The government had in the budget for 2018-19 committed itself to meet the entire employer’s contribution of 12% of wages for new employees towards provident fund under the Employees’ Provident Fund Organisation (EPFO) for all sectors for the next three years under the Pradhan Mantri Rojgar Protsahan Yojana (PMRPY).
A senior government official in ESIC told ET that an informal discussion had taken place in the ministry on the possibility of extending the coverage of PMRPY to ESIC. ESI is a self-financing social security and health insurance scheme for Indian workers managed by ESIC under the ESI Act 1948.
Under this scheme, employees earning up to Rs 21,000 a month contribute 1.75% towards ESI while the employer contributes 4.75%.
However, ESIC extends coverage to firms with 10 or more employees while EPFO covers firms with 20 or more employees.
The government sees two benefits of the scheme. “First, more jobs will be created in the formal sector and, second, firms with 10-20 employees, which were hitherto not covered under the EPF Act, will now be incentivised to provide their employees with some kind of social security,” the official said, requesting anonymity since the proposal is still at drawing board stage.
Source: Economic Times