Economic Survey on Tuesday made a case for providing greater choice to workers, particularly for availing benefits under mandatory social security schemes like EPF and ESI. Pitching for labour reforms, the survey said formal employment could increase by offering employees choices when they start employment. These include allowing them to decide whether they want 12 per cent employee contribution to be deducted from their salary.
The survey also suggested providing the workers a choice between Employees’ Provident Fund Organisation (EPFO) and National Pension Scheme (NPS).
It also suggested that the workers should decide whether their health insurance premiums go to Employees’ State Insurance (ESI) or a private health insurance of their choice.
However, it cautioned that this choice should be exercised by employees, not employers, and today’s status quo should continue to be available to all employees.
The key point is to offer choice to employees, which will also result in competition for service providers such as the EPFO and Employee’s State Insurance Corporation (ESIC), it said.
In the present scenario, the workers are mandatorily covered under the social security schemes run by the EPFO and ESIC in formal sector.
Given the difficulty of reforming labor laws per se, the thrust could be to move towards affording greater choice to workers which would foster competition amongst service providers, it said.
At the same time, it said that there could be a gradual move to ensure that at least compliance with the central labour laws is made “paperless, presenceless and cashless”.
It also pointed towards the multiplicity of labour laws and the difficulty in their compliance, describing these as impediments to the industrial development and employment generation.
At present, there are 39 Central labour laws which have been broadly proposed to be grouped into four or five Labour Codes on functional basis with the enactment of special laws for small manufacturing units.