The government can give working people the option to reduce their contribution to the provident fund so that their salary will increase. Officials say that this may help increase consumption demand, which has slowed down economic growth due to sluggishness.
According to the Labor Ministry's proposal, the company's contribution to the provident fund will remain at the current level of 12 percent. These things are included in the Social Security Bill 2019, which was approved by the cabinet last week. The ministry has also decided to retain the existing autonomy of Employees Provident Fund Organization (EPFO) and Employees State Insurance Corporation (ESIC), while earlier it proposed to give them corporate-like appearance.
Through this bill, the government has taken another step towards providing social security to 500 million people in the country. The bill also envisages creating a Social Security Fund i.e. Social Security Fund under Corporate Social Responsibility (CSR). It states that all workers, including gig workers, will be given welfare benefits related to pension, medical, sickness, maternity, death and disability.
A government official, on the condition of anonymity, said, 'We have removed all the controversial proposals and focused only on the well being of the workers. We also want to improve the ease of doing business in the country. We are bringing existing labor laws under one code.
The Labor Ministry has also withdrawn the previous proposal to give EPFO subscribers the option to shift to the National Pension System. He refused to accept the advice of the Finance Ministry in this matter. The Labor Ministry has mentioned the high returns and other benefits from EPFO in support of its decision. It's also said that investors in EPFO get tax rebate at every stage. It is believed that the Social Security Bill will be introduced in Parliament this week.
According to the bill, units in which at least 10 laborers work will have to provide many benefits to the workers under ESIC and it will be mandatory for workers who work dangerously. Companies in which less than 10 laborers work, can voluntarily give these benefits to their workers under the ESIC scheme. With this, fixed-term contract workers will be entitled to a gratuity on a pro-rata basis. They will no longer have to work in a company for at least five years. The Social Security Code incorporates 8 central labor laws.