Insurance for India’s Frontline Blue-Collar Workforce

India Inc. is witnessing a labour shortage across sectors. This includes healthcare, manufacturing, pharmaceutical, and healthcare. The shortage stood at 15-25% in January 2022 and had been forecasted to grow further due to pandemic-related uncertainties. Around 119 million additional skilled workers are needed in 24 sectors by 2022.

This gap in the availability of skilled talent has pushed companies, as well as the government to rethink how workers are hired and retained. Covid-19 was very difficult for the blue-collar workers, and many remain hesitant to return to work in absence of sufficient financial security.
The government has extended several insurance-related benefits for frontline workers, to boost morale and ensure business continuity.

The Advent of Labour Code 2020 and Its Impact

India has recently witnessed revolutionary labour reforms with 4 brand new codes that subsume 29 central labour laws. The new codes provide a much-needed recognition to India’s gig workers or ‘platform workers’.

India has over 500 million workers today, out of which 290 million participate in the non-farm sectors like construction, manufacturing, utilities, and more. The gig economy has the power to generate over 90 million jobs in the non-farm sector, contributing 1.25% to India’s GDP in the long term.

To support the gig workers, the Code on Social Security 2020 extends benefits like disability insurance for frontline workers, health insurance, maternity leave, and old-age protection for the first time. There is an optional unemployment cover too.

Here’s what companies in India need to know.

Mandatory Health Insurance for All Workers

All industrial and commercial establishments, workplaces, and offices will need to provide group health insurance policy for all workers. These policies will need to cover family members too up to a prescribed limit.

The Insurance Regulatory and Development Authority of India (IRDAI) has instructed insurance companies to create these products at low costs with simple wordings for companies to understand.

With this order, medical insurance will be available to those employees under the low-income bracket (less than ₹21,000 income) who are not covered under the ESIC Act 1948.

Employee State Insurance

The 2020 Social Security Code allows voluntary registration under the Employee State Insurance if the company and its employees give consent. Further, the Government can extend this scheme to any hazardous occupation regardless of how small the company is.

The code also covers gig workers and workers from the unorganised sectors under the Employee State Insurance Scheme. Companies will need to pay for every worker, whether hired directly or through a contractor.

This pertains to both employers’ and employees’ contributions. No company can deduct the employer’s contribution from any wages payable, or recover it in any other form.

Market Moving Towards Need-Based Insurance Model

Traditional insurers depend on legacy systems, historical information, and actuarial calculations. With gig workers now being included in the benefit pool, companies will have to offer personalised insurance solutions for frontline workers.

Today, workers need on-demand frictionless services, flexible and bundled products, and speedy claim processes.

There is the question of shifting liabilities, with definitions of “intermediaries”, or “aggregators of services”. Insurance policies will need to adapt to changing business models.

Betterplace helps companies zero in on insurance for frontline workers that appeal to a diverse workforce. With round-the-clock claims support for blue-collar workers, we not only help reduce operational costs but help companies to drive employee loyalty, and job satisfaction.