Cess Collection and Welfare of Construction Workers

The recent revelations from the Union Labour Ministry highlight issues regarding the welfare of construction workers in India. An RTI response disclosed that various State welfare boards have not utilised approximately ₹70,744.16 crore collected as cess from employers. This cess was intended for the benefit of over 5.7 crore registered construction workers. The findings raise concerns about the accountability of both State and Central governments in supporting these workers, particularly during crises like the COVID-19 pandemic.

Background of the Cess System

The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act was enacted in 1996. This legislation allows State governments to charge a cess from employers, set between 1% and 2% of construction costs. Since its implementation, the total cess collected has reached ₹1,17,507.22 crore. However, only ₹67,669.92 crore has been allocated to workers, indicating gap in fund utilisation.

Registered Workers and Fund Allocation

As of September 30, 2024, approximately 5,73,48,723 workers are registered with 36 State Welfare Boards. Despite the large sum collected, the distribution of funds has been inadequate. For example, Maharashtra has collected ₹19,489.25 crore over 19 years but has spent only ₹13,683.18 crore on worker welfare. Other states like Karnataka and Uttar Pradesh have similarly low expenditure compared to the cess collected.

Accusations of Cess Evasion

Trade union representatives, such as Arka Rajpandit from the Construction Workers Federation of India, claim that there is widespread cess evasion among builders and employers. The figures presented suggest that the reported construction costs do not align with the cess collected, indicating potential discrepancies in reporting and compliance.

Impact of the COVID-19 Pandemic

The pandemic brought into light the vulnerabilities of construction workers. Many faced hardships during the lockdown, with inadequate support from both State and Central governments. This lack of assistance has raised questions about the effectiveness of the welfare system designed to protect these workers.

Concerns Over Future Regulations

The proposed Code on Social Security may dilute the existing cess collection framework. Critics argue that it allows for self-assessment by employers and reduces the cess rate. This could undermine the benefits that workers currently receive under the Building and Other Construction Workers Act, including essential services like accommodation and sanitation facilities.

State Implementation Issues

There are allegations that most State governments are not fully implementing the provisions of the Building and Other Construction Workers Act. Many states have not reconstituted welfare boards to include representatives from Left trade unions, raising concerns about transparency and accountability. Observers note that these actions may be aimed at redirecting funds from welfare boards to state budgets.

Questions for UPSC:

1. Examine the implications of inadequate fund allocation for construction workers’ welfare in India.
2. Discuss the significance of the Building and Other Construction Workers Act in safeguarding the rights of workers.
3. Critically discuss the potential impact of the Code on Social Security on the welfare of construction workers.
4. With suitable examples, discuss the challenges faced by construction workers during the COVID-19 pandemic and the role of government intervention.

Answer Hints:

1. Examine the implications of inadequate fund allocation for construction workers’ welfare in India.

1. Inadequate fund allocation leads to insufficient access to essential services such as healthcare, housing, and safety measures for construction workers.
2. It encourages a cycle of poverty and insecurity among workers, impacting their overall well-being and productivity.
3. Low fund utilization raises questions about government accountability and transparency in managing welfare resources.
4. Failure to utilize funds can result in unrest and dissatisfaction among the workforce, leading to strikes or protests.
5. It undermines the objectives of the Building and Other Construction Workers Act, which aims to provide social security and benefits to workers.

2. Discuss the significance of the Building and Other Construction Workers Act in safeguarding the rights of workers.

1. The Act establishes a legal framework for the regulation of employment and conditions of service for construction workers.
2. It mandates the creation of welfare boards to collect cess and allocate funds for workers’ benefits, enhancing their social security.
3. The Act ensures workers’ rights to essential facilities such as accommodation, drinking water, and sanitation on construction sites.
4. It empowers workers by providing them with a platform to voice their concerns and seek redressal through welfare boards.
5. The legislation aims to reduce exploitation and improve working conditions within the construction industry.

3. Critically discuss the potential impact of the Code on Social Security on the welfare of construction workers.

1. The Code may dilute existing protections by allowing self-assessment of cess by employers, potentially leading to reduced revenue for welfare funds.
2. It could lower the cess rate, further limiting the financial resources available for worker welfare programs.
3. The shift from statutory entitlements to discretionary facilities may jeopardize workers’ access to essential services.
4. Critics argue that it could lead to a reduction in accountability for employers regarding their obligations to workers.
5. The Code’s implementation may exacerbate existing disparities in welfare provision among different states.

4. With suitable examples, discuss the challenges faced by construction workers during the COVID-19 pandemic and the role of government intervention.

1. Many construction workers faced job losses and financial instability during the lockdown, leading to mass exodus to their home states.
2. Inadequate government support during the pandemic brought into light the vulnerabilities of workers in the informal sector.
3. Examples include lack of access to food, shelter, and healthcare, exacerbating their hardships during the crisis.
4. State and Central governments were criticized for failing to provide timely assistance, such as cash transfers or food supply.
5. Post-pandemic, the need for stronger safety nets and welfare systems has been emphasized to protect workers during future crises.