The wage ceiling could be raised to as much as ₹25,000 and ₹30,000 per month from ₹15,000 currently, under the Employees’ Provident Fund Organisation (EPFO).
Also read: Minimum wage hikes may push workers out of EPFO net, say experts
The rethink follows sharp wage increases for industrial workers in the National Capital Region. This could result in exclusion of many skilled employees from mandatory EPFO coverage, undermining the government’s push towards universal social security.
Officials are also reconsidering an increase in wage ceiling under the Employees’ State Insurance Corporation (ESIC) to bring the two at par with each other for better compliance and ease of doing business. The current ceiling under ESIC is ₹21,000 per month.
A senior government official told ET that the ministry has taken note of the recent increase in wages in some states and is assessing its impact on the social security coverage for these workers.
“The matter is being internally discussed and the ministry will soon take necessary approvals before rolling out a comprehensive stakeholder consultation to firm up the new wage ceiling,” the official said. Enhancing the wage ceiling under EPFO for mandatory contribution will widen its coverage, bring more workers into the formal workforce, and enhance their retirement corpus though placing some strain on employer balance sheets.
The official said raising the wage ceiling will have large financial implications on employers, and hence the government wants to bring all stakeholders on board before moving a formal proposal to the Central Board of Trustees of EPFO for approval.
The government had in the past considered raising the wage ceiling under EPFO to make it at par with ESIC. The last revision in the wage ceiling of EPFO was in 2014 when it was raised to ₹15,000 per month from ₹6,500.
The move to raise the wage ceiling is gaining urgency after the Supreme Court recently flagged the need to update the threshold in line with rising wages and inflation, warning that the current limit excludes a growing segment of the workforce.