In a move aimed at expanding social security coverage for formal sector workers, the Indian government is considering increasing the wage thresholds under the Employees’ Provident Fund Organisation (EPFO) and the Employees’ State Insurance Corporation (ESIC). This proposal, if implemented, could significantly extend the reach of these social security schemes.
Proposed Increase in Wage Ceiling
According to sources, the government is contemplating raising the wage ceiling under the EPFO and ESIC schemes to ₹25,000 per month. This marks a substantial increase from the current thresholds of ₹15,000 for the EPFO and ₹21,000 for the ESIC. The wage threshold is the maximum salary up to which workers in firms with 20 or more employees qualify mandatorily for these schemes.
Historical Context and Demand for Revision
The wage thresholds for these schemes have not been revised for several years. The EPFO’s threshold was last updated in 2014, and the ESIC’s in 2017. Trade unions have long demanded an increase, arguing that the current thresholds are outdated and do not reflect current economic conditions. This demand has also been approved by an internal committee of the EPFO’s Central Board of Trustees (CBT).
Rationale for the Increase
Sources pointed out that the current minimum wage for Central government employees is ₹18,000, making the EPFO’s wage threshold particularly outdated. With rising inflation and salary changes, there is a pressing need to increase these thresholds. A ₹25,000 ceiling would harmonize the thresholds for both schemes and ensure broader coverage, including more workers in these social security nets.
Government Discussions and Trade Union Support
Discussions on this issue have been ongoing and may be announced soon as part of the government’s broader efforts to improve social security coverage for workers. Trade union Bharatiya Mazdoor Sangh recently met with new Labour Minister Mansukh Mandaviya, reiterating the demand to double the ceiling for EPF and ESI eligibility. They emphasized that the current ceilings are too low and do not reflect the rise in incomes and prices.
Potential Impact on Workers
Raising the wage threshold to ₹25,000 would significantly increase the number of workers eligible for EPFO and ESIC benefits. This move would provide enhanced social security coverage, ensuring that more workers can secure their financial futures through these schemes. It would also align the wage thresholds with current economic realities, offering greater protection and benefits to a larger section of the workforce.
