Due to factors like increasing globalization, rapid growth in the developing economies, emerging opportunities in the global economy, large pool of young and technically qualified persons in certain countries and an ageing population in the western world, migration of professionals across nations is bound to become a major socio-economic phenomenon in the foreseeable
This migration is likely to be of short to medium term duration with migrants returning to their home country after completing the employment
India is a major source of migrant professionals due to its vast reservoir of technically qualified manpower in sectors like Information Technology, Engineering, Health, Finance and
India is likely to emerge as a major country of destination for knowledge workers from all over the world in the medium to long term on account of our rapid economic growth.
SOCIAL SECURITY SYSTEM ABROAD
Most of the developed countries have an umbrella social security system mandated by
It is funded through mandatory contribution from all working people and their employers (in a prescribed ratio) in order to provide multiple benefits like old age pension, disability insurance, health insurance and unemployment
The contribution is in the form of a fixed percentage of income subject to a maximum lump-sum
There are legislative restrictions on export of social security benefits on relocation of the beneficiary to another
There are minimum contribution periods stipulated by law. No benefit accrues if the contribution is made for a lesser period. The entire contribution is lost in such cases.
PROBLEMS FACED BY INDIAN WORKERS
Indian workers posted abroad (detached workers) by their Indian employers are subjected to double contribution. They have to continue to make social security contribution in India as per Indian law and yet are compelled to pay contribution under the host countries legislation
In case of relocation to India, the workers do not get any benefit from the social security contribution made abroad, because the host country legislation would not allow export of social security benefit.
Due to the minimum contribution period criteria, a worker staying abroad for a lesser period loses all the contribution.
Another disadvantage is that due to the high rate of social security tax, the Indian companies become less competitive while bidding for projects in these
India has already signed social security agreements with Belgium, France, Switzerland, Netherlands, Luxembourg, Hungary, Denmark, Czech Republic, Republic of Korea, Norway and Germany to protect the interests of Indian professionals by providing following
(i) Exemption from social security contribution for the posted (detached) workers (provided the worker is covered under the Indian social security system and continues to pay his contribution to the Indian system during the period of
(ii) Exportability of benefits in case of relocation to India or any other country after having made social security
(iii) Totalization of the periods of contribution pertaining to both countries for the purpose of assessing eligibility for benefit / pension under the legislation of each
The SSAs also make Indian companies more competitive since exemption from social security contribution in respect of their employees substantially reduces costs.