappuzha 23,3315 4,145 4,650 3,212 4,928 40,250 5.0
Pathanamthitta 8,401 5,930 7,993 3,528 11,548 37,400 4.6
Kottayam 17,651 2,676 4,088 4,244 8,445 37,104 4.6
Idukki 6,979 2,037 3,467 2,846 9,244 24,573 3.0
Ernakulam 41,377 6,498 10,467 3,011 7,214 68,567 8.4
Thrissur 30,647 4,629 12,180 7,798 21,863 77,117 9.5
Palakkad 22,962 10,552 17,429 11,489 24,654 87,086 10.7
Malappuram 30,475 6,387 9,463 5,737 15,242 67,304 8.3
Kozhikode 35,270 6,821 11,773 5,852 15,894 75,610 9.3
Wayanad 5,786 1,010 986 1,078 1,783 10,643 1.3
Kannur 46,472 11,793 12,394 4,569 16,707 91,935 11.3
Kasargod 14,038 2,499 3,192 2,040 3,623 25,392 3.2
State 3,51,625 80,705 1,32,264 67,474 1,80,223 8,12,291 100
Benefit to the workers
1. Pension to a member who is unable to work due to permanent disablement or who has
completed the age of 60 years.
2. Gratuity to the members of the Fund.
3. Immediate assistance to members of the Fund, in case of accidents.
4. Financial assistance for the funeral expenses of the members and members of their
families.
5. Loans and advances to members for construction of houses for their residence on such
terms and conditions as may be fixed by the Board.
6. Expenses incurred in connection with premia for group insurance of the members as the
Board may deem fit.
7. Financial assistance for the education of children of the members as may be decided by
the Board.
8. Medical expenses of the members or their dependents as may be decided by the Board.
9. Family pension.
10.Maternity benefits.
11. Financial assistance to members to meet expenses of the marriage of their children.
12.Any other purpose specified in the scheme.
Table 5.4 Members and Beneficiaries of KBCWWF, 1996-‘97 to 1999-2000
Source: KBCWWF
In 1996-‘97, 0.2 lakh workers were given benefits, which went up to 0.32 lakh in 1999-2000
(Table 5.4). The proportion of beneficiaries was in the range of 3.9 to 4.9 percent during
1996-‘97 to 1999-2000. The amount of benefits increased from Rs 309.7 lakh in 1996-‘97 to
Rs 1049.6 lakh in 1999-2000 by 239 percent. The average per capita benefits increase was by
112 percent (from Rs 1548.5 to Rs 3280). The various benefits provided by the KBCWWF
are given in Table 5.6. The corresponding amounts are shown in Table 5.7.
Pension
Monthly pension, at the rate of Rs 200 to 400, constitutes the most important benefit, which
Details Year
1996-97 1997-98 1998-99 1999-2000
Total Members (In lakh) 4.32 5.65 6.32 8.12
New Members Registered
(In lakh) 0.81 1.32 0.67 1.80
Annual Growth rate of membership (%) 22.95 30.55 11.86 28.48
Benficiaries (In Lakh) 0.20 0.18 0.31 0.32
Beneficiaries as percentage of Members
Benefits Provided (Rs in Lakh) 309.7 478.1 665.7 1049.6
Average per capita benefit
received (Rs) 1548.5 2656.1 2147.4 3280.0
attracts the construction workers to join the Fund, as a measure of security during old age.
In 1996-‘97, 8457 members enjoyed the pension benefit; the number increased by 83 per-
cent to 15,484 in 1998-‘99. KBCWWF disbursed Rs 145.4 lakh on this count in 1996-‘97,
the amount went by 93 percent to Rs 280 lakh in 1998-‘99.
Ex-gratia payments
In 1996-‘97, 1557 members benefited from ex gratia payments; the number rose to 3458 in
1999-2000. But, ex gratia payments increased only marginally during the period from Rs 10
lakh to Rs 10.6 lakh.
Health cover
No formal insurance cover is provided to the workers; however, they are given financial
assistance in the event of accidents or fatal diseases. For example, in 1996-‘97, 361 work-
ers were given Rs 2 lakh as payment for fatal diseases; the corresponding figures were 563
and Rs 2.4 lakh respectively in 1998-‘99. But, per capita payment decreased from Rs 554
in 1996-‘97 to Rs 426 in 1998-‘99.
Table 5.5 Fund Collection of KBCWWF: 1996-‘97 to 1999-2000
Source: Administrative Report of KBCWWF, Various Years
Educational assistance
Given the importance of education in Kerala and the premium attached to it even by poor
households, it should not come as a surprise that educational assistance figures high among
the welfare benefits of KBCWWF. In 1996-‘97, the Fund assisted 933 students with an
average of Rs 214 each as scholarships and cash awards; the corresponding figures were
1826 students and Rs 690 in 1999-2000.
Housing assistance
There are several housing schemes for the poor in Kerala; this aspect of social security has
been quite seriously addressed as part of the State Government’s poverty alleviation pro
grammes (Mahendra Dev, 2001). The KBCWWF provides house-building loans; in 1999-
2000, 452 members were given loan at a cost of Rs 166.1 lakh, which was 225 percent
higher than in the previous year.
Source Fund Collection (Rs. Lakh)
1996-97 1997-98 1998-99 1999-2000
Members Contribution 620.55 1221.61 943.07 1124.64
Contribution of Employers 841.16 879.04 871.67 1207.28
License Fee from the Contractors 0.56 7.97 6.38 -
Contribution of Government 1.00 1.00 1.00 -
Total 1463.27 2109.62 1822.12 2331.92
Table 5.6 Beneficiaries of KBCWWF: 1996-‘97 to 1999-2000
Source: Administrative Report of KBCWWF, Various Years
Note: Others Include Money order Bank charges, Benefit Distributed by District Executive Officers, Free
Medical Treatment etc.; * includes items 1, 2, 9, and 10.
Table 5.7 Benefits Provided by KBCWWF: 1996-‘97 to 1999-2000
Source: Administrative Report of KBCWWF, Various Years
Note: Others Include Money order charges, Benefit Distributed by District Executive Officers, Free
Medical Treatment etc.; * Include items 1 and some segment of 2, 9, and 10.
Benefits No. of Beneficiaries
1996-97 1997-98 1998-99 1999-00
Pensions 8457 3073 15484 6103*
Death Benefits to Nominees 523 691 1031 -
Ex-gratia Payments 1557 987 2054 3458
Maternity Allowance 609 1196 976 1486
Funeral Assistance 466 647 1452 1162
Scholarship & Cash Awards 933 956 1492 1826
Marriage Assistance 2639 4463 4914 8249
Payment for Fatal Disease 361 245 563 770
Refund of contribution to
Members 4377 5121 1279 -
Interest on Workers Contribution NA 691 1279 -
House Building Loans - - 204 452
Implement Loans - - 24 127
Others - - 22 8483
Total 19922 18070 30774 32116
Benefits Amount (Rs in Lakh)
1996-97 1997-98 1998-99 1999-2000
Pensions 145.4 191.3 280.0 615.8*
Death Benefits to Nominees 61.9 69.5 106.9 -
Ex-gratia Payments 10.0 10.4 14.0 10.6
Maternity Allowance 5.5 9.3 9.8 14.8
Funeral Assistance 4.9 6.5 10.1 11.6
Scholarship & Cash Awards 2.0 9.7 11.6 12.6
Marriage Assistance 42.4 89.3 98.3 165.0
Payment for Fatal Disease 2.0 2.0 2.4 1.3
Refund of contribution to Members 32.7 30.5 55.7 -
Interest on Workers Contribution 2.9 4.1 15.7 -
House Building Loans - 28.8 51.1 166.1
Implement Loans - 2.7 1.2 6.4
Others - 23.0 8.9 45.4
Total 309.7 478.1 665.7 1049.6
Marriage assistance
Being an important event in a person’s life, lavish spending for wedding has become an
essential responsibility of households, the discharge of which involves huge expenditures.
In 1996-‘97, 2639 beneficiaries were given marriage assistance to the tune of Rs 42.4 lakh;
the amount of assistance went up by nearly four times to Rs 165 lakh in 1999-2000.
Maternity allowance
Maternity allowance at the rate of Rs 500 is given to a person for two deliveries. In 1996-
‘97 the KBCWWF disbursed a sum of Rs 5.5 lakh as maternity allowance for 609 women
members; the arrangement rose to Rs 14.8 lakh in 1999-2000, the number of members
benefited being 1486.
Death benefits
In 1996-‘97, 523 nominees of deceased members were given death benefit at a cost of Rs
61.9 lakh; the corresponding figure were 1031 nominees and Rs 106.9 lakh in 1999-2000.
Funeral assistance
A notable provisioning by the KBCWWF, which is neither insurance nor welfare, is the
financial assistance for meeting the funeral expenses of the worker. Although the worker
often worked without dignity, the need for conducting his funeral in dignity was underlined
by this form of assistance (Marcel Van der Linden, 1996). In 1996-‘97, Rs 4.9 lakh was
expended as funeral assistance; the amount increased by 137 percent in 1999-2000 (Rs 11.6
lakh).
Implement loans
The KBCWWF assists its members also with loans for purchase of implements. In 1999-
2000, 127 members were given implement loans worth of Rs 6.4lakh.
It is seen that pensioners accounted for 42 percent of the beneficiaries in 1996-‘97. Mar-
riage assistance rose from 13 to 26 percent during 1996-‘97 to 1999-2000. The corre-
sponding increases were from 8 to 11 percent in the case of ex gratia payments and from 5
to 6 percent for scholarships and cash awards to children. The annual growth rate of all
benefits taken together was 58 percent during 1997-‘98 to 1999-2000.
Critical assessment
The coverage of workers in the construction sector has been quite impressive in compari-
son with that in other Welfare Funds; still much more improvement is required, in particular,
in backward districts.
Several studies have proved that around 70 percent of the Welfare Funds in Kerala mobilise
resources that exceed their total expenditures (Government of Kerala, 1989). The income
of KBCWWF increased from Rs 6575.8 lakh in 1997-‘98 to Rs 10,156.2 lakh in 1999-2000
(Table 5.8). Contributions, which accounted for 22 percent of total receipts in 1996-‘97, fell
to 12 percent in 1998-‘99, with consequent rise in the proportion of deposits, both savings
and fixed. Details regarding fixed deposits of KBCWWF are given in the Table 5.10.
Total expenditure of the KBCWWF went up from Rs 409.5 lakh in 1996-‘97 (excluded fixed
and savings deposits) to Rs 1244.6 lakh in 1999-2000, with an annual average growth rate
of 48 percent (Table 5.9). Welfare payments in 1996-‘97 occupied 76 percent of total
expenditure (excluding deposits); the proportion marginally declined to 70 percent in 1997-
‘98, but rose to 79 percent in 1998-‘99 (Table 5.11). Beneficiary payment as percentage of
contribution increased from 21.4 percent in 1996-‘97 to 35.3 percent in 1988-‘99 but de-
creased to 12.5 percent in 1999-2000.
The low proportion of disbursements is a matter of concern, since it implies that hardly any
meaningful social security is provided to the members. The fact that the disbursements do
not reflect either the contributions or the accumulated funds could give rise to problems of
credibility in the long run (Kannan K.P, 2002). It also implies that the present generation of
workers may be benefiting at the cost of past generations. These tendencies are not desir-
able, since the proclaimed aim of the Fund is to cater to the welfare of the construction
workers. It may also lead to the credibility of the KBCCW falling in jeopardy as the mem-
bers might accuse that the resources are not being used for the welfare of the workers.
Source of Income Income (Rs in Lakh)
1996-97 1997-98 1998-99 1999-2000
Credit balance 0.09 0.07 0.15 0.06
DD in Transit 0.1 62.1 38.1 0.03
Savings & Fixed Deposits
(Including Banks, Treasury,
Post office, UTI, Kisan vikas
patra and Interest) 5089.7 6966.2 12248.9 2331.9
Contributions 1462.3 2109.6 1685.1 7759.9
Government Grant 1.0 1.0 - -
Benefit undelivered 19.9 0.5 22.1* -
Loans Returned - - 2.40 7.04
Miscellaneous 2.6 8.9 19.22 57.2
Total 6575.8 9148.4 14015.9 10156.2
Table 5.8 Income Statement of KBCWWF, 1996-‘97 to 1999-2000
Source: Administrative Report of KBCWWF, Various Years
* With the KBCWWF
Table 5.9 Details of Fixed Deposits of KBCWWF as on 31 March 2000
Source: Administrative Report of KBCWWF, Various Years.
Bank Amount
(Rs. In Lakh)
Indian Bank 649.2
Canara Bank 334.8
Federal Bank 211.8
South Indian Bank 279.8
Union Bank of India 829.1
Nedungadi Bank 617.4
Syndicate Bank 65.3
Indian Overseas Bank 18.1
United Bank of India 1.6
Lord Krishna Bank Ltd 715.8
Dhanalekshmi Bank Ltd. 468.4
Tamil Nadu Marcantaile Bank Ltd 493.5
Catholic Syrian Bank Ltd. 1000.0
Corporation Bank 300.0
Bank of Maharashtra 650.0
State Bank of Hyderabad 169.9
Dena Bank 192.7
Oriental Bank of Commerce 305.5
Thiruvananthapuram Dist. Co-Op Bank 170.0
Kollam Dist. Co-Op Bank 37.3
Kottayam Dist. Co-Op Bank 34.8
Idukki Dist. Co-Op Bank 20.1
Ernakulam Dist. Co-Op Bank 32.0
Palakkad Dist. Co-Op Bank 45.0
Malappuram Dist. Co-Op Bank 57.3
Kozhikode Dist. Co-Op Bank 59.0
Wayanad Dist. Co-Op Bank 7.0
Kannur Dist. Co-Op Bank 98.0
Kasargod Dist. Co-Op Bank 20.1
Indira Vikas Patra 100.0
Kissan Vikas Patra 702.0
Post Office Time Deposit 712.0
Treasury Savings Bank 10.5
Total 9408.0
Table 5.10 Expenditure Statements of KBCWW: 1996-‘97 to 1999-2000
Source: Administrative Report of KBCWWF, Various Years
Note: Savings and fixed deposits in 1996-‘97 was Rs 4807.3 lakh, in 1997-‘98 Rs 6353.9 lakh, in 1998-‘99
Rs 13250.8 lakh, and in 1999-2000 Rs 8911.6 lakh, which are included in the expenditure part.
Though it has been accepted in general that the administrative cost of the Welfare Funds
should not exceed 10 percent of the total income, the majority of the Funds are operating
above the stipulated limit (Government of Kerala, 1989). The administrative expenditure of
the KBCWWF increased by 304 percent from Rs 63.6 lakh in 1996-‘97 to Rs 193.67 lakh in
1999-2000. But remained at about 16 percent of the total expenditure (excluding deposits) in
all these years (Table 5.11).
Instead of expressing administrative cost as a percentage of total income, it is more mean-
Table 5.11 Relationship between Welfare Payment & Expenditure of KBCWWF:
1996-‘97 to 1999-2000
Source: KBCWWF; Note: Total Expenditure excludes fixed and savings deposits other than in item number - 4.
Item Expenditure (Rs in Lakh)
1996-97 1997-98 1998-99 1999-2000
Administration Expenditure 63.6 110.2 118.8 193.67
Capital Expenditure 6.0 6.3 17.3 4.3
Deposits (Telephone, Rent etc) 0.4 - - -
Payment of Welfare Benefits 312.3 478.2 542.3 874.9
Loans Granted - - 52.23 95.3
Miscellaneous (Bank charges,
MO Charges etc) 4.9 0.07 5.5 0.13
Suspense Accounts (Cash & Stamp) - - 0.2 0.13
In transit (Mail transfer / DD/
Telephonic/Cheque Transfer 2.4 62.1 6.7 76.2
Benefit Undistributed 19.9 23.2 22.1 -
Total 409.5 680.0 765.1 1244.6
Particulars Year
1996-97 1997-98 1998-99 1999-2000
Administrative expenditure as a
percentage of total expenditure 15.5 16.2 15.5 15.6
Beneficiary payments as
percentage total Expenditure 76 70 78 78
Administrative Expenditure as
a Percentage of Welfare payments 20.37 23.04 21.91 22.14
Savings& Fixed Deposits as a
percentage Total Expenditure 92.15 90.33 94.54 87.75
Beneficiary payment as a
percentage to contribution 21.36 22.67 35.28 12.50
ingful to express it as a percentage of the total welfare payments – a kind of transaction cost
of welfare distribution. If this cost exceeds the benefit transferred, it has undesirable impli-
cations (Kannan KP, 2002). But, administrative expenditure as a proportion of welfare pay-
ments of the KBCWWF has always remained lower than one-fourth. It went up from 20.4
percent in 1996-97 to 23 percent in 1997-98, and remained at 22.1 percent in 1999-2000.
Expenditure on the account ‘in transit,’ including mail transfer, DD, Telephones, and Cheque
transfer, increased from one percent of total expenditure in 1996-‘97 to six percent in 1999-
2000; this item needs to be contained for the sustainability of the Fund in the long run.
In brief, it may be stated that the major objective of welfare benefit namely of helping the
needy - is not yet achieved, even after significant gains in several other areas (Table 5.12).
Diversification of welfare schemes to cater to the need of the construction industry, is
essential. At the same time, the situation of benefits remaining undistributed, which came to
six percent of total benefits in 1996-’97 also needs correction as justification to the welfare
motto of the Fund.
Table 5.12 Growth Indices Relating to KBCWWF (Base 1996-‘97)
Source: KBCWWF
Particulars Growth Indices (1996-‘97 = 100)
1997-98 1998-99 1999-2000
Members 131 146 188
Beneficiaries 90 155 160
Benefits 154 215 339
Expenditure 135 269 195
Administrative Expenditure 173 187 305
Savings & Fixed Deposits 132 276 185
6. Kerala Building and Other Construction Workers Welfare Board – A brief
review of its finances
In this section a brief survey of the financial condition of the Board is attempted. As stated
earlier, the Board’s primary objectives are to provide a measure of social security and pro-
tection for construction and allied workers, by mobilising finance for the purpose from
workers and employers. For the construction workers the Board offers the following social
security benefits.
1. A monthly pension on attaining superannuation. (completion of 60 years of age);
2. Pension for the family (at reduced rate) on the death of the pensioner;
3. Lump sum death benefit for the family in the event of the worker meeting with an
accident or dying during working period;
4. Disability pension to the worker in case of his/her total disablement during the period of
service; and
5. Medical care and other benefits.
The main sources of finance are mandatory contributions from employers as well as contri-
bution from employees. There is also a provision for government grants to support the
scheme. The Fund services benefits using these sources as well as the earnings from assets
created by the Fund.
Methods of estimating the solvency of the fund
The solvency of the Fund is defined as the ability to meet all the benefit commitments
promised under the scheme as and when they fall due for payments without any default at all
times in the future. According to this definition, it is not enough if for a particular year the
accounts show a credit balance for the Fund because what will happen in the future is not
clear from such annual statements of accounts. This is very important because of the long-
term nature of the liability contracted by the Fund.
Take for instance a pensioner who has just retired. The committed monthly pension for a
retired worker at the time of our data collection ranged from Rs 200 to Rs 300. If we take
the lower side, that is Rs 200, the annual pension commitment comes to Rs 2400. The Board
has to pay Rs 2400 per year so long as the pensioner is alive. When the pensioner dies the
pension reverts to his/her spouse at a reduced rate and will continue so long as the spouse is
alive.
If we assume that the pensioner would live for a period of 20 years from the date of
retirement, and that upon his/her death the spouse would survive for another five years, the
committed pension benefit reaches out into the future for at least 25 years. The enormity of
the pension commitments becomes clear; it comes to around Rs 50, 000 per person!
Therefore, to determine the solvency, the financial implication of this long-term benefit
outgo would have to be reckoned. Similarly on the contribution side, an estimation of the
likely contribution receivable by the Fund in the future is also required. If we assume that a
person becomes a construction or allied worker at the age of 30, on the average and that he/
she may be expected to continue in the trade till superannuation, the annual contribution
representing this worker would continue for as long as 30 years.
For handling financial arrangements of such long-term nature both on the contribution side
and on the benefit side, specialised, actuarial techniques are required.
The method
The benefits promised by the Fund fall into four major categories: payable on accidental
death while continuing as worker, payable following disability to continue work, payable on
survival after superannuation and miscellaneous lump-sum payments to take care of illness
and other contingencies. Any valuation process to determine the solvency would have, there-
fore, to be based on a Mortality model, a Disability model, a Survival model, and a Sickness
model.
A mortality model is required to estimate the probability of death due to accident. Using this
model, as on the date of valuation, it is possible to estimate the number of workers on the
rolls who are likely to die annually due to accidents in the future. This estimate gives an idea
of the probable annual outgo in the shape of accident benefits in the future.
Some of the workers on the rolls would become disabled annually in the future and become
unable to carry on work. From statistics, the annual outgo of disability benefits in the future
could be calculated.
A survival model is required to estimate the annual outgo of pension payments in the future.
The model provides an index of the probability of survival of pensioners each year in the
future. It also helps determine the probability of death of a pensioner and therefore deter-
mine the pensionary outgo for his/her spouse.
From a sickness table, it should be possible to estimate the number of workers likely to fall
sick and the length of the average sickness episode each year in the future. The outgo as
sickness benefits for the workers during each year in the future may be calculated from this
table.
Similarly the contribution, which would flow into the Fund from the work force on the rolls,
during each year in the future has also to be estimated using a survival model for the work-
ers. Clearly, contributions would come only if a worker remains on the rolls and works. If
he/her dies or leaves the trade, his/her contributions would cease. Therefore the estimation
of contribution in the future depends on the survival as workers of the existing work force.
This number may be estimated appropriately employing a suitable survival model for workers.
Decision criterion for solvency
The decision criterion for solvency is based on traditional actuarial practice. A traditional
actuary determines the question of solvency by comparing the monetary value of the stream
of benefits flowing out of the Fund with the value of the stream of contribution flowing into
the Fund, in respect of the workforce as on the date of valuation. If the value of the benefits
exceeds the value of the contributions including receipts from available assets, the Fund is
not in a position to meet the committed liability, has therefore to be regarded as not solvent.
On the contrary, if the value of the contribution exceeds the value of the benefits, the Fund
is in a position to meet the committed liabilities as and when they unwind in the future. Thus
the shortfall of the value of the contribution over the value of the benefits – Valuation Deficit
– indicates a measure of the lack of financial strength of the Fund. Similarly, the excess of
the value of the contribution over the value of the benefits – Valuation Surplus – is a measure
of the financial strength of the Fund to meet the committed liabilities.
In this study we employ an abridged version of this traditional actuarial technique to deter-
mine the solvency or otherwise of the KBCWWF.
Data base for valuation
Data with regard to contribution flow were available at the headquarters from the statements
of accounts and reports published by the Fund annually. Information on administrative ex-
penses for the Fund as a whole was also available on a yearly basis. Though information on
benefits other than pensions paid to members and on the beneficiaries was not available, data
on the aggregate pay-outs on these benefits could be gathered from the annual statements of
accounts.
A cursory examination of the costs of the various benefits promised by the Fund was made
in consultation with a professional actuary. The actuary found, after going through the
statements of accounts and available other information, that the major item of cost for the
Fund was its commitment of monthly pension to the members and pension to families
following the death of members. It was therefore decided to estimate the aggregate cost of
the pension benefit as on 31-3-2002. For this purpose details on pensioners existing as on
31-3-2002 were collected. Since the pension payments are sanctioned and regulated by the
headquarters of the Fund, registers were available district-wise information on the existing
pensioners such as name, date of birth, date of enrolment, date of retirement, date of com-
mencement of pension, and monthly pension sanctioned.
It was not possible to collect information on pensioners for all the 14 districts because of
time and resource constraints. Our personnel had to work without obstructing the routine
work in the offices. Therefore it was decided to settle for a sample of six districts selected
at random. The districts selected were Kollam, Idukki, Kozhikode, Wayanad, Kannur, and
Kasargod.
The age-wise distribution of pensioners in the selected districts as on 1 April 2000 is shown
in Table 6.1.
Table 6.1 Age-Specific Distribution of Pensioners as on 1-4-2002 in Selected Six Dis-
tricts
Source: Pensioners Register Maintained at KBCWWF
Calculation of value of pension benefits as on 01-04-2002
It is seen that there were 7203 pensioners in the age group of 60 to 72, in these districts. In
Table 6.2 the value of pension commitment as on 1 April 2002 in respect of these 7203
pensioners is shown. The method of calculation of the pension value is as follows. Using
the LIC 1996-‘98 mortality table, the probability of survival of a pensioner is estimated.
Thus the amount of pension payable in every future year since 1 April 2002 is calculated
and the probability of making that payment is estimated. For instance, probability of a pen-
sioner aged 60 as on 1 April 2002 to survive and receive pension payment during 2002-‘03
is 98.91 percent. The total pension payment at the rate of Rs 200 per month per annum is Rs
2400.
The present value of this Rs 2400 payable in one-year is worked out by discounting it by
applying the rate of interest of 8 percent. The value of Rs 2400 payable in one-year is hence
equal to Rs 2400 (1.08). This present value is multiplied by the probability factor because
the payment will be made only if the pensioner survives. Therefore the survival adjusted
present value of the pension payment of Rs 2400 per annum is equal to 2400/1.08 x .9891 =
2198. In this way the present value of all possible future payments is calculated and added
up to determine the value of the pension commitment for a person aged 60 on 1 April 2002.
If there are 2000 pensioners aged 60 then the total value will be 2000 times the value for a
single pensioner.
Age Kannur Wayanad Kasargod Idukki Kozhikode Kollam Total
58 0 0 0 0 0 0 0
59 0 0 0 0 0 0 0
60 3 18 0 0 0 6 27
61 0 1 0 6 0 477 484
62 0 40 88 165 9 556 858
63 0 31 189 174 89 242 725
64 98 33 109 102 228 121 691
65 420 21 93 51 186 171 942
66 698 43 144 49 259 122 1315
67 594 30 82 27 299 76 1108
68 429 4 64 16 193 33 739
69 152 1 20 2 75 4 254
70 43 1 2 3 6 2 57
71 0 0 1 0 1 0 2
72 0 0 0 1 0 0 1
73 0 0 0 0 0 0 0
Total 2437 223 792 596 1345 1810 7203
Table 6.2 Age-specific distribution of pensioners in the Scheme as on 1-4-2002
Note: Monthly pension = Rs200, Discount Rate = 0. 08,
Sources: Reports of KBCWWF, Annual Account of KBCWWF, Pensioners Register Maintained at KBCWW,
LIC 96-98 Mortality Table (Appendix II)
In Table 6.2, under column 3, the value of pension payment of Re 1 per annum is shown for
each age. Under column 4 the product of 2400 and column 2 and column 3 for each age is
recorded. This gives the value of the pension commitment for each age. Under column 5, 10
percent of column 4 is taken, as roughly the value required for servicing the family pensions
on the death of the pensioner. This is not at all an over estimate. In Column 6 the aggregate
value of the pension commitment (column 4 + column 5) is shown. Thus from Table 6.2 we
get the estimated value of the pension commitment in respect of 7203 pensioners in the six
selected districts.
Age Number of Annuity Present value Present value Total value
pensioners Factor of Member of Family of pension
pension pension commitment
50 0 11.45211 0 0 0
51 0 11.33638 0 0 0
52 0 11.21622 0 0 0
53 0 11.09326 0 0 0
54 0 10.96716 0 0 0
55 0 10.83747 0 0 0
56 0 10.70369 0 0 0
57 0 10.56523 0 0 0
58 0 10.42122 0 0 0
59 0 10.27144 0 0 0
60 27 10.11562 655479 65547.9 721027
61 484 9.953435 11561792 1156179.2 12717971
62 858 9.784392 20148414 2014841.4 22163255
63 725 9.599943 16704000 1670400 18374400
64 691 9.401889 15592415 1559241.5 17151657
65 942 9.192001 20781462 2078146.2 22859608
66 1315 8.971973 28315895 2831589.5 31147485
67 1108 8.743382 23250272 2325027.2 25575299
68 739 8.507705 15088902 1508890.2 16597792
69 254 8.266282 5039106 503910.6 5543017
70 57 8.020294 1097193 109719.3 1206912
71 2 7.770754 37300 3730 41030
72 1 7.518496 18044 1804.4 19848
73 0 7.264163 0 0 0
Total 7203 158290274 15829027 174119301
The estimate of the number of pensioners that may exist in the remaining eight districts and
the value of the pension commitment for them are given in Table 6.3.
Table 6.3 Statistics showing Registered members in the Welfare Scheme (continuing
as workers)
Name of District
As on 31-3-
99
As on 31-3-
2000
Pensioners as
on 1-4-2002
Rema
Trivandrum 90368 121090 3156 Estim
Kollam ** 39864 48220 1810 actua
Pathanamthitta 25852 37400 975 Estim
Alappuzha 35322 40250 1049 Estim
Kottayam 28659 37104 967 Estim
Idukki ** 15329 24573 596 actua
Ernakulam 61353 68567 1787 Estim
Thrissur 55254 77117 2010 Estim
Palakkad 62432 87086 2270 Estim
Malappuram 52062 67304 1754 Estim
Kozhikode ** 59716 75610 1345 actua
Wayanad ** 8860 10643 223 actua
Kannur ** 75228 91935 2437 actua
Kasargod ** 21769 25392 792 actua
Total for selected 6 districts 276373 7203
Total Estimated Registered in 14
Districts
812291
Note: ** indicates selected districts for the study
Sources: Reports of KBCWWF, Annual Account of KBCWWF, Pensioners Register Maintained at KBCWWF,
LIC 96-98 Mortality Table (See Appendix- II)
The method of estimation is as follows. Details of registered construction workers existing
as on 31-3-1999 and 31-3-2000 were collected from the headquarters of the Board. Dis-
trict-wise particulars for all the 14 districts are available and these have been recorded in
Table 6.3. Under column 4 of Table 6.3, the number of pensioners as on 1-4-2002 in respect
of the six districts for which data were collected has been recorded. In respect of other
Annuity factor for age 60 a
60
=
Discounting Factor = V
15
= 1/(1+.08)
15
=
Present value of monthly pension of Rs200 payable at age 60
for a person aged 45 as on 1-4-2002 =
200 x (
15
P
45
) x a
60
x v
15
=
Value of Pension commitment in respect of members in active work as o
2002= 812291 x 6939.504099 =
Value of Pension commitment in respect of existing pensioners (6 districts)
Value of Pension commitment in respect of remaining 8 districts
Total required Fund
Total Fund available as on 31-03-2000
Estimated Fund Size as on 31-3-2002
(It is assumed that Rs 25 Cr will be collected every year in respect of the ex
members for the next 15 years)
The present Value of these 15 annual contributions @ 25 Cr per annum =
Total Value of the assets as on 1-4-2002
Less Administrative Expenses @Rs3.5 Cr per annum
Value of Fund available as on 1-04-2002
districts for which pensioner data could not be collected, estimates were made using the
registered work force as on 31-3-1999 and 31-3-2000 as bases for projection. Roughly the
number of pensioners is about 26 percent of the work force.
The total estimated pensioners in the State as on 1-4-2002, including the 7203 enumerated
from the six districts earlier mentioned, come to 21,171. Information on the age distribution
of the 7203 pensioners is available, but we have no information on the age distribution of the
13,968 pensioners in the remaining eight districts (21,171 – 7203 = 13,968). Assuming that
their average age is 62, using the LIC mortality table and a rate of interest of 8 percent per
annum for discounting; the liability value in respect of these estimated 13,968 pensioners
was determined and recorded in Table 6.3. Thus the total value of the pension commitment
in respect of all surviving pensioners was determined to be Rs 51,17,70,057.
We had a workforce of 2,76,373 as on 31-3-2000. These persons constitute a potential
pension liability for the Fund. Hence we have to determine the value of pension commitment
for these 2,76,373 persons who will eventually retire; they would draw pension for them-
selves as long as they live and after their death their families would draw pension. In Table
6.3 we have estimated the amount involved for paying pension by taking the average age of
the work force as 45, using the LIC mortality table and calculating the amount at 8 percent
rate interest for discounting. The cost of pension liabilities in respect of the existing work
force amounts to Rs 563,68,96,724. This amount must be added to the liability value in
respect of existing pensioners. The aggregate pension value for pensioners and existing
work force together comes to Rs 614, 86,66,781.
There is need to find methods to meet the escalating cost. One source is the available assets
of the Board as on 1-4-2002. From the accounts of the Fund the value of the available
assets, as on 1-4-2002 was estimated at Rs 154,90,89,596. There is another source namely
the annual contribution by employers made as long as the workforce remained in employ-
ment. It is difficult to gather exact information about this source. But, by considering the
statements of accounts during the past 5 to 6 years, it was estimated that not more than Rs
25 cr per annum in respect of the existing work force will flow into the Fund during the next
15 years. The present value of Rs 25 cr per annum during the next 15 years was determined
by discounting them at a rate of interest of 8 percent per annum. This amounts to Rs
213,98,69,672. In this way the total value of the assets already available and also those in the
making during the next 15 years amounts to Rs 368,89,59,268 (Rs 154,90,89,596 + Rs
213,98,69,672 ).
After studying the accounts of the Fund for the past five years, it was estimated that for
servicing the benefit and for administering the Fund about Rs 3.5 cr per annum will be
required for the next 15 years. The present value of the administrative expenses was simi-
larly determined using 8 perecent per annum interest for discounting; it came to Rs
29,95,81,754.
The true available financial source will thus be Rs 338,93,77,514 (Rs 368,89,59,268 – Rs
29,95,81,754) against the value of pension liability of Rs 614,86,66,781. This means that
there exists an estimated deficit as on 1-4-2002 amounting to Rs 275,92,89,267 (614,86,66,781
– 338,93,77,514 = 275,92,89,267). If we spread this deficit for the next 15 years the annual
deficit would work out to Rs 32, 23,66,509.
Thus, a crying need is found to exist for reformulating the benefit package and also the
contribution factors so as to make the Fund totally self-financing. Unless corrective meas-
ures are taken the Fund will have to face serious financial consequences in the coming
years. Even with Rs 200 as monthly pension, we have found that the Fund would move to
a position of not being solvent in the not-too-distant future. The doubling of the benefit
without finding matching resources to finance additional commitments would only acceler-
ate financial strains and the process towards insolvency.
7. Construction Workers in Mazhuvannur Panchayat
Being in the unorganised sector, the socio-economic background of construction workers,
in particular of the elderly among them, is not at all better than that of the other vulnerable
groups. The discussion in this section is based on a survey of the socio-economic charac-
teristics of the construction workers of Mazhuvannur Panchayat in the Kunnathunadu taluk
of Ernakulam district.
Mazhuvannur panchayat was inhabited from very early periods by construction workers,
since this area has rich laterite stone mines. Historians have traced the origin of the name of
the panchayat Mazhu-vannur (Mazhu being the implement used for cutting stone), to ‘the
stone cutting workers who dominated the village’ (V.K.Valathu).
Location
Mazhuvannur panchayat is located in the Mazhuvannur and Airapuram villages of Vadavukodu
Block panchayat. Kunnathunadu is the Assembly constituency and Muvattupuzha the Parlia-
ment constituency. Vengola and Rayamangalam villages fall on the North of Mazhuvannur,
and Aykkaranadu panchayat on the South. Payipra and Kunnathunadu panchayats are lo-
cated in the East and the West of the Mazhuvannur, respectively. The total area of the
panchayat is 4911 sq. km.
Physiography
The diversified physiography of the panchayat characterises a typical Kerala midland re-
gion. The undulating topography alternating with hills, valleys, and forests shows the rich-
ness of natural resources in the panchayat. Like the diversity and richness of land re-
sources, Mazhuvannur is also well-endowed with water resources in the form of ponds,
streams, and canals. The annual rainfall is 330cm. Nevertheless, during the summer months
water shortage is a common phenomenon. The water scarcity is accentuated by the con-
struction of the Periyar Valley Canal, which has led to the disappearance of a number of
ponds.
Agriculture
The topographic diversity of the area has attracted a variety of farm activities in the panchayat.
The major crops cultivated include rice, coconut, rubber, and pineapple (Table 7.1).
Agricultural labourers dominate the working population in the panchayat.
Demographic features
According to the 1991 Census, the total population of the panchayat was 29,508 persons;
14,866 males and 14,642 females. The density of population in the panchayat (601 persons
per sq km) is lower than the State average (819 persons per sq.km). Of the 6062 households
in the panchayat nearly 48 percent are under abject poverty. Among the 2901 families
Table 7.1 Area under Important Crops
Source: Panchayat Development Report, 1996 of Mazhuvannur panchayat
below the poverty line (BPL), 201 belong to SC/ST (Development Report, 1996). Ward-
wise distribution of families below the poverty line is given in Table 7.2. Poverty-ridden
families are found in larger numbers in ward numbers five, six, eight, and eleven than in the
other wards. These four wards together account for more than 50 percent of the BPL
families in the panchayat.
Table 7.2 Ward-wise Distribution of Families below Poverty Line
Source: Panchayat Development Report, 1996 of Mazhuvannur panchayat
Of the total number of 8729 buildings in the panchayat, 69 percent are houses. Concrete
buildings accounted for 27 percent and other Pucca buildings for 66 percent of the total
number of buildings in the panchayat (Table 7.3).
Construction workers – Primary survey
The present study of construction workers in the Mazhuvannur panchayat is based on the
Crops Area (Ha)
Rice 1140
Coconut 940
Rubber 1100
Pineapple 240
Banana & other Plantains 97
Horticulture 60
Tapioca 47
Pepper 40
Others 141
Ward No. Families below Poverty Line SC / ST-BPL Families
1 198 13
2 259 12
3 227 1
4 194 32
5 314 26
6 429 30
7 71 10
8 321 -
9 279 24
10 208 53
11 401 -
Total 2901 201
Table 7.3 Details of Building in the Panchayat
Source: Mazhuvannur Panchayat Development Report, 1996
primary survey conducted in two wards of the Panchayat (Ward Nos. 6 and 7). The period
of survey was February 2002 to June 2002.
Construction workers were divided into three groups: members of the KBCWWF, non-
members, and pensioners. From each group 50 samples were selected. Quantitative and
qualitative methods were used for collecting data. Semi-structured pre-tested and interview-
administered questionnaire was the main tool used. Besides, focus group discussions (FCD)
and key informant interviews were carried out at the ward level to supplement the informa-
tion collected through the survey. Trained investigators collected the data through house-
to-house visits. The timings of data collection were varied to suit the respondents. Data
collection, focus group discussions, and open-ended interviews were conducted simultane-
ously.
Sample selection
By adopting the stratified sampling method, 150 samples were selected from the three groups.
The selection was completed in two steps. Initially details of workers were collected from
the voters’ list with the help of the panchayat members and people’s representatives. On
preliminary observation it was found that the majority of the working population in the ward
Nos. 6 and 7 were engaged in the construction sector. And, again as we have seen in Table
7.2, these two wards stood at the two extremes with regard to poverty. Poverty-ridden
families were the maximum in Ward 6 (429) and the minimum in Ward 7 (71). Therefore,
samples were selected from these two wards.
Identified samples were streamlined through focus group discussions and key informant
interviews. The criteria adopted for a construction worker to be included in the sample
selection were the following: he/she should be a person who is employed for wages doing
any work in connection with building construction including any work relating to supply of
building materials who gets his/her wages directly, or indirectly from an employer or from a
contractor, and who is specified as worker in any of the categories in Schedule-I of the
Construction Workers Welfare Fund Act. An opinion survey was also conducted to analyse
the workers’ perceptions of the Welfare Board. Opinions of non-members were also re-
corded.
Type No. Percent
Total buildings 8729 100.0
House buildings 6062 69.4
Concrete 2359 27.0
Pucca 5800 66.4
Kutcha 520 6.0
Multi-storeyed 50 0.6
Socio-economic profile of construction workers
Occupation
The majority of the employed construction workers belonged to the agricultural sector. The
construction sector engage 14 types of workers including brick workers, masons, carpen-
ters, black smiths, plumbers, and painters. Out of the 100 samples selected, including both
members and non-members of the KBCWWF, 39 percent are helpers in the construction
sector followed by masons and rock workers (13 percent each). In the structural classifi-
cation of construction workers much variation could not be seen between members and
non-members. Helpers constituted more than one-third of the construction workers. Among
the regular workers, masons and rock-mine workers were numerically the highest account-
ing for 13 percent each.
Table 7.4 Classification of Construction Workers by Occupation
Source: Field survey
Sex ratio
As we have seen earlier, the sex ratio in the panchayat was 985 females per thousand males
as against 1058 females per thousand males for the State as a whole (Table 7.5). In the
sample households 73 percent of construction workers are males. The work participation
rate among females is extremely low (15.4). Only 27 percent of the construction workers
are found to be females. Among the women workers 59 percent have taken membership in
the KBCWWF, which shows that women workers are highly conscious of their security.
Type of Work Members Non-Members Total
No. % No. % No. %
Brick Worker 3 6 2 4 5 5
Mason 8 16 5 10 13 13
Carpenter 5 10 2 4 7 7
Black Smith 2 4 4 8 6 6
Plumber 2 4 2 4 4 4
Painter 3 6 2 4 5 5
Helper in Construction Site 15 30 19 38 34 34
Fitter - - - - - -
Electrician 3 6 4 8 7 7
Road Worker - - - - - -
Welder - - - - - -
Seawall Worker - - - - - -
Rock Mine Worker 6 12 7 14 13 13
Marble Worker 3 6 3 6 6 6
Others - - - - - -
Total 50 100 50 100 100 100
Table 7.5 Classification of Construction Workers by Sex
Source: Filed survey
Age composition
Forty-one percent of the workers in the age group of 18-60 years belong to the age group of
35-45 years, and persons above 55 years constituted only seven percent of the total work
force (Fig. 7.1 and Table 7.6). The older workers always bother about their social security;
54 percent of workers above 45 years of age have taken membership in the KBCWWF,
whereas the corresponding figure was only 45 percent for workers below 35 years of age.
Table7.6 Age Composition of Construction Workers
Source: Filed survey
Marital, community, and educational status
Among the 100 sample workers 83 percent are married; widowed, divorced, and separated
constituted only four percent (Table 7.7). Scheduled Castes constituted 26 percent of which
54 percent are outside the social security umbrella of the KBCWWF (Table 7.8). Workers
belonging to other backward communities accounted for 50 percent of the construction
sector in the area and 54 percent of them are members of the KBCWWF. Membership rate
among forward community workers was only 46 percent.
Table 7.7 Martial Status of Construction Workers
Source: Field survey
Sex Members Non-Members
No. % No. %
Male 34 68 39 78
Female 16 32 11 22
Total 50 100 50 100
Age Group Member Non-Member
No. % No. %
18 – 35 10 20 12 24
35 – 45 20 40 21 42
45 – 55 17 34 13 26
> 55 03 06 04 08
Total 50 100 50 100
Type Members Non-Members
No. % No. %
Married 41 82 42 84
Unmarried 7 14 6 12
Widowed 1 2 0 0
Divorced / Separated 1 2 2 4
Total 50 100 50 100
Table 7.8 Construction Workers by Community
Source: Field survey
Even though the State claims to have achieved hundred percent literacy, in the study area 30
percent of the construction workers are found illiterate (Table 7.9). The average rural
literacy rate in the taluk is 82 percent (Government of Kerala, 2001). But, educational status
does not seem to have made any significant influence on the workers’ awareness of their
social security needs and membership rates. For instance, out of 15 illiterate construction
workers, 7 (47 percent) are members and 8 (53 percent) are non-members. Among work-
ers with primary level education, 30 out of 55 (55 percent) are members. In the higher
categories of the educated with secondary and higher secondary levels of education or
professional education the proportion of members is lower than of non-members.
Table 7.9 Educational Status of Construction Workers
Source: Field survey
Health status
Owing to several physical strains the chances of injury during certain types of construction
work are common, necessitating temporary stay off from work. In the study area 36 per-
cent of workers reported some sort of injury, disease, or weakness which hampers their
usual work. Male workers (38 percent) reported more cases of ill health than their female
counterparts (30 percent). Among the unhealthy workers 46 percent of males and 63 per-
cent of females are members of the Welfare Fund (Fig. 7.2 and Table 7.10). Thus, the
Social Group Members Non-Members
No. % No. %
Scheduled Caste 12 24 14 28
Scheduled Tribe 0 0 0 0
Forward Community 11 22 13 26
Other Backward
Community 27 54 23 46
Total 50 100 50 100
Educational Status Member Non-Members
No. % No. %
Illiterate 7 14 8 16
Lower Primary
Education 14 28 11 22
Upper Primary
Education 16 32 14 28
Secondary 5 10 6 12
Higher Secondary 4 8 6 12
Graduate/
Postgraduate 0 0 0 0
Professional 4 8 5 10
Total 50 100 50 100
benefit coverage of unhealthy construction workers under the Welfare Benefit Scheme of
the KBCWWF among the sample households is only 55 percent. Injury led to permanent
disability to two percent of the workers, and partial disability to another five percent.
Table 7.10 Health Status of Construction Workers
Source: Field survey
Political background
Workers in Kerala are in general politically active and most of them are either members of
trade unions or active members of political parties. Trade unions emerged as a powerful
labour institution in the Mazhuvannur panchayat a long time ago and historical factors played
an important role in this development. But, such factors could not make any impact on the
construction workers. Among the sample construction workers 65 percent are sleeping
members of political parties; among them only 40 percent are members of the KBCWWF
(Table 7.11). On the other hand, active members of political parties and trade unions consti-
tuted only 10 percent, and of which 60 percent were members of the Welfare Fund. Thus,
it could be seen that there is a positive correlation between active participation of workers in
trade union and political activities and membership in the Welfare Fund.
Factors affecting work
Being in the unorganised sector, construction work is determined to a great extent by a
number of factors including availability of raw materials and imlements, weather, and health
status of workers. Among the samples selected 48 percent of the workers got only 15 or
less number of days work per month (Table 7. 12). Avaliability of work is reflected in the
work participation rates, 51.5 for males and 15.38 for females in the district.
Health factors, household responsibilities and alternative employment opportunities some-
Health Status Members Non-Members Total
Male Female Male Female Male Female
No. % No. % No. % No. % No. % No. %
Healthy 21 42 11 22 24 48 8 16 45 70.3 19 29.7
Weak & Frail 8 16 3 6 10 20 2 4 18 78.3 5 21.7
Anaemic 0 0 1 2 1 2 0 0 1 50 1 50.0
Physical Disability 0 0 0 0 1 2 0 0 1 100 - -
Chronic Diseases 2 4 1 2 0 0 1 2 2 50 2 50.0
Disability due to 1 2 0 0 0 0 0 0 1 100 - -
Accident during
the work
i)Leading to
permanent
Disability
ii) Stay of for a
short period 2 4 0 3 6 0 0 5 100 - -
Total No. of Workers 34 68 16 32 39 78 11 22 73 73 27 27.0
times keep workers out of the construction work for short periods. In our analysis 59
percent of the construction workers lost their work temporarily due to health reasons and
household responsibilities (Table 7.13). The corresponding proportion for women workers
alone was 67 percent. Construction workers are found to be engaged in other agricultural
and non-agricultural activities on holidays and free days without affecting their construction
work, due to fairly high wage rates prevailing in this sector.
Table 7.11 Political Background of Construction Workers
Table 7.12 Work Availability for Members and Non-Members
Source: Field survey
Table 7.13 Reasons for Absence from Work
Source: Field survey
Background Members Non-Members
No. % No. %
Members of Trade Union 8 16 2 4
Active Members of
political parties 6 12 4 8
Moderate Members of
political parties 10 20 5 10
Sleeping members of
political parties 26 52 39 78
Total 50 100 50 100
Average Number of Members Non-Members
days per month
No. of days % No. of days %
0 to10 3 6 5 10
10 to 15 22 44 18 36
15 to 20 14 28 15 30
20 to 25 11 22 12 24
> 25 0 0 0 0
Total 50 100 50 100
Reasons Members Non-members
Male Female Male Female
No. % No. % No. % No. %
Health 16 32 8 16 10 20 4 8
Household
Responsibilities 9 18 3 6 6 12 3 6
Other employment 0 0 0 0 0 0 0 0
Others 0 0 0 0 0 0 0 0
Total 25 50 11 22 16 32 7 14
Daily wage rates of construction workers in Kerala are given in Table 7.14. The wage rates
existing in the construction sector are one of highest in the unorganised sector.
Table 7.14 Daily wage Rates of Construction Workers
Source: Census of India – 2001, Provisional Figures
Reaching the work sites and meeting consumption requirements during work involve ex-
penditure. On an average the daily personal expenditure a construction worker incurred for
performing his work and reaching the work site stood at Rs 40, of which 55 percent
constituted expenditure on food (Table 7.15). Travel expenditure constituted another 22
percent. Cigarettes and beedi smoking and pan consumption are quite common among the
construction workers. Consumption of liquor is also widespread among them (Table 7.16).
Around 70 percent of construction workers consume liquor and toddy, 33 percent being
regular consumers. The average monthly consumption expenditure for liquor and toddy
among the construction workers stood at Rs 840.50, which constituted 21 percent of the
monthly personal income of the male workers. Consumption expenditure for intoxicants
among non-members of the Welfare Fund was found 10 percent higher than that of mem-
bers, a fact which highlights the higher security awareness of members than of non-mem-
bers.
Table 7.15 Average Daily Expenses on Working Days
Source: Field survey
The major source of income of the workers is wages. The average monthly personal in-
come of the construction workers in the study area was Rs 3352, an amount hardly suffi-
cient to ward off poverty from their families. Gender-wise disparity could be seen in the
personal income distribution of the construction workers, as the female workers’ earnings
was 42 percent lower than that of their male counterparts (Table 7.17). Earnings from
Construction Worker Daily Wages (Rs.)
Rural Urban
Carpenter First class 172.52 172.84
Carpenter Second class 152.78 152.88
Mason First class 170.20 171.73
Mason second class 153.41 152.11
Unskilled male Labour 123.43 124.30
Unskilled female Labour 102.76 103.98
Background Average Daily Expenditure (Rs.)
Members Non-members
Travel 8.5 9.0
Food 21.6 22.7
Cigarettes, Beedi, Pan 9.0 8.9
Other 0 0
Total 39.1 40.6
activities other than construction work constituted 16 to 17 percent of the monthly income
of the workers. It is also seen that income of the non-members is nine percent higher than
that of the members.
Table 7.16 Workers’ Consumption of Intoxicants
Source: Field Survey
Table 7.17 Average Monthly Wage Income of Workers
Source: Field survey
Construction workers usually stick to their profession, even though construction activity
forms part of the unorganised sector. Among the sample workers 85 percent have experi-
ence of more than 10 years, and seven percent, of more than 40 years in the construction
sector (Fig. 7.3 and Table 7.18). This finding implies that the new generation seldom enters
this field. For example, only five percent of workers have service of less than five years and
none in this group were women.
Table 7.18 Experience in Construction Work by Year-groups
Source: Field survey
Item No. of workers who consumes Avg. Monthly
Consumption
Daily Occasionally Once in While Expenditure
(Rs.)
Mem. N.M Mem. N.M Mem. N.M Mem N.M
Liquor 7 10 14 13 - 7 521 580
Toddy 2 4 5 2 1 0 280 300
Ganja / Charas - - - - - - - -
Drugs - - - - - - - -
Other Intoxicants - - - - - - -
Work Average Monthly Personal Income (Rs.)
Members Non-Members
Male Female Male Female
Construction Work 3352 2293 3465 2409
Other Work 483 300 607 500
Total 3835 2593 4072 2909
Years of Experience No. of Workers
Members Non-Members
Male Female % Male Female %
0-5 3 0 6 2 0 4
5-10 4 2 12 4 0 8
10-20 6 3 18 10 4 28
20-30 9 5 28 13 4 34
30-40 10 4 28 8 2 20
> 40 2 2 8 2 1 6
Household details of the construction workers
Even though the sex ratio in the panchayat area is biased against women, it was not so
among the sample households, the ratio was found to be 1207 females per 1000 males.
Non-working members (aged below 15 years and above 55 years) comprised 16 percent of
the population (Table 7.19).
Table 7.19 Household Details of Construction Workers according to Members and
Non-Workers
Source: Field survey
Item Member Non-Member
No.s % No.s %
Total Population 201 - 225 -
Avg. Strength of the Family 4.2 - 4.5 -
Male Population 90 45 103 48
Female Population 111 55 122 52
Total 201 100 225 100
Age Composition of Workers
Children 33 16 43 19
< 18 8 4 11 5
18 - 55 132 66 135 60
> 55 28 14 36 16
Total 201 100 225 100
Marital status (>18)
Married 105 52 123 54
Unmarried 46 23 46 20
Total 151 75 169 76
Educational Status
Illiterate 60 36 59 33
Primary School 33 20 40 21
Secondary School 47 28 50 28
Graduate and above 8 5 6 3
Professional 3 1 4 2
Skilled Members 18 10 23 13
Total 169 100 182 100
Employment Status of the Population (18-55)
Agriculture 20 13 4 2
Non Agriculture 83 52 95 56
Govt. Jobs 6 4 5 3
Unemployed 23 14 19 11
Not in the Labour Force 28 17 48 28
Total 160 100 171 100
Around 69 percent of the adult household members are married, and illiterates constituted
36 percent of total household adult population. Unemployment rate is 19 percent, 78 per-
cent of working population being employed in the non-agriculture sector.
Benefits received from KBCWWF
The major benefits received from the Welfare Fund include marriage assistance, funeral
assistance, and scholarship for children of the members. Among the 50 sample members of
KBCWWF only 28 percent received any benefits. House building assistance in three slabs at
the rate of Rs 5000, Rs 10,000, and Rs 20,000 was received by five members. The different
types of benefits received and the number of beneficiaries are shown in Table 7.20.
Table 7.20 Benefits Received from the Welfare Board
Source: Field survey
Family income
As discussed earlier, the wage income of the construction workers is hardly sufficient to
sustain a decent life for a family of 4-5 members. The family income of one-fifth of the
workers was lower than Rs 3000 per month (Table 7.21). Only 15 percent had incomes
higher than Rs 6000. The average monthly family income of the members of the Welfare
Fund was found lower than that of the non-members; it must be the low income that forced
them to join the Welfare Fund for social security.
Table 7.21 Monthly Family Income of Sample Households
Source: Field survey
Item No.of Persons Amount
Per person (Rs.)
Marriage 5 2000
House Building 2 5000
1 10,000
2 20,000
Medical 2 Spectacles
Funeral 1 2000
Education 1 2000
Income Group Members Non-Members
No. of Families % No. of Families %
<1000 0 - 0 -
1000-2000 7 14 5 10
2000-3000 6 12 4 8
3000-4000 10 20 7 14
4000-5000 10 20 13 26
5000-6000 11 22 12 24
6000-7000 4 8 5 10
< 7000 2 4 4 8
Housing conditions
Housing includes not only the physical structure providing shelter but also the immediate
surroundings and the availability of related community services and facilities. The Environ-
mental Hygiene Committee (1949) of India had recommended the following standards for
rural housing (Government of India, 1949).
1. There should be at least two living rooms.
2. Ample veranda space may be provided.
3. The built up area should not exceed one-third of the total area.
4. There should be a separate kitchen with a paved sink or platform for washing utensils.
5. The house should be provided with a sanitary latrine,
6. The window area should be at least 10 percent of the floor area,
7. There should be a sanitary well or a tube well within a quarter of a mile from the house.
8. It is unsanitary to keep cattle and livestock in dwelling houses. Cattle sheds should be at
least 25 feet away from dwelling houses. A cattle shed should be open on all sides; and 8ft
x 4ft area is sufficient for each head of cattle.
9. There should be adequate arrangement for the disposal of wastewater, refuse, and gar-
bage.
Among the sample households these norms are not seen to be maintained. Being poor they
could not maintain high housing standards. Thirty-two percent of the houses of the sample
households are of the Kutcha type. Sanitary latrine facilities, as had been insisted by the
Environmental Hygiene Committee were not available in 23 percent of the houses; however,
three-fourths of the houses were electrified and had drinking water facilities including own
dug wells or community well and taps (Table 7.22). Firewood, kerosene, and LPG were the
fuels used for cooking purposes in these households.
Land area owned and agriculture practices
The size of the land holdings owned by workers is comparatively low and 17 percent had
less than 10 cents of land (Table 7.23). However, more than one-fourth of them owned
more than 50 cents.
By way of homestead farming, 42 percent of workers among the sample households
cultivated coconut, tapioca, rubber, etc. Nearly 40 percent of the workers cultivated
paddy. Around 70 percent of the construction workers in the study area owned livestock
assets including cattle and poultry (Table 7.24). One could not find any difference between
members and non-members in this regard.
Ownership of household durables
Being a consumer society, undergoing strong demonstration effect, huge investments are
found to have been made in consumer durables. Not much difference is observed in this
respect among various income groups. Among the sample households, 51 percent of work-
ers owned TV sets, 16 percent phones, and 11 percent owned motor vehicles (Table 7.25).
Radio, mixer, and bicycles are also quite common.
Table 7.22 Housing Conditions of Workers
Source: Field survey
Table 7.23 Land Area Owned by Workers
Source: Field survey
Condition Member Non-Member
No. % No. %
House Type
Kutcha 14 28 18 36
Old & Dilapidated 11 22 8 16
Semi-Pucca 19 38 16 62
Pucca 6 12 8 16
Residential Status
Owned 50 100 50 100
Rented 0 - 0 -
Rent Free 0 - 0 -
Electrified Houses 39 78 42 84
Latrine Facility
Water Sealed 36 72 40 80
Open Pit 1 2 0 -
No Latrine 13 26 10 20
Drinking Water
Owned Well 26 52 18 36
Community Well 5 10 6 12
Owned tap 2 4 4 8
Public tap 2 4 4 8
Other 15 30 18 36
Cooking Fuel
Fire wood 50 100 50 100
Charcoal 0 - 0 -
Kerosene 12 24 16 32
LPG 8 16 4 8
Others 0 - 0 -
Land Size No. of People
Members Non-Members
< 5 Cents 2 0
5 – 10 Cents 9 6
10 – 50 Cents 23 33
50 –100 Cents 15 11
> 100 Cents 1 0
Table 7.24 Livestock Owned by Workers
Source: Field survey
Liabilities
Conspicuous consumption with low levels of income creates problems for these house-
holds. Medical treatment, marriage ceremonies, housing loans, and education loans are their
major liabilities. Among the sample households 133 cases of liabilities were reported of
which 16 percent were of liabilities of more than Rs 20,000 each (Table 7.26). Marriage
expenditure created liability in 42 families, of which 8 families had an average liability of
more than Rs 50,000. In fact it was this item which constituted 80 percent of the reported
liabilities of the construction workers.
Table 7.25 Details of Household Durables Owned by Workers
Source: Field survey
Source-wise liability distribution of construction workers, as given in Table 7.27 shows that
friends and relatives, moneylenders, co-operative societies and banks are their major sources
of funds. Friends and relatives and co-operative societies dominated this sector in 66 per-
cent of cases.
Live Stock Members Non-Members
No. % No. %
Cattle 7 14 6 12
Goats 8 16 12 24
Buffalo 0 - 1 2
Pigs 0 - 0 -
Poultry 16 32 13 26
Duck 2 4 0 -
Others 2 4 3 6
Item Members Non-Members
No. % No. %
Television 28 56 23 46
VCR / VCP 2 4 2 4
Refrigerator 0 - 0 -
Radio 20 40 26 52
Phone 7 14 9 18
Sofa Set 4 8 7 14
Other Furniture 3 6 2 4
Mixer 11 22 13 26
Grinder 1 2 0 -
Cycle 19 38 22 44
Scooter / Bike 4 8 6 12
Other Motor Vehicle 1 2 0 -
Table 7.26 Liabilities of Workers
Source: Field survey
Savings
Savings in Post office, Chit funds /Kurys and Jewellery constituted the major forms of
savings (Table 7.28). Investment in Jewellery and savings in Post office constituted 76
percent of total savings. But insurance coverage was found only in eight percent of
cases.
Table 7.27 Source-wise Liabilities of Workers
Source: Field survey
Table 7.28 Structure of Savings of Workers
Source: Field survey
Household expenditure
Consumption expenditure is divided broadly into food and non-food expenditures. Non-
Amount (Rs.) House loan Treatment Education Marriage
Mem N.M Mem N.M Mem. N.M Mem. N.M
< 1000 0 0 0 0 0 0 0 0
1000 – 5000 7 3 9 8 3 2 5 6
5000 – 10,000 5 6 6 8 1 1 6 6
10,000 –20,000 3 5 6 5 2 1 4 4
20,000 –50,000 2 1 2 3 0 0 2 1
> 50,000 2 0 0 0 0 0 3 5
Total 19 15 23 24 6 4 20 22
Source Members Non-Members
No. % No. %
Friends & Relatives 11 22 12 24
Money Lenders 4 8 8 16
Co-op Societies 13 26 10 20
Banks 3 6 4 8
Others 4 8 1 2
Institutions Members Non-Members
No. % No. %
Provident Fund 0 - 0 -
Insurance 4 8 6 12
Banks 0 - 3 6
Post Office 24 48 21 42
Chit funds / Kury 16 32 19 38
Others (Jewellery) 26 52 32 64
food items comprise electricity, drinking water, fuel, newspapers, treatment of diseases,
transport, and house maintenance. The average monthly expenditure for food constituted
Rs 1365, and for non-food Rs 780 (Table 7.29). Around ten percent of workers expended
more than Rs 2000 per month for food items.
Table 7.29 Monthly Consumption Expenditure
Source: Field survey
Lump sum expenditures for medical treatment, acquisition of consumer durables, and in-
vestment in land were quite high among the construction workers. During the past three
years around one-half the sample workers invested in land, buildings, vehicles, and in con-
struction and renovation of buildings (Table 7.30).
Table 7.30 Percentage Distribution of Average Lump-sum Expenditure of the Past
3 Years
Source: Field survey
The average amount expended for the purchase of land and buildings was Rs 77,917 per
transaction, and the expenditure of members of Welfare Fund under this item was 37 per-
cent higher than that of non-members (Table 7.31). In the construction of buildings and
purchase of vehicles also the expenditure of members was higher than that of non-mem-
bers. On the other hand, non-members’ expenditures on marriage ceremonies, medical treat-
ment, and purchase of durable goods exceeded by 25 percent of those of the members.
Group (Rs.) Members Non-Members
Food Non-Food Food Non-Food
< 500 0 10 0 13
500 – 1000 7 26 8 26
1000 – 1500 30 11 26 10
1500 – 2000 8 3 12 1
> 2000 5 0 4 0
Purpose Members Non-Members
. No. % No. %
Purchase of Land /
Building 4 8 6 12
Construction /
Renovation of building 17 34 15 30
Purchase of Vehicle 3 6 6 12
Purchase of Other
Durable Goods 4 8 2 4
Marriage / Ceremonies 9 18 12 24
Medical Treatment 28 56 23 46
Redemption of Loan 0 - 0 -
Other 0 - 0 -
Table 7.31 Average Amount Expended for Major Purposes
Source: Field survey
Opinion of the workers about KBCWWF members
Members
As part of the field survey an opinion poll on the Welfare Board was also conducted among
members as well as non-members. Opinions regarding the present functioning of the Wel-
fare Board, benefits and social security coverage, and need for new benefit schemes were
collected from the members; and the perceptions of the non-members about the Welfare
Fund were recorded. Regarding the present functioning of the Welfare Board, 54 percent of
members were satisfied; whereas 36 percent were unsatisfied. But, 84 percent of the
members were of the opinion that existing benefits are inadequate and 78 percent empha-
sised the need for improvement in social security assistance.
The majority of the members of KBCWWF expressed the view that improvement in welfare
benefits should be linked to hike in monthly contributions. While extending the welfare schemes
first preference should be given to maintenance of houses and then to medical allowances.
Enrolment of new members was the only possible way for enhancing welfare benefits.
Even though the Welfare Fund model of social security system was constituted for the
welfare of workers in the unorganised sector, it could not reach each and every worker due
to the voluntary nature of membership. Usually workers are attracted to join the Welfare
Funds with expectations of benefits.
Non-members
One-half the construction workers still remain outside the security network of the KBCWWF.
Unawareness of the functioning of Welfare Fund was not the reason reported for keeping
away from the Fund; the reluctance is due to their position of social security already achieved.
Among the non-members 58 percent of workers opined that they are not bothered about the
Welfare Fund model of social security. However, financial stringency prevented 26 percent
from joining the Fund.
The Construction Workers Welfare Fund was constituted in 1990, but the benefits perco-
Source Average Amount (Rs.)
Members Non-Members
Purchase of Land /Building 90,000 65,833
Construction / Renovation of Building 17,529 15,633
Purchase of Vehicles 13,000 9,833
Purchase of other durable goods 4165 7,500
Marriage / Ceremonies 68,333 83,833
Medical Treatment 9,500 11,233
Redemption of Loan 0 0
Others 0 0
lated to the grassroots level and reached the rural areas only a couple of years ago. As a
result, a good number of old construction workers remain outside the security network of
KBCWWF; in the study area eight percent of the non-members belong to this latter group.
Regarding the question on the information about members who have benefited from the
Welfare Board, non-members opined that 92 percent of their brethren who are members
were not getting any benefit at all. Thus, it could be seen that unawareness and illiteracy are
not the factors, which prevented the workers from joining the Welfare Board; the determi-
nant factor is the attractiveness of benefits expected.
Socio-psychological analysis of pensioners
The National policy on older persons views life cycle as a continuum, of which the post-60
phase of life is an integrated part. It does not view the age of 60 years as the cut-off point for
beginning a life of dependency. It considers 60 plus as a phase when the individual should
have choices and opportunities to lead an active, creative, productive, and satisfying life.
As part of the socio-economic analysis of the construction workers, a separate study on the
socio- psychological behaviour of the pensioners from among the retired construction workers
was conducted. Fifty pensioners from the Mazhuvannur panchayat were selected through
random sampling. This analysis not only depicts the social and psychological aspects of the
elderly construction workers; it also gives a general idea of the problems faced by the elderly
population in the State as a whole. During a period of rapid socio-cultural transition and
emerging generation gaps the psychological problems faced by the elderly are complex.
The breakdown of the joint family system and the emergence of the nuclear family system
have created tensions in the normal lifestyle of the elderly population.
Social security, financial security, and psychological security are the three pillars on which
the foundation of the human social life persists. Social security is a product of cultural
transitions and socio-political balance emerging in the society and the resultant family net-
work. A great anxiety of old age relates to financial security. It is attached to the potential
income-generation capacity of the elderly through employment, assets or whatever the me-
dium which is socially accepted as adequate and necessary. Potential future income stream
is connected with the past ownership of assets and employment. Being in the unorganised
sector potential income-generation capacity at the old age is an unimaginable task and it is in
such situations, the role of pensions becomes important. Even though the amount of pen-
sion given by the Welfare Board is small, that itself creates potential income generation
capacity based on which the psychological security increases. Healthy relationships existing
among members of the family, respect and care given to the elderly including the care given
to meeting their basic needs and medical attention are all supportive of psychological secu-
rity.
The main thrust of the welfare benefit scheme will have be to identify the more vulnerable
among the old persons such as the poor, the disabled, the infirm, the chronically sick and the
destitute, and to provide welfare services to them on a priority basis.
Since the KBCWWF was constituted only about a decade ago the majority of the present
pensioners are not too old; very old construction workers remaining mostly outside the
social security fabric of the Welfare Board. In our analysis only six percent of the elderly
construction workers were getting pension for more than four years, and 80 percent were
getting the same for less than two years.
Pension from KBCWW, as we discussed earlier, is a product of the workers’ contribution
and the period of payment. It ranged from a minimum of Rs 200 per month to a maximum
of Rs 400. In Mazhuvannur panchayat 66 percent of pensioners were getting the minimum
pension.
Even though the working capability diminishes with old age, human desires and family
needs go on increasing and at least the partial fulfilment of which (other than the personal
basic needs) is essential for psychological satisfaction. In our sample, 94 percent of the
pensioners complained that their pensions are inadequate. Unless other sources of income
were found, attaining even the basic needs through pension alone is difficult. Among the
sample pensioners only 34 percent had some livelihood options other than income from their
children.
Table 7.32 Pensioners’ Perceptions on Pension
Source: Field survey
Status in the family
Family is the most cherished social institution and the most vital non-formal social security
for the elderly. Elderly persons stay with one or more of their children, particularly when
independent living is no longer feasible. It is this arrangement that is found to be the most
preferred and also the most satisfying to the elderly. It is important that this traditional
support system continues to be functional and the ability of the family to discharge its caring
responsibilities is strengthened through other support services. Family activities constitute
the major engagement of the elderly. Under the nuclear family system, the elderly look after
their children and grandchildren, in return for the care they take for the elderly. Among the
sample households the family size of the pensioners was found to be around seven persons,
four in the same household and three (grand children) of neighbouring households in which
their children live.
Even though the pensioner happens to be, in almost all cases, the senior-most citizen of a
household, he may not be the head of household in most cases. Income generation capacity,
activity status and capacity to handle family and social issues, determine the status of a
member in the family. Pensioners headed 50 percent of the surveyed households in the
sample households in Mazhuvannr panchayat. Sons of pensioners were the heads in 28
percent of the cases. In 18 percent of the cases, it was women members who headed the
households.
Period No. of Pensioners %
Adequate for needs 0 0
Inadequate 47 94
Barely Adequate 3 6
Old persons have become soft targets for criminals. In some cases, they also become
victims of neglect and physical and emotional abuse within the household. The members of
their own families may force them to part with their ownership rights. Rights of inheritance,
occupancy and disposal of widows are at times violated by own children and relatives.
Being the senior-most and the most experienced person in the family, important family
decisions are either taken directly by the elderly or taken under their advice and approval. In
92 percent of cases their advice was sought; but only in 60 percent it was regularly sought.
Thus, it is found that irrespective of whether the pensioner is heading the house or not,
important family decisions tend to be taken after consultation with him/her.
Activity status
Elderly construction workers should not be treated merely as consumers of goods and
service; they are good resource persons too. They render useful services in the family and
outside. Opportunities and facilities need to be provided to them so that they could continue
to contribute effectively to the family, the community, and the society. Elderly construction
workers usually enjoy their retirement life with their children and grandchildren. But per-
sonal and family liabilities compel some of them to engage in certain kinds of work and earn
a living. In Mazhuvannur panchayat, 44 percent of pensioners are still working, and of
them 14 percent worked regularly.
With the gradual break-up of the joint family system and the decreasing financial and other
support from children, the economic status of the elderly construction workers is become
increasingly critical. Financial dependency makes the problems of the elderly difficult of
solution. It was poverty or unemployment of the other members of the family which often
compelled the pensioners to engage in work (Table 7.33).
Table 7.33 Reason for Pensioners for Engaging in Work
Source: Field survey
Generation gap
The National Policy on the Elderly envisages an age-integrated society by strengthening
integration between generations, facilitating two-way flows and interactions, and strength-
ening bonds between the young and the old (CSO, 2000). Owing to various factors like
nuclear family structure, employment of men and women and integration of youth with
other places to which they move in search of employment, it is becoming more and more
difficult to extend due care and attention to the elderly, forcing them to live lonely lives
during old age. Fulfilment of the psychological needs of the elderly is inevitably associated
with their relationships with the members of the family and in particular with their grandchil-
Reason No. of Workers %
Poverty 8 33
Unemployment of Members of the Family 6 25
Personal Expenses 3 13
Insufficient Family Income 7 29
dren. Among the pensioners, nearly 90 percent have grandchildren with all of whom they
maintained fond and constructive relationship.
Most often the relationship between the elderly and their grandchildren is strengthened through
solving problems related with academic and financial matters, sports and games, religious
and cultural observances, and food and clothing practices. Around 50 percent of the pen-
sioners in the study area regularly supported their grandchildren in these matters.
Interestingly, every four out of five pensioners reported that their close contracts with their
grandchildren have given them a new meaning in life. Generation gaps that usually emerge
and manifest in cultural and socio-economic approaches were not, according to them,
unbridgeable gaps. It is the strength of the bonds of affection maintained within families
that keeps generation-gaps at bay.
Attitude towards life
A characteristic feature of the health status of the elderly is that the majority of them suffer
from more than one disease making medical treatment inevitable difficult and prolonged.
Prevalence of various types of physical disabilities was found to be widely prevalent among
the elderly construction workers. During old age the majority of people try to prepare a
balance sheet of their own in their mind based on material achievements on the one side and
psychological satisfaction on the other. Whatever may be their past experiences, they derive
pleasure from the company of children and grand children with whom they live, provided
the relations are cordial. The pensioners in our sample belonged to the following groups.
1. Around two-thirds felt disappointed due to failure in achieving goals;
2. Financial difficulties regularly affected 56 percent;
3. Health problems haunted 84 percent;
4. Ill treatment from members of the family, rendered 56 percent of them fell despondent
and helpless.
5. One- half of the pensioners felt life in isolation and neglect.
Programmes will have to be developed to promote family values, sensitise the young on the
necessity and desirability of inter-generational bonding and continuity and of meeting filial
obligations. Values of caring and sharing need to be reinforced. Society needs to be sensi-
tised to accept the role of married daughters of sharing the responsibilities of supporting
parents in the present day changing social context in which parents have only one child or
two, in some situations only a daughter. This would require some adjustments and changes
in the perceptions of in-laws in regard to sharing of the caring responsibilities by sons and
daughters especially in the light of the equal rights of inheritance to all children irrespective
of sex granted by courts of law and the greater emotional attachment that daughters have
with their parents.
8. Conclusion
The structure of a welfare state rests on its social security fabric. Labour welfare is welfare
accorded to labour. Welfare Funds are raised by levying cess on production, sale or export
of specified goods, or by collecting contributions from various sources including employers
and employees, as well as the Government, and are used for meeting expenditures on the
welfare of workers.
The Government, employers, and trade unions in Kerala generally agree that Labour Welfare
Funds have gone a long way in ameliorating the conditions of life of labour outside their
work premises and in the society at large. But the multiplicity of Boards has resulted in
heavy expenditure or overheads, thus draining the amounts available for benefit spending.
Further, each Board covers only specific groups of workers, neglecting many of the needy.
It is therefore essential to co-ordinate the activities of the various Welfare Boards, or to
amalgamate them into a common administrative set-up for the sake of economy and effi-
ciency of welfare activities. In spite of several limitations, Welfare Boards, as they function
today, provide one of the most important ways of reaching workers in the unorganised
sector.
Labour in the unorganised/informal sector accounts for about 85 percent of the working
population in Kerala. Welfare Funds of social security for workers in the unorganised sector
have a history of more than three decades in Kerala. Social security benefits are given
mainly in the form of provident funds, paid to workers on superannuation, monthly pen-
sions, and gratuity. Social insurance is given in the form of ex gratia payment in the event
of disability or death; a modest payment is made in the event of treatment for ill-health.
Welfare assistance consists of financial assistance for housing, education of children, and
marriage of daughters.
The majority of Welfare Funds in the State expend a large chunk of their incomes as estab-
lishment charges. It means that a sizeable proportion of the savings of the informal sector
workers is used to finance the salaries and perquisites of formal sector workers in govern-
ment service. Higher costs of administration raise basic questions about the basic purpose
of running Welfare Funds. A solution to this problem rests as indicated earlier on establish-
ment of a unified and common administrative body to manage all the Welfare Funds; the
danger imminent in such a solution has in the development of a monolithic bureaucratic
structure. With regard to Government contributions and workers’ contributions to the Wel-
fare Funds, there exist no well-stated principles; therefore, out of the 19 Welfare Funds
formed in the State only 15 get Government contribution. Employers’ contributions are also
irregular. The coverage ratio of Welfare Funds in Kerala is quite dismal too due to the poor
attractiveness of expected benefits. Further, funds mobilised by the majority of Welfare
Funds are insufficient to meet their disbursements.
According to the 1991 census, Kerala’s work participation rate was 38 percent and the total
number of workers was 120 lakh. Around 12 lakh workers were in the organised sector,
and the remaining 108 lakhs, in the informal sector. Leaving out farmers, workers in the
informal sector came to 90 lakh, of which 26 lakh (29 percent) are covered under Welfare
Funds, leaving the rest uncovered by social security measures. The voluntary nature of
membership and the unattractiveness of benefits also are attributed to the low coverage.
In Kerala, Building and Construction Workers Welfare Fund (1990) was constituted as per
the Kerala Construction Workers Welfare Fund Act of 1989. Major welfare schemes taken
up by the Fund include pensions, death benefits, accident benefits, cash awards and schol-
arships to members’ children, medical expenses, marriage and maternity benefits, and invalid
pensions. By the middle of the 1990s there were five lakh construction workers in the State;
of this only 3.5 lakh (70 per cent) became members of the Fund. The total number of
members was 8.12 lakh in March 2000. Given the nature of employment in the unorganised
sector and its geographical spread, the coverage of workers should be reckoned as impres-
sive.
Resource mobilisation for reimbursement of welfare expenditure workers occupies an im-
portant stage in the functioning of a Welfare Fund. The KBCWWF Act (1989) fixed slabs of
Rs 10, Rs 15, and Rs 25 as the monthly contribution of members. Contribution of the
employer is one percent of the construction cost (annual contribution made by the contrac-
tors was in the range of Rs 100 to Rs 1000); and 10 percent of initial members’ contribution
per annum was the contribution of the Government. Fund collection in 1999-2000 was Rs
2331.92 lakh.
The basic objective of the KBCWWF is to provide a measure of social security and insur-
ance cover for construction workers who are vulnerable to risks and uncertainties and do
not have any other institutional protection arising from their employment status. In 1999-
2000, 0.30 lakh workers benefited from the Welfare Fund, with a total amount of Rs 1049.6
lakh. The coverage of workers in the construction sector has been quite impressive when
compared to that in other Welfare Funds; yet, substantial improvement, in particular in
backward districts, is quite urgent. In other words, the major objective of giving welfare
benefits to all those who are in need, still remains an unachieved target.
As on 1.4.2002 there is an estimated number of 21,171 pensioners and 2,76,373 workers
registered with KBCWWF. The present value of the pension commitment as on 1.4.2002 in
respect of the pensioners and work force calculated using actuarial methods amounts to Rs
615 cr. The value of assets available to the Fund as on 1.4.2002 (less future administration
costs) comes to Rs 339 cr. But, it is found that the Fund is moving rapidly towards a
position of insolvency, due to the increasing disbursements of benefits, in particular, of
pensions. The deficit works out to Rs 276 cr. The annual additional funding needed to fill
the deficit of Rs 276 cr is Rs 32 cr per annum for the next 15 years. The doubling of the
benefits without finding matching resources to finance additional commitments would only
accelerate the process of serious financial strains and lead the Fund to insolvency.
The household survey of construction workers conducted in the Mazhuvannur Panchayat
revealed that the social status of construction workers was not higher than that of the other
poverty-ridden groups. Literacy levels, health status, and housing conditions of construc-
tion workers are below the State average. Among the construction workers, a positive
correlation was found between active participation of workers in trade union activity and
membership in Welfare Fund. Construction workers engaged themselves during their free
time in agricultural and other non-agricultural activities. Wage rates existing in the construc-
tion sector are one of the highest in the unorganised sector in the State.
Income from construction work is hardly sufficient to meet basic family requirements.
Even though new generation seldom enters this field, the unemployment rate among the fami-
lies of construction workers is quite low (19 percent). The average monthly family income of
the members of the Welfare Fund was found to be lower than that of the non-members; it
must have been the low incomes that forced them to join Welfare Fund as a means of social
security.
Even though the majority (54 percent) of the construction workers is satisfied with the
present functioning of the KBCWWF, 84 percent opined that existing benefits are inadequate
to meet their needs. Despite the fact that KBCWWF was constituted for the welfare of
construction workers in the unorganised sector, it could not reach every worker due to the
voluntary nature of membership and poor attractiveness of the provisions of the Fund. Lack
of awareness and illiteracy was not found to be the major factor which prevented the con-
struction workers from joining the Welfare Fund; the determinant factor was undoubtedly
inadequacy of the anticipated benefits.
Socio-psychological analysis of the pensioners showed that the breakdown of the joint
family system and the emergence of the nuclear family system create socio-psychological
tensions in the lives of the elderly population. Personal and family liabilities compel a good
proposition of the elderly construction workers to engage in some kind of economic activi-
ties. Programmes will have to be developed to promote family values and sensitise the young
generation on the necessity and desirability of inter-generational bonding and continuity.
We offer the following comments and suggestions to improve the welfare of the construc-
tion workers and the activities of KBCWWF.
1. The more vulnerable among the construction workers (such as the poor, the disabled, the
infirm, the chronically sick and those without family support) may be identified and special
welfare schemes may be instituted for them on a priority basis;
2. With regard to the security of the elderly, the ability of the family to discharge its caring
responsibilities must be strengthened through support services;
3. KBCWWF operates without substantial improvement in its revenue collection, it is likely
to become insolvent after six to seven years.
4. New members will have to be enrolled in large numbers during the next 15 years since
much larger amounts by way of contributions are necessary for the Board for meeting its
commitments; such contribution should not be used to fill the deficit of the Fund.
5. There is crying need for reformulating the benefit package and strengthening its sources
of contribution in order to make the Fund totally self-financing. Unless corrective measures
are taken, KBCWWF would face serious financial consequences in the very near future.
6. All construction workers should be made members of the KBCWWF; and banks and
other financial institutions should be involved the collection of contributions.
7. The contribution of employers / contractors should be substantially enhanced from their
existing levels.
Appendix Table 1
Welfare Funds in Kerala and their Major Functions
Sl.No. Name of the Fund Beneficiary Group Funding
& year of Starting
1 2 3 4
1. Kerala Toddy
Workers Welfare
Fund, (1969)
(KTWWF)
2. Kerala Labour
Welfare Fund,
1977 (KLWF)
3. Kerala Head Load
Workers Welfare
Fund, 1983
(KHEDLWWF)
4. Kerala Motor
Transport Workers
Welfare Fund, 1985
(KMOTWWF).
Persons directly or indirectly
engaged in tapping and collec-
tion and distribution of toddy
for their livelihood. All toddy
shops/premises are covered
under the Fund
a. Government : Nil
b. Employer : 13% of
workers’ wage
c. Employee: 8% of
workers’ wage
Workers in Factories and
Plantations employing 10
workers or more, shops and
commercial establishments
employing two workers or
more, and co-operative
institutions employing 20
workers or more.
a. Government: Varies from
year to year. So far 40
lakhs have been allotted
b. Employer : Rs.8 per half
year per worker
c. Employee : Rs.4 per half
year per worker
‘Head Load Workers’-
(Individuals who work for an
establishment either directly or
through a contractor for
wages, in loading, unloading,
and carrying on head or in a
trolley, any article from any
place).
a. Government: Nil
b.Employer: 25 % of the
Workers’ wage (including
Gratuity 5%)
c.Employee: 10 % of wage
for general fund
Persons with at least three
months of service in a mo-
tor transport undertaking di-
rectly or through an agency,
working in a professional
capacity in a transport vehi-
cle as driver, conductor,
cleaner, or as station staff,
checking staff, cash clerk,
time keeper, watchman or
attender.
a.Government: Nil
b.Employer: 13% of
workers’ wage
c.Employee: 8% of work-
ers’ wage.
5
6.
7.
8.
Keral a Advocat es’
C l e r k s We l f a r e
Fund,1985
(KADCLWF)
Persons, who function as
Advocates’ clerks, regis-
tered under the Kerala Ad-
vocates’ Clerks Welfare Act,
and who are within the age
group of 20 years to 70
a. Government: Rs 90/
year/member
b. Employer: Nil
c. Employee: Rs.60/
Annum/ Member
Kerala Artisans and
Skilled Workers
Welfare Fund, 1986
(KARSWWF)
Workers from the Informal
Sector such as Tree Climbers,
Gold Smiths, Carpenters,
Shoe-Makers, Beedi-Makers,
Potters, Chakku Oil Extrac-
tors, Cycle Rickshaw Work-
ers, Gunny bag collectors,
Cycle Repairers, Watch Re-
pairers, Milk and News Paper
Distributors, Ice- Makers, Milk
Extractors, Photographers,
Tailors, Barbers, Dhobies, and
also all other workers who are
not covered by any of the
welfare schemes (Between 20
years and 58 years of age)
a. Government: Rs2/Every
Rs10 contributed by
the workers
b. Employer: Nil
c. Employee: Rs 10/
month/worker
Kerala Cashew Workers
Relief & Welfare Fund,
1988 (KCSHWWF)
Cashew Workers and their
dependants with a minimum
service of five years in the in-
dustry and annual income not
exceeding Rs.3600 (Not cov-
ered by ESI/maternity benefit
scheme)
a.Gvernment: Twice the
amount contributed by
employee
b. Employer: Rs.1/day /
worker
c. Employee: Rs.0.50/day/
Worker
Kerala Khadi Workers
Welfare Fund, 1989
(KKHWWF)
Workers who work for wages
under employers, contractors,
co- operative societies or who
are self-employed under Khadi
industries.
a.Gvernment: 10 % of
the workers’ wage
b. Employer: 10 % of
the workers’ wage
c. Employee: 10 % of
wage
9.
10.
11.
Kerala Coir Workers
Welfare Fund,
1989(KCORWWF)
Workers, Agents or Contrac-
tors and persons who depend
mainly on the coir industry for
livelihood, and persons self-
employed in the coir industry.
The scheme also covers de-
pendants of workers.
a. Government: Grant
which is twice the
amount contributed by
workers
b. Employer:
i. 1% of turnover
ii. Co-op Society: Rs.1/
month/worker
c. Employee: Rs.1/
month/ worker
Kerala Fishermen
Welfare Fund, 1989
(KFMWF)
All Fishermen who are em-
ployed for wages in fishing
vessels or are self-employed
fishermen who are registered
as members of Fishermen’s
Welfare Society.
a. Government:Contribution
for pension and group
insurance premium
b. Employer:
i. Dealer- 1% of turnover
ii. Vessel owner- Rs.1/
month
ii. Net owner- Rs.1/month
iv. Farm owners- 2% of
value of fish caught
c. Employee:
ii. 3 % of value of fish or
wage
iii. Rs.30/year/ worker
Kerala Handloom
Workers Welfare Fund,
1989 (KHNDLWWF)
Persons directly or indi-
rectly employed in the
Handloom sector. This
scheme also covers
dependents of workers.
a. Government: Twice
the workers’ contribu-
tion
b. Employer: 1% of the
turnover and an amount
equal to workers contribu-
tion
c. Employee
i. Rs.1/month
ii. Rs.2/month/
selfemployer
12.
13.
14
15.
Kerala Abkari Workers
Welfare Fund, 1990
(KABWWF)
Arrack and Foreign Liquor
Workers who are not cov-
ered by the Toddy Work-
ers Welfare Fund
a.Government: Rs.1Lakh
for pension purpose
b. Employer: 15% of wage
including 5% gratuity
c.Employee: 10% of wage
Kerala Construction
Workers Welfare
Fund,1990
(KCONWWF)
Workers employed in any
construction such as Ma-
sons, Carpenters, Brick
Workers, Workers en-
gaged in quarrying includ-
ing stone crushing, but
excluding supervising
functionaries like
engineers
a.Government: 10% of
initial member
contribution per year
b. Employer:
i. 1% of construc-
tion cost
ii. Annual contribution by
Contractors (Rs 100-
1000)
c. Employee: Monthly
contribution per
member on slab basis
Kerala Agricultural
Workers Welfare
Fund,1990
(KAGWWF)
Agricultural Workers in
the age group of 18-60
a.Government: Nil
b. Employer:
i . Rs.0.5-Rs.1/hectare
ii. >1Hecter – Rs.15/year
c. Employee: Rs.2/
Month/Hectare
Kerala State Lottery
Agents Welfare Fund,
1991 (KLOTAWF)
Regular agents holding valid
identity folders as mentioned
in the Kerala State Lottery
Rules, 1977
a.Government: 20% of
members’ contribution
b. Employer: Nil
c.Employee: Category A/B:
Rs.15/Rs.10 per month
16
17
19.
KeralaDocumentWriters,
Scribes and stamp
Vendors welfare Fund,
1991 (KDSVWF)
Person holding valid li-
cense under the Kerala
Document Writers (Li-
cense Rule) Or the Kerala
Manufacture and Sale
Stamp Rule,1960 and
aged below 60 year
a. Government: 10% of
workers’ contribution
b. Employer: Nil
c.Employee: Category A/
B:Rs.15/Rs.10 per month
Kerala Auto Rickshaw
Workers’ Welfare Fund
1991 (KAURWWF)
Persons directly or indi-
rectly engaged in the pro-
fession within the age
group of 28 to 58 and the
scheme is voluntary.
a. Government: 10% of
workers’ contribution
b. Employer: Rs.10/month/
worker
c.Employee: Rs.20/month/
worker
Kerala Anganwadi
Workers & Helpers
Welfare Fund, 1991
(KAWHWF)
18.
Health Workers,Teachers
and Helpers working in
Anganwadis.
a. Government& Employer:
10% of workers’
contribution
b. Employee:
i. Worker - Rs.20/month
ii. Helper- Rs.10/month
Kerala Tailors’
Welfare Fund, 1994
(KTAWWF)
Tailors directly or indi-
rectly employed by em-
ployers, contractors, and
agents or by themselves
through ownership of tai-
loring shops.
a.Government: 10% of
workers’ contribution
b.Employer:Rs.5month/
worker
c.Employee:
ii.Rs.15/self employer/
month
i. Rs.10/worker /month
Table 4.2 Details of Welfare Fund Benefits (Note this table also)
Name of
the Fund
Pension PF, Gratuity etc Disability,
Death
Children’s
Education
Med
KTWW
F
A pension
scheme has
recently been
evolved and
it offers
Rs.100 per
month to
retirees who
has up to 10
years
membership
and also
offers an
additional
amount of
Rs.10 per
month of
every year
that comes
after 10
th
year
at the Fund
Net credit to
the account of
the worker
(provident fund
a/c) and
gratuity paid
with interest
(currently 11%)
on superannua-
tion, retire-
ment or on his
death. Gratuity
is 50% of the
monthly
average of
wages for each
com-pleted
year of service
subject to
maximum of
20 month’s
wages.
Disability
allowance
Rs.125 per
month.
Funeral
expense
Rs.2000
Non
refundable
advance
(deducti-
ble) from
his contr-
ibution
Rs.1200 or
50% of his
contribu-
tion,
whichever
is lower.
Non
refu
adv
his
mon
or 5
his
con
whi
is lo
For
trea
will
Rs.3
gran
ded
KLWF No provision Since the
Fund is in
Insurance
Fund, there is
no retirement
benefit.
Ex-gratia
Rs.1000,
perma-nent
disabled
Rs.2500,
Funeral
Expense
Rs.200.
Scholars-
hip on the
basis of
merit. It
varies from
Rs.50 to
Rs.1000 per
year
(primary to
professi-
onal).
Med
gran
ded
Rs.1
(ma
amo
KHEDL
WWF
Pension
scheme not yet
evolved
Every
member will
be paid an
amount at the
rate of 10
percent of
total wages
earned during
the entire
period of
service. This
is their lump-
sum
retirement
benefit or
gratuity. If
there is no
much amount
Rs.10000 as
special
superannu-
ation
assistance is
disbursed,
provided he
should have
100 days of
work in each
year.
Ex-gratia
benefit
Rs.2000.
Rs.100 per
month to
perma-nently
disabled
members till
his death or
lump sum
amount of
Rs.10000.
Under group
insurance
scheme
Rs.20000, if
accident
death occurs.
And funeral
expenses of
Rs.500.
Education
grant
Rs.100 per
year per
child and
scholarship
varies from
Rs.100 to
Rs. 2000.
KADCL
WF
No provision At the time
of retirement,
he will be
paid
according to
his service.
If he
completed 30
years, he will
be paid
Rs.10000
Since there is
special
provision for
an advance
clerk who is
aged between
35 and 70
years,
exgratia
varies from
Rs.1000 (up
to 60 years)
to Rs.2500
(for 71-75
years)
Funeral
assistance is
Rs.500.
No
provision
No
KARSW
WF
No provision Since there is
no provision
of P.F&
gratuity, the
net amount at
the Fund
(only
membership
contribution)
with interest
is given back
at the time of
retirement or
death. This
amount
varies from
Rs.600 to
Rs.50000
depending on
service.
Ex-gratia
Rs10,000,
Disability
allowance
Rs.100 per
month,
Funeral
expenses
Rs.500
Scholar-
ship ranges
from Rs.300
to Rs.1500
Med
up t
(inj
cou
wor
KCSH
WRWF
Minimum two
year member-
ship, 60 years,
Rs.100 per
month for
ordinary
worker and
Rs.200 per
month under
staff category.
Family pension
in the event of
death of the
pensioner.
Since the
Fund is an
Insurance
Fund, No
provision for
P.F, gratuity
and other
lump-sum
retirement
benefit
Ex-gratia
Rs.2500
under special
consideration
like death,
illness or
perman-ent
disablem-ent.
Funeral
expense of
Rs.500 for a
member and
Rs.250 for
pensi-oner
but it is dedu-
ctible from
his contr-
ibution.
Scholars-
hip Rs.500
to Rs.2000
per annum.
Cash award
of Rs. 1000
per sudent
(only for
SSLC and
Pre-degree
students)
KKHW
WF
Minimum 10
years as a
member, 60
years, Rs.60 to
Rs.180 per
month
depending on
service. If his
service is less
than 10 years,
he is eligible to
get only his
contributi-on.
Family pension
in the event of
death of the
pensioner at the
same rate.
Since the
funds is an
insurance
Fund, No
provision for
P.F, gratuity
and other
lump-sum
retirement
benefit.
Rs.5000, if
perma-nent
disability
occurs.
Funeral
assistance
Rs.350.
Non-
refundable
advance of
Rs.1500 or
25% of
contribut-
ion can be
withdrawn
for higher
education.
Education
grant (non-
deductible)
Rs.250.
KFMW
WF
Rs.100 pr
month
Since the
fund is an
insurance
fund, No
provision for
PF, Gratuity
and other
lump-sum
retirement
benefit
District wise
cash award
for SSLC
students
which ranges
from Rs.300
to Rs.1000
District
wise cash
award for
SSLC
students
which
ranges from
Rs.3000 to
Rs.1000.
KHNDL
WWF
Rs.100 per
month
Since the
fund is an
Insurance
Fund, No
provision for
P.F gratuity
and other
lump-sum
retirement
benefit
Ex-gratia
Rs.5000
Non-
refundable
advance for
workers
childrens
education
(maximum
advance
Rs.1000).
KABW
WF
Minimum three
years, 60 years,
Rs.200 to
Rs.300
(maaximum)
per month.
At the time
of retirement
a member is
entitled to
obtain only
graruity as
the
retirement
benefit and
the net credit
(balance) in
the provident
Fund account
is kept for
financing
their pension
scheme.
Ex-gretia Rs.
5000,
Funeral
expense
Rs.500.
Scholars-
hip for
higher
education
(Pre-degree
to
professional
course).
KCON
WWF
Minimum one
year
membership,60
years,Rs.75 per
month to
Rs.300
(maximum) per
month
(depending on
service)
Since the
Fund is an
Insurance
Fund, No
provision for
P.F, gratuity
and other
lump-sum
retirement
benefit
Ex-gratia
Rs.5000,
Funeral
expense
Rs.500.
Non-
refundable
advance of
Rs.1000 per
education
purpose.
Scholarship
Rs.300 to
Rs.1200 on
the basis of
merit.
KAGW
WF
No provision Only lump-
sum
retirement
benefit. If a
member
covers 40
years, he is
entitled to
Rs.25000. If
it is three
years
(minimum),
he will be
paid Rs.5000
Ex-gratia
benefit
Rs.1000
Scholars-
hip ranging
from Rs.500
to Rs.1500
KLOT
WF
No provision Retirement
age 60 years
and above.
Lum-sum
retirement
benefit
depending on
his service.
If he
completed 40
years, he will
be paid
Rs.62,700.
Ex-gratia
benefit for A-
class
members Rs.
10000 and B-
class
members
Rs.7000.
No
provision
KDSV
WF
No provision Retirement
age 60 years
and above,
lump-sum
retirement
benefit
depending on
services. If
he completed
35 years, he
will be paid
Rs.37,749.
Ex-gratia
benefit for A
class
members
Rs.10000 and
B-class
members
Rs.7,000.
No
provision
KAUR
WWF
No provision Retirement
benefit
depending on
completed
years of
service.
Retirement
age58. If he
completed 40
years, he will
be paid
Rs.125000
Ex-gratia
Rs.10000.
Not yet
disbursed.
KCOR
WWF
Minimum two
year
membership,
60 years, Rs.75
per month and
family pension
in the event of
death of the
pensioner.
Since the
Fund is an
Insurance
Fund, No
provision for
P.F, gratuity
and other
lump-sum
retirement
benefit
Ex-gratia
benefits
Rs.5000, if
disability
occurs.
Rs.100 per
month till
retirem-ent
age (60
years) and
funeral
expense of
Rs.200
Scholarship
for higher
education –
Rs500 to
Rs.1500 per
year on the
basis of
marit
KMOT
WWF
No provision Net amount
in the PF
account and
gratuity paid
with interest
(currently
9%) at the
time of
superannuati
n or on his
death
Ex-gratia
benefit
Rs.5000 and
Funeral
assistance
Rs.1000
Non-
refundable
advance for
education
which
should not
exceed
Rs.1200.
Provision
for
Scholarsh-
ip
Source: Government of Kerala, (1996) Social Security initiatives in Kerala, State Planning Board, Thiruvananthpuram
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