The government is contemplating enhancing the wage ceiling under the Employees’ Provident Fund Organisation (EPFO) to at least ₹21,000 from ₹15,000 now to widen the social security coverage, a step towards achieving universal social security.
The proposal, which has been on the backburner for several years now, is being re-looked at.
We are evaluating all options and a decision in this regard could be taken by the new government, the official said. The government is of the view that strong balance sheet of India Inc will help cushion the extra financial burden that enterprises will incur due to enhanced wage ceiling, a senior government official told ET.
According to the official, raising the wage ceiling has huge financial implications for both the government as well as the private sector.
But the government has to move in that direction if it wants to bring more and more workers under the social security net, the official added. It is estimated that millions of workers will benefit with the enhanced wage ceiling as minimum wages in most states are anywhere between ₹18,000 and ₹25,000, depriving them of any form of social security. The wage ceiling under EPFO was last raised in 2014 to ₹15,000 from ₹6,500. Besides, even the Employees’ State Insurance Corporation (ESIC) has had a higher wage ceiling of ₹21,000 since 2017 and there is consensus within the government that the wage ceilings under the two social security schemes should be aligned. Both EPFO and ESIC are under the administrative control of the ministry of labour and employment.
Under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, both employee and the employer make matching contributions of 12% each of basic salary, dearness allowance and retaining allowance, if any, to the EPF account.
While the employee’s entire contribution is deposited in the provident fund account, 8.33% of the employers’ contributions goes to the Employees’ Pension Scheme and the balance 3.67% is deposited in the PF account. EPFO subscribers are entitled to provident fund, pension and insurance benefits under EPF & MP Act, 1952.
Page Source : Economic Times
