Centre may expand social security net

Ray of hope:EPFO will consider a proposal to increase wage ceiling for social security coverage to Rs. 25,000 a month.AFP

Ray of hope:EPFO will consider a proposal to increase wage ceiling for social security coverage to Rs. 25,000 a month.AFP   | Photo Credit: AFP

The Employees’ Provident Fund Organisation’s central board of trustees will meet on Thursday to consider extending social security benefits to volunteers under anganwadi , mid-day meal and Accredited Social Health Activists (Asha) schemes.

The EPFO has proposed to the Labour Ministry that a lower contributory rate of 10% of income towards the Employees’ Provident Fund be allowed for scheme workers as against 12% contribution stipulated for the organised workers.

According to estimates, there are 14 lakh anganwadi workers, 12 lakh anganwadi helpers, 25.50 lakh mid-day meal workers in the country, as per the agenda of the EPFO’s central board of trustees meeting reviewed by The Hindu . The meeting will be chaired by Labour Minister Bandaru Dattatreya.

No cover

There is no mandatory social security cover for such scheme workers at present. However, the Centre can issue a notification to cover any class of establishments with a lower contributory rate under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952. This will only be applicable to scheme workers in organisations employing at least 20 workers.

“The Central Board (EPF) may kindly consider for recommendation to the Central Government to issue notification for the Social Security Benefits to the volunteers of various schemes workers i.e, anganwadi , ASHA, Mid-day Meal Workers under the ambit of EPFO,” according to the agenda of the meeting.

Providing social security coverage to the unorganised workers has been one of the key demands of the central trade unions.

Wage increase

The EPFO will also consider a proposal to increase wage ceiling for its social security coverage to Rs. 25,000 a month from Rs. 15,000 a month at present in a bid to bring more workers under the provident fund net.

At present, EPF is optional for employees earning more than Rs. 15,000 a month. The EPFO had sent a formal proposal to the Union Labour Ministry last year to increase the wage ceiling for EPF coverage to Rs. 25,000 a month.

“The purpose of revision of wage ceiling is to ensure that on increase in wages due to inflation etc., minimum social security benefits are continuously made available to intended beneficiaries. Timely revision of wage ceiling is of utmost importance to ensure that new employees who are joining establishments covered under the EPF & MP Act, 1952 are assured of PF benefits,” according to the agenda.

The EPFO said that “there is an immediate requirement to enhance wage ceiling under EPP & MP Act, 1952” to ensure workers remain eligible for provident fund benefits.

Financial burden

However, the move may lead to additional financial burden on the Union government as it contributes 1.16% of the employee’s salary as subsidy towards the Employees’ Pension Scheme. The wage ceiling hike will lead to additional burden of Rs. 2,708 crore per annum on the central government, the EPFO said.

The previous wage ceiling was revised in September 2014 when the limit was increased from Rs. 6,500 to Rs. 15,000 per month. At present, out of around 3.7 crore active members are subscribed to EPFO, close to three crore workers are those in the earning category of Rs. 15,000 and below.

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