Centre considers increasing monthly wage ceiling for EPFO and ESIC to Rs 25,000

In a move that could expand the social security coverage for formal sector workers, the government is considering a proposal to increase the wage threshold under the Employees’ Provident Fund Organisation and the Employees’ State Insurance Corporation.

According to sources, the government could increase the wage ceiling under the two schemes to Rs 25,000 per month. This would be a sharp rise from the current wage threshold – just Rs 15,000 per month for the EPFO and Rs 21,000 for the ESIC.

The wage threshold, which is the maximum pay up to which workers employed in firms with 20 or more employees mandatorily qualify for the schemes, have not been revised for several years. For the EPFO, the threshold was last revised in 2014 while for the ESIC, it was revised in 2017.

According to sources, this has been a long standing demand of trade unions and was also approved by an internal committee of the EPFO’s Central Board of Trustees. While several meetings of the CBT have also discussed the issue, a decision has not been taken till now. The wage threshold for the ESIC will have to be approved by its respective board.

Sources pointed out that the current minimum wage for the Central government is Rs 18,000 and the EPFO’s wage threshold is below that. Further, with higher inflation and changes in salaries, there is a need to further increase the threshold. A Rs 25,000 threshold would align the threshold for both the schemes and ensure that more workers can be included in these two social security schemes.

Sources said that discussion on this issue have been taking place and could be announced as part of the government’s efforts to improve social security coverage and provide benefits to workers.

In a recent meeting with the new Labour Minister Mansukh Mandaviya, trade union Bharatiya Mazdoor Sangh had also demanded doubling the ceiling of ESI and EPF eligibility. “The current ceilings were too low and not in tune with the rise of income and prices,” it said in a statement, adding that such enhancement will also widen the coverage of the schemes to a large section of workers.