Central government continues to move along an anti-worker course
The Ministry of Labour & Employment announced its plan to amend the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. One of the important changes that this amendment aims to make is reduce the contributions made by workers as well as employers to the employees provident fund (EPF) of the worker. The proposal of the Central government is to cut down the contributions made by both a worker and his employer from 12 percent of basic salary plus dearness allowance to 10 percent.
The interest rates on PF accounts are much higher than bank savings or even fixed deposit accounts. Further, the interest acrued each year is not taxable. EPF gives a worker a large sum of money at the time of his retirement to manage his retired life. It also makes part of the accumulated amount available to the worker at times of need such as for children's marriage, house construction or renovation, etc.
If this Bill is passed, the monthly contribution into the EPF account will go down by 16.7 percent with a corresponding reduction in the total accumulated fund at retirement. The increase in monthly take-home income of workers may be around two percent. Thus the worker has a lot to lose later and very little to gain at the present.Even if workers save this additional money in their bank accounts, the savings at the time of retirement will not even be one-fourth of what additional amount have acrued if the EPF contributions continue at the present rate.
Trade unions have opposed the proposed amendment. They have pointed out that EPF is the worker’s only security post retirement and rescue money for workers in bad times
The government is selling this proposal by saying that this will give more money in the pockets of workers every month. It is hoping that workers will accept such an amendment because most workers are facing tight financial situation due to high unemployment and downward pressure on wages.
Unions have also pointed out that there are other provisions in the Bill which are anti-worker. For example there is provision in the Bill to absolve employers from paying arrears beyond five years even if they have defaulted on their share of EPF contribution for more than five years. The draft of the Bill is not yet available in public domain.
CGPI condemns the Central government for trying to push through an amendment to the EPF Act that is clearly in favour of the capitalists and against the working class.