Government decision may lead to annual savings to the tune of Rs 9,000 crore for the industry.
The government on Thursday announced reducing the total rate of contribution made by workers and employers towards the Employees’ State Insurance (ESI) scheme from 6.5 per cent to 4 per cent for the first time in over two decades.
The move is expected to benefit around 1.3 million employers who will see a 40 per cent reduction in the rate of contribution they make for their employees, in line with the provisions of the Employees’ State Insurance Act, 1948.
Nearly 4.75 per cent of a worker’s monthly salary goes towards ESI as the employer’s contribution, 1.75 per cent of the income is the employee’s share at present. Now, 3.25 per cent will be the employer’s share and 0.75 per cent the employee’s. This will be effective from July 1, 2019 — a move the government said “would benefit 36 million employees and 1.28 million employers”.
The move has the approval of Labour and Employment Minister Santosh Kumar Gangwar who had given his nod before he flew to Switzerland on Tuesday to attend the International Labour Conference.
Source: Business Standard
