US unhappy with Indian social security model

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S Saroj KumarChennai, Jul 28 2011, 01:39 IST
The talks on totalisation agreement between India and the US could not make much headway as the US government was not convinced about the Indian social security model, said Nasscom president Som Mittal.

“Yes, Indian IT workers are losing close to $1 billion in terms of statutory payment they make towards social security benefits. These contributions largely remain unutilised as IT workers on B1, H1B1 visas stay for a short period and come back without fulfilling the mandatory time period meant for availing those benefits. We could resolve the issue by way of a totalisation treaty between the Indian and US governments. A deal is dragging as the US is objecting to the Indian social security model,” he said at the Nasscom HR summit here on Wednesday.

Terming the US opposition as predominantly surprising, he added that India had already signed such totalisation deals with other outsourcing locations in Europe like Belgium, France Germany and Switzerland before initiating it with the US. “The loss is not just to employees, as the statutory obligation also very much adds to the cost of Indian IT companies that deploy their onshore workforce in the US. The deal, if sealed, could further envisage repatriation of the payments made by the employees to their provident fund accounts in India or could enable some kind of a direct transfer to their social security related savings here,” he said.

On the issue of the social security mismatch between India and the US, Mittal said India had just begun the process of social security through ambitious programmes like the Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS).

“Over 80% of our workforce is in the unorganised sector. US wants comprehensive reforms in the Indian social security system that match its expectations. This requires the revamp of the social security administration of our entire organised sector that pervades all sectors other than IT. This imbroglio could only be redressed by the Indian government that can negotiate and resolve it for mutual good. It is a matter of bilateral process involving inter-ministerial and secretary-level talks. Nasscom could do little to speed up the signing as it very much comes under the ambit of government-level dialogue,” he said.

Nasscom president called for gender-specific labour reforms like allowing women to work beyond 7 pm, especially in BPO firms, that is not in vogue in some parts of the country.

“The paradigm is largely changing about BPO firms as buyers and MNCs are asserting for higher labour governance standards in the delivery centres in India,” he said.

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