New Delhi: Millions of employees working in the organised private sector are pushing for an increase in the wage cap for compulsory Employees’ Provident Fund coverage. Currently, the Rs 15,000 monthly cap restricts many workers from receiving retirement benefits. Calling attention to the critical need for reform, the issue has lately reappeared in Parliament with the government saying that any revision is based on stakeholder consultations.
The issue of raising the limit came up in parliament when the government was questioned whether it plans to raise the EPF limit to Rs 30,000. In response to the question, Labour and Employment Minister Mansukh Mandaviya stated that any ceiling change would be based on stakeholder consultations with unions and industry bodies.
Revision in ceiling
Mandaviya stated that all employees in establishments registered with EPFO and earning up to Rs 15,000 per month must be covered mandatorily. He further said that any changes to the ceiling are subject to stakeholder consultations with unions and industry bodies because they affect both take-home pay for workers and employer hiring costs.
Mandaviya said that under the EPF Scheme, 1952, all employees earning up to Rs 15,000 in establishments covered under EPFO must be enrolled and there is no separate minimum wage requirement for eligibility.
Last increased from Rs 6,500 to Rs 15,000
The Employees’ Provident Fund wage ceiling for mandatory enrolment was last revised in 2014 when it was raised from Rs 6,500 to Rs 15,000 per month. Since then, salaries in urban India have risen rapidly but the EPF ceiling has stayed untouched. According to worker unions and employee representative bodies, this gap is harming the workforce.
Necessity of Rs 15,000 cap
Currently, EPF enrolment is mandatory only for salaries of up to Rs 15,000. Employees in the private sector who earn slightly above Rs 15,000 are not registered in any pension scheme. Thousands of entry-level urban workers who earn between Rs 18,000 and Rs 25,000 may miss out on retirement savings. If the ceiling is raised to Rs 30,000, organised sector employees earning Rs 30,000 will be required to contribute to the EPF and thus have a safety net for their future.
Gig workers
On gig workers, the government said that they are in the service economy and will not be included in the EPF Scheme, 1952. These workers fall outside the traditional employer–employee relationship that PF coverage is built upon. He stated that gig workers are already covered by the Code on Social Security, 2020, which provides benefits such as health cover, accident insurance, old-age protection and a Social Security Fund.
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