Interview with Labour Minister | SC order on higher pension contribution has many implications, says Bhupender Yadav

“PF pension verdict has legal, financial, actuarial and logistical implications,” said Union Labour Minister Bhupender Yadav

December 03, 2022 07:42 pm | Updated December 04, 2022 09:55 am IST - NEW DELHI

Bhupender Yadav, Union Minister of Labour and Employment, Environment, Forest and Climate Change in the Government of India. File

Bhupender Yadav, Union Minister of Labour and Employment, Environment, Forest and Climate Change in the Government of India. File | Photo Credit: Shiv Kumar Pushpakar

The 17th Asia and the Pacific Regional Meeting (APRM) of the International Labour Organisation will be held in Singapore between December 5 and 9. Two recent reports of the ILO had warned “social unrest” if issues such as unemployment, inflation and drastic decrease in income were not addressed by the governments. The APRM is likely to discuss the post-pandemic employment situation in the region and come up with a policy suggestion to tackle the crisis. Union Labour Minister Bhupender Yadav talked to The Hindu on the position India would be taking in the APRM. On the recent Supreme Court verdict on the EPFO higher pension, Mr. Yadav said it was being examined by his Ministry. “It has legal, financial, actuarial and logistical implications,” Mr. Yadav said.

Excerpts from the interview:

The APRM will discuss actions to enhance job-rich growth. What are to be India’s concrete suggestions towards this?

In Singapore, India’s suggestions will include the way to strengthen employment service portals, integration of job portals across the globe to bridge the gap between jobseekers and employers, a system for skill gap mapping for employment growth, and the formalisation of economy by providing social security to the informal sector workers, including gig and platform workers. Our suggestions will also include sustainable financing of social security; facilitating the growth of gig and platform economy; extension of credit facility to promote self-employment and entrepreneurship; the promotion of investment in physical and digital infrastructure; leveraging the opportunities presented by green economy; aligning labour laws with the current economic scenario; and compliance mechanisms to be simplified and updated, in consonance with the latest technological developments.

Social justice for a human-centred recovery is the theme of the main agenda in the meeting. How do you see labour market recovery in India after the pandemic? A recent ILO report had said the recovery is going to be slow in the region due to multiple factors such as inflation and growing unemployment rate.

The Indian economy is on the path of achieving the Prime Minister’s vision of becoming a $5 trillion economy by 2024-25. Economic growth positively affects job creation. Budget 2021-22 has made provisions for a sharp increase in public investment to boost economic activity. Budget 2022-23 further provided a strong impetus for growth, with capital expenditure being stepped up sharply by 35.40%, to ₹7.50 lakh crore from ₹5.54 lakh crore in the current fiscal. This outlay will not only boost economic activity but also concurrently improve the employment situation in the country.

The institutional framework to support transitions towards formality and decent work is another key agenda. Trade unions here have been arguing that steps such as fixed term employment (FTE) are against formalisation of employment. How do you look at this?

FTE has already been notified in the Central sphere as a type of employment for all sectors in the Schedule to the Industrial Establishment (Standing Orders) Act. It was notified on March 16, 2018 and incorporated in the Industrial Relations Code too. FTE intends to create a balance between the rights of the employer and the employees. FTE will also obviate the role of middlemen such as contractors, and direct hiring by the employer would lead to better career progression. The provision of all benefits to fixed-term employees at par with the permanent employees will contribute to the formalisation of the economy.

Social security is another main point of discussion. The code on social security is yet to be implemented. The recent Supreme Court order on higher PF pension is also to be implemented. What is your approach towards both the issues?

Consultations and consensus-building is an intrinsic part of cooperative federalism. In this spirit, wider consultations are continuously being undertaken. The Code on Social Security, 2020, received the assent of the President of India on September 28, 2020 and shall come into force on such date/dates, as may be decided. So far only Section 142- has been operationalised which relates to the grant of benefit and services based on Biometric Aadhaar system, for the identification of beneficiaries.

Now to the second part of your question, the case is mainly about the constitutional validity of the 2014 amendments made to the pension scheme. The amendments were struck down by the Kerala High Court leading to the filing of the SLP by EPFO and UOI. The Supreme Court has set aside the Kerala High Court judgment and upheld the constitutional validity of the 2014 amendments. Some parts of the amendment have been read down. The Court has held it cannot direct the Government to operate a pension scheme in a particular manner, and it is open for the Centre to amend the scheme either prospectively or retrospectively including changing the rate of contribution, condition of the eligibility and the scale of benefits.

Direction has been made in the exercise of jurisdiction available under Article 142 to the effect that the members existing on September 1, 2014 would be permitted to exercise the option to contribute on full salaries to the pension fund within a time window of the next four months. The judgement of the Supreme court is being examined. It has legal, financial, actuarial and logistical implications.

All pension funds have to be sustainable for the future generations therefore, in the larger public interest and that of social security it is imperative that the pension funds are kept in good financial health so that the pension payment liabilities in future, are met. The interests of the employees that have been contributing to the pension fund below and above the wage ceiling will have to be safeguarded. The process of evaluating the actuarial implications of the judgement has been initiated in this spirit. The Government of India is committed to providing a sustainable and adequate pension to all the employees that are members of the Employees’ Pension Scheme, 1995.

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