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INTUC flays move to lower employer contribution to EPF

Our Bureau New Delhi | Updated on January 27, 2018 Published on May 24, 2017

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Congress-backed INTUC has opposed the Centre’s move to reduce employers’ contribution to provident fund from 12 per cent of basis wages per month. The proposal is part of the agenda of the meeting of the tripartite Central Board of Trustees (CBT) of retirement fund EPFO, slated to be held in Pune on May 27. Employers have sought to trim their PF contribution to 10 per cent.

“We from the Indian National Trade Union Congress (INTUC) have no hesitation to say that the proposal in Item No10 of the said meeting agenda appears to be the most retrograde policy proposal brought before the CBT,” Ramen Pandey, CBT member and President, INTUC West Bengal, said in a letter to Labour Minister Bandaru Dattatreya.

Pandey said the rate of contribution of employers was raised to l2 per cent/month by virtue of special order No.S.O.320(E) dated April 9, 1997. Exception was made only in respect of the jute, bidi, brick, coir industry other than the spinning sector and gaurgam factories, and various sick industries.

“For 20 years, employers are contributing 12 per cent of the basic wage as PF contribution for their employees. We cannot comprehend what might have weighed with the Central government to propose to consider lowering down the employer’s contribution to PF by superseding the earlier notification,” said Pandey.

The main ground on which the Ministry has requested the Employees Provident Fund Organisation (EPFO) to place the proposal in the agenda is that there were “demands from various quarters on many occasions to review the present rate of EPF contribution and placing it at par with other social security schemes, such as the National Pension System (NPS).”

However, INTUC said this reflects “confused” thinking on the part of the Labour Ministry, which has already circulated a Draft Code of Social Security, which proposes that employers should contribute I7.5 per cent plus 2 per cent for gratuity, in all, 19 per cent of basic wages of an employee, for social security. For the employees, the draft proposes maximum contribution of 12.5 per cent per month.

“Should the Ministry not have uniform thinking and common approach in matters concerning provisioning social security for the workers? In other words, the draft code circulated by the Ministry as a part of its grand labour laws reform, is ridiculed by the existence of the letter dated April 29, 2017 (calling for lowering employer contribution),” INTUC said, calling for immediate withdrawal of the item from the agenda.

Pandey said the Ministry’s move reflects “inadequate understanding” of EPF as a social security scheme and the NPS, which was for retirement benefit and the only contributor for the scheme was the individual. Also, being a self-funded scheme, NPS can hardly be called a social security scheme, he said, reminding Dattareya of his assurance at a tripartite meeting in February that the “existing rights and privileges of workers will not be diminished.”

Published on May 24, 2017
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