Employee Welfare | Commerce & Accountancy Optional Notes for UPSC PDF Download

Introduction

• The progress of a nation's industry relies heavily on the dedication of its labor force. The significance of labor welfare was acknowledged as far back as 1931 by the Royal Commission on Labour, which emphasized the value of benefits for workers who couldn't procure them independently. Labor welfare initiatives are seen as a wise investment that typically yields a profitable return in the form of increased efficiency.
• Employee welfare is defined as "efforts to enhance the quality of life for employees." According to Todd, "employee welfare encompasses anything done for the comfort, improvement, intellectual or social well-being of employees, above and beyond their wages, which are not essential to the industry."

Features of Employee Welfare

• Employee welfare is an all-encompassing term that includes various services, facilities, and amenities provided to employees for their well-being. It generally comprises welfare provisions mandated by law, industry customs, or employees' expectations outlined in their employment contracts.
• The primary goal is to improve the lives of the working class. The provision of welfare amenities aims to foster the overall development of the worker, encompassing their social, psychological, economic, moral, cultural, and intellectual aspects, making them not just a good worker, but also a good citizen and family member.
• Employee welfare is a dynamic concept. These facilities may be offered voluntarily by progressive entrepreneurs, driven by their recognition of social responsibility towards labor, or may be legally required. Alternatively, these services may be provided by the government or trade unions, provided they have the necessary resources.
• Employee welfare measures are also known as fringe benefits and services. "Labour Welfare" is a broad term that includes social security and other activities such as medical aid, childcare, canteens, recreational facilities, housing, adult education, and transportation arrangements for laborers to and from the workplace.

Objectives of Employee Welfare

• Employee welfare benefits the employee, employer, and society as a whole. Labor/employee welfare endeavors to provide service facilities and amenities that enable workers in industries/factories to perform their work in healthy and favorable environments conducive to good health and high morale.
• It is partly humanistic, as it allows workers to enjoy a fuller and richer life.
• It is partly economic, as it enhances worker efficiency and keeps them content and satisfied. This helps minimize workers' inclination to form unions or resort to strikes.
• It is partly civic, as it fosters a sense of responsibility and dignity among workers, making them good citizens of the nation.

Employee Welfare Agencies

Central Government Initiatives

• The central government has made extensive provisions for employee health, safety, and welfare under the Factories Act of 1948 and the Mines Act of 1952. These laws mandate the provision of canteens, crèches, rest rooms, and shelters in workplaces.

State Government Regulations

• State governments in various regions and Union Territories also provide welfare facilities for workers. They prescribe rules for worker welfare and ensure compliance with labor laws.

Employer Initiatives

• In India, many employers have historically viewed welfare efforts as unproductive. However, some have undertaken pioneering welfare work.

Trade Union Participation

• Trade unions in India have generally not been active in worker welfare, but some strong unions, such as the Ahmedabad Textiles Labor Association and the Mazdoor Sabha in Kanpur, have made strides in this area.

Philanthropic Organizations

• Philanthropic and charitable organizations like the Seva Sadan Society and the YMCA also contribute to employee welfare.

Labour Welfare Schemes

• Labour welfare schemes can be statutory, voluntary, or mutual. Statutory schemes are mandated by government legislation, such as providing drinking water or first aid. Voluntary schemes are initiated by employers, such as flexible work hours or health checkup camps. Mutual schemes involve collaboration between all parties for the social and economic upliftment of workers.

Intramural Welfare Services

• Intramural welfare services are provided within the organization, including canteens, restrooms, uniforms, drinking water, washing and bathing facilities, safety measures, pension and provident fund contributions, and more.

Extramural Welfare Services

• Extramural welfare services are provided outside the organization and include housing, education, child welfare, leave travel facilities, interest-free loans, workers' cooperative stores, and vocational guidance.

Labour Welfare in India

• In recent years, Indian organizations have focused more on employee welfare. Common facilities include educational and medical services, transportation, recreational activities, housing, consumer cooperative societies, and more.

Examples of Corporate Welfare Programs

• Companies like Accenture and NIIT in India offer a range of employee benefits, including health and wellness facilities, flexible work hours, sports facilities, family events, and creative benefits like wedding allowances, childcare programs, and birthday celebrations.

The Factories Act of 1948

• The Factories Act contains provisions for various welfare measures, including washing facilities, storage for clothing, seating arrangements, first aid appliances, canteens, shelters, rest rooms, lunch rooms, crèches, and welfare officers.

Principles of Employee Welfare Service

• The service must fulfill the genuine and specific needs of workers, which can be achieved through their active participation.
• The service should be structured in a manner that allows employees to select from a range of benefits that best align with their individual needs. This is referred to as the "cafeteria approach" and may include options like health insurance, accident insurance, cash benefits, tax advantages, and retirement plan contributions. As there are significant differences in the needs of employees based on factors such as gender, age, marital status, number of children, type of job, and income level, this approach tailors the benefit system to each individual, although it may be challenging to manage and administer.
• Employers should not adopt a purely benevolent stance.
• The service's cost should be calculated, and its financing should be based on a solid foundation.
• There should be periodic evaluations of the service, and corrective measures should be taken based on feedback.

Benefits of Welfare Schemes

The key benefits of welfare measures can be outlined as follows:

• They contribute to the improved physical and mental health of workers, thereby fostering a healthier work environment.
• Welfare measures such as housing schemes, medical benefits, and educational and recreational facilities for workers' families elevate their living standards. This, in turn, motivates workers to focus more on their jobs, leading to increased productivity.
• Employers benefit from a stable labor force when they provide welfare facilities. Workers become more engaged and participative in their roles.
• Employee welfare measures enhance organizational productivity and foster healthy industrial relations, ultimately ensuring industrial peace.
• Welfare policies help reduce common social issues among laborers, such as abuse and teasing, to a significant extent.

Conclusion

Employee welfare refers to efforts to improve the quality of life for workers. Welfare measures can be statutory, voluntary, or mutual, and can be provided within or outside the organization. Recent years have seen increased focus on employee welfare in India, with companies like Accenture and NIIT leading the way. The Factories Act of 1948 outlines various welfare provisions, and principles for setting up employee welfare services include meeting individual needs, avoiding a patronizing attitude, and conducting regular evaluations. Welfare schemes benefit both employees and employers by improving health, productivity, and industrial relations.