CITU, AITUC oppose decision to reduce ESI contribution ratehttps://indianexpress.com/article/business/citu-aituc-oppose-decision-to-reduce-esi-contribution-rate-5781624/

CITU, AITUC oppose decision to reduce ESI contribution rate

Subsequently, in the 177th governing body meeting held on February 19, 2019, chaired by the 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, CITU said.

CITU, AITUC oppose decision to reduce ESI contribution rate
As per the Centre’s decision announced Thursday, employers’ contribution under ESI scheme has been reduced to 3.25 per cent from 4.75 per cent (Representational image)

A day after the Centre announced reduction in contribution under the Employees’ State Insurance (ESI) Act from 6.5 per cent to 4 per cent, trade unions opposed the decision saying it is a unilateral decision and not in line with the decision taken by the tripartite governing council of the ESI.

The Centre of Indian Trade Union (CITU) said it is a gross violation 175th tripartite Governing Body meeting of ESI held on September 18, 2018, where it was unanimously decided to reduce the employers’ contribution to ESI to 4 per cent of the wages of the enrolled workers from 4.75 per cent and the workers’ contribution to 1 per cent from 1.75 per cent making the total ESI contributions at 5 per cent annually.

Subsequently, in the 177th governing body meeting held on February 19, 2019, chaired by the 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, CITU said.

Editorial | Lower contributions to employees’ state insurance could boost formalisation further.

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As per the Centre’s decision announced Thursday, employers’ contribution under ESI scheme has been reduced to 3.25 per cent from 4.75 per cent and that of employees down to 0.75 per cent from 1.75 per cent, taking the total contribution to 4 per cent. The government estimates that the reduced rates, effective July 1, are likely to benefit 3.6 crore employees and 12.85 lakh employers.

Meanwhile, the All India Trade Union Congress (AITUC), in its statement, said that instead of reducing the rate of contribution, more benefits should be planned under the health insurance scheme and inspections should be restored to ensure compliance. CITU added that employers’ obligation to ESI being reduced by 1.5 per cent and that of workers’ by only 1 per cent “would lead to huge benefits/savings of the employers to the tune of estimated Rs 8,000-Rs 10,000 crore.”

Reduction in ESI contribution is mainly to benefit the employers/business class, CITU said, adding 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 1, 2017, as decided by the Tripartite Governing Body.

“This is going to create serious difficulty to meet its obligations of social security and medical benefits to the enhanced number of beneficiaries. CITU vehemently condemns such arbitrary move of the NDA-II government in the interest of the corporate lobby and demands implementation of the Governing Body decision on ESI contribution dated on September 18, 2018 in letter and spirit,” it said.