CONTEMPLATING SOCIAL SECURITY FOR START-UPS IN INDIA AND THE IDEAS FROM TUNISIA

INTRODUCTION

A potentially relevant determinant that has so far received little attention in India is a social security net for the young entrepreneurs willing to take a leap in the dark.An individual is interested in risks and corresponding rewards of opting for the start-up as an alternate of the regular paid job and therefore, when the social security meets basic needs, it is easier to be creative and boosts the will to take risks. It was candidly put forward by Derek Thompson, a noted American author and a journalist writing for the Atlantic. He opines, “as a general rule; entrepreneurs do not win. They mostly fail. Trying to start a company is like playing a high-risk casino game with your career. It is roulette, except thousands of dollars, thousands of hours, and unquantifiable sacrifices are on the table. We should focus on minimizing the downside of losing so that start-up roulette feels less risky for the person having a big idea”. Deliberating upon the social security for young entrepreneurs has, therefore, become a pressing need in the current milieu.

The article has endeavored to discuss the importance of start-up culture for the developing economy and the impediments that prevent mushrooming of the start-ups. The researcher has identified a lack of social security as the primary reason that keeps the young minds glued to their wage employment and restrains them from conceiving a start-up. An attempt has been made to discuss the problems faced in the implementation of social security in India, and cue in this regard has been taken from Tunisia, which has suddenly become a fertile ground for start-ups. 

START-UP ACT OF TUNISIA

In December 2018, Tunisia rolled out progressive reforms to boost the start-up culture in the nation. It defines a start-up as a company that is less than eight years old, has fewer than a hundred employees, and a balance sheet of fewer than six million dollars. More importantly, the company has to have “an innovative business model and significant growth potential.” The discretionary bit of the definition is decided by a committee that is a mix of bureaucrats and those critical stakeholders of the start-up ecosystem, venture capitalists. Firstly, employees who wish to found a start-up can apply for a ‘start-up leave‘ that is a yearlong and can be extended by another year, and employers are bound by the act to grant such leave. Secondly, up to three co-founders of a start-up will be eligible to receive a stipend that is commensurate with the income that they were making when they were employed. Third, there would be tax exemption for eight years since the inception of the start-up. 

Starting up is fraught with risks monetary and social and the time when an entrepreneur can start making money for himself is not precise. This is the reason why if people are in a steady job, even if they have a brilliant idea for a start-up, they do not usually go through with the idea of founding one, because they do not want their dependable monthly salary to stop. Moreover, also, they have no assurance that they can get back to their salaried job if the start-up fails. Therefore, the start-up leave and start-up stipend that the Tunisian government offers completely negates those risks, allowing people to found companies knowing that there is a safety net in place in case the start-up fails.

CONTEMPORARY PERSPECTIVE OF START-UPS IN INDIA AND THE NEED FOR SOCIAL SECURITY

TVF Pitchers, a web series released in 2015, this series had become the talk of the town since it was the first time on Indian Television that a Drama-Comedy series had its primary theme as entrepreneurship. The story-line revolved around four friends who venture to have their start-ups and the struggles involved therein. The reality is no different, to start as an entrepreneur may imply that one loses not only social security benefits but also secure wage employment.

According to a recent report by NASSCOM, around 7200 start-ups were conceived from 2013-2018 in India, with 1200+ start-ups added in the year 2018 itself.The data reinstates that the start-up culture is on the, and the educated youth is set to be the ‘job creator’ and has done away with the mindset of a ‘job seeker.’ Not only the start-ups create jobs, but they also act as the agents of change and contribute towards the wholesome development of the nation by setting the process of industrialization in motion, which in turn will increase the demand and pave the way for more industrial units to come into existence. In the United States, of all the jobs created between 1980 and 2010, about one-sixth of this amount can be traced to new firms, and another one-sixth can be traced to new establishments of existing firms.

But at the same time is referred as leap of faith in the darkdue to lack of social and financial security in being an entrepreneur as, eventually,a fraction of entrepreneurs will earn reasonably high incomes, but a relatively large group will face low incomes at times not sufficient to sustain the individual and approximately 50% to 60% of new business start-ups survive within the first three years of activity.It is due to the high risk involved in opting for a start-up a career that an individual fear to venture into the entrepreneurship and has to settle for regular employment.A study from the RAND Corporation suggested that subsidized health offered in the fixed-wage employment leads to”entrepreneurship lock” as the employees prefer not to quit the job for entrepreneurship, as they would lose the health insurance offered by the employer.

ISSUES IN SOCIAL SECURITY REGIME IN INDIA

Around 10% of the working force is currently covered under the social security acts in India, and the social security lack presence in many sectors. The primary reasons for the dismal penetration of social security are the lack of comprehensive policy for social security, exclusion of the marginal sections, among others.

The Second Labour Commission that submitted its report in 2002 had considered social security as a fundamental human right and had recommended that the state bear the responsibility for ensuring elementary social security and is supplemented by the contributory schemes.Other salient recommendations included-

1. The term ‘workman’ may be replaced by the term ’employee’ so as to make the Workers’ Compensation Act applies to all categories of employees.

2. Constitution of high-powered national security authority under the Chairmanship of a Prime Minister.

3. A social security fund at Union and State level may be set up.

4. There will be three kinds of social security schemes. First, social insurance type of contributory scheme, second, subsidized insurance/welfare fund type of partly contributory and partly socially assisted schemes and the social assistance scheme which will be wholly non-contributory.

To deal with the same, the government has drafted an ambitious Rs 1.2 lakh crore plan to provide universal social security coverage ata larger scale.This broader program envisages three categories — the most deficient 20%, who will get a government payout; those who subscribe on their own and formal sector workers who will need to set aside a fixed proportion of income toward the scheme.  Its implementation would be regulated and monitored by an overarching regulatory body called the National Social Security Council to be chaired by the Prime Minister with Finance Minister, Health Minister and Chief Ministers of all states along with workers and employers as its members,” the official said.

The estimated 50 Crore beneficiaries will be classified into four tiers.  Tier one will include the people below the poverty line have the negligible contributory ability. Workers in the unorganized sector who have contributory power to an extent but are not self-sufficient may be covered under the subsidized schemes in tier two. The third tier of beneficiaries will include those who either by themselves or jointly with their employers can make an adequate contribution to the schemes, so as to be self-sufficient while the fourth tier will comprise comparatively affluent people who can make their own provisions for meeting the contingencies or risks.

The researcher recommends that the start-ups should be included in the tier two employees who are the workers in the unorganized sector who have some contributory power but are not self-sufficient.

 CONCLUSION

A widely circulated article in The Atlantic, authored by Harvard Business Review associate editor Walter Frick claims that, when governments provide citizens with economic security, they embolden them to take more risks. Social security plays a vital role in proving workforce freedom from anxiety and in the rendering industry more attractive. It adds to the increased sense of security and will consequently increase the efficiency and supply of labor. The means and scope for social security will differ from country to country based on factors like size, population, economic resources, industrial development, and living standards, but despite several difficulties, the contemporary times have witnessed rapid march towards the goal of social security.The government should ensure the entrepreneurship potential does not remain untapped due to the fear of failure of the start-up venture a cue in this regard can be taken from Tunisia  Further, ‘Startup India’ is an initiative by the government to nurture the start-up ecosystem by means like Providing Funding with a Corpus of INR 10,000 crore and Tax exemptions but social security has been ignored yet again.Social security ensures that the youth of the nation are attracted to entrepreneurship and become job providers rather than job seekers. An equal career opportunity could be the only incentive for the bright youth of the nation to opt for start-ups.

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ABOUT THE AUTHOR

Anubhav is a fourth year student a fourth-year student at Dr RML National Law University, Lucknow.

In Content Picture Credit– Web Works