Vol. XLIII No. 25 June 23, 2019

CITU Opposes Govt’s Move to Reduce ESI Contribution

THE Centre of Indian Trade Unions (CITU) denounces the decision of the government of India to reduce rates of contribution to Employees State Insurance Scheme (ESI). CITU, in a press release issued on June 14, said that the decision was unilateral and arbitrary and was a gross violation of the resolution made at the tripartite governing body of the ESI, held in September 2018.

In the 175th tripartite governing body meeting of ESI held on September 18, 2018, it was unanimously decided to reduce the employers’ contribution to ESI from 4.75 per cent of the wages to 4 per cent and the workers contribution from 1.75 per cent to 1 per cent, making the total ESI contributions at 5 per cent annually. Accordingly, the draft Gazette Notification was issued asking for opinion, if any, within 45 days. Simultaneously, in the 177th  governing body meeting held on February 19, 2019, under the chairmanship of union labour minister, ESI budget for the coming financial year (2019-20) was finalised on the basis of this contribution generation of 5 per cent.

However, to the shock of the workers, suddenly, after the new government assumed charge with the same labour minister, the government declared further reduction in ESI contribution to 3.25 per cent (a reduction of 1.5 per cent for the employers), while reducing the workers contribution to 0.75 per cent, further reducing the total contribution-generation to 4 per cent, in a gross violation of the unanimous decision of the tripartite governing body. 

The CITU said that in totality, the employers’ obligation towards ESI has been drastically reduced by 1.5 per cent while reducing the workers contribution by only 1 per cent. This would lead to huge benefits or savings of the employers to the tune of estimated Rs 8,000 to Rs 10,000 crore, the union pointed.

The CITU said that the step was taken by the government with ill motives to benefit the employers’ lobby. It also highlighted that in the meeting of the tripartite standing committee of the ESI governing body held on June 13, 2019, nothing was reported about the government decision on reduction of ESI contribution to be announced on the same day evening and its arbitrary departure from the unanimous decision of the governing body of which the labour minister was a party.

The CITU said that the increase in enrollment in ESI, as claimed by the government is due to upward revision of entitlement level from Rs 15,000 to Rs 21,000 from January 2017, as decided by the tripartite governing body. Reduction in ESI contribution mainly to benefit the employers or business class played no role in it. Rather, this is going to create serious difficulty to meet its obligations of social security and medical benefit to the enhanced number of beneficiaries.

The CITU vehemently condemned the arbitrary move of the NDA-II government and demanded implementation of the governing body decision on ESI contribution taken in September 2018.