The decision may cost the government Rs 11,339 crore annually, which is an increase of about Rs 1,089 crore from the existing outgo. The employers will have to share the burden as more employees will come under the scheme, necessitating additional payouts from them
The Union government’s decision to revise upwards the ceiling in wages to be eligible for coverage under provident fund is welcome in that it will extend the social security measure to an additional 51 lakh employees. The last revision was in 2014; with the new revision, employees who earn up to Rs 25,000 a month will be eligible to get the coverage which was till now limited to those who earned Rs 15,000 or less.
The decision may cost the government Rs 11,339 crore annually, which is an increase of about Rs 1,089 crore from the existing outgo. The employers will have to share the burden as more employees will come under the scheme, necessitating additional payouts from them. The employees who will newly come under the scheme may see a proportional cut in their take-home salary which will eventually enhance their retirement benefits. It will also give them access to provident fund savings under the Employees’ Provident Fund and pension benefits under the Employees’ Pension Scheme which are available to its 7.98 crore contributing members at present. They will also be eligible for insurance protection through the Employees’ Deposit Linked Insurance Scheme.
The enhancement of the ceiling reflects the periodical wage hike across industries, the government says. However, one should not lose sight of the fact that the wages of the employees and the social security cover available to them are not reflective of the growth claimed to have been made by the Indian economy in the last 12 years. Also, four out of every five employees work in the informal sector and they have little or no access to social security measures. Add to this the ballooning gig segment, and the picture looks far from rosy. The government may take a long-term view of the unorganised sector, too, and extend the social security measure to them as well.
