A high-level committee has supported a proposal to raise the Employees' Provident Fund Organisation (EPFO) wage maximum from Rs 15,000 to Rs 21,000 per month. However, the committee has stated that the government can apply the hike at a later period after taking into account all inputs. Once adopted, the idea will bring an estimated 7.5 million extra workers into the scheme, as well as make adjustments to the existing system.
"The EPFO ad hoc committee has agreed to improve (waged under) the EPF Act to line with the ESI establishment," a senior government official told ET. If approved by EPFO's central board of trustees, the proposal will provide relief to companies who are hesitant to take on more financial obligations right once.
Employers highlighted stress on their balance sheets as a result of the pandemic outbreak in their discussions and requested more time to execute the suggested rise. It will also benefit the exchequer, as the Centre now pays the EPFO's Employees' Pension Scheme roughly Rs. 6,750 crore per year.
The government contributes 1.16 percent of EPFO participants' total basic wage to the plan.
Under present regulations, any company with more than 20 employees must register with the EPFO, and all employees earning less than Rs 15,000 must participate in the EPF scheme.
It will also bring the ceiling in line with the limit set by the Employees' State Insurance Corporation (ESIC), which is Rs 21,000. KE Raghunathan, an employer's representative on the EPFO's central board of trustees, said there is agreement within the EPFO that identical standards should be followed for both EPFO and ESIC when it comes to delivering social security.
"Workers should not be denied the benefits of social security due to differences in the two schemes' regulations," he stated.
However, labour groups are concerned that the decision will take a long time to execute.
"There are a lot of roadblocks in the way of putting this in place, including the requisite authorization from the finance ministry," a labour union representative said on condition of anonymity.
