New Delhi, Jan 18 (KNN) The leading MSME federation, FISME has approached Mr. Modi’s office to restructure the social security policy for workers in the small sector.

According to FISME a pragmatic labour policy will encourage more enterprises in the unorganised sector to declare their actual number of workers and also provide them social security.

While the Government is seized to the fact that a large number of people employed in the informal sector are not covered by social security net, the bureaucracy possibly overlook the sheer unviability of the existing EPF and ESI framework for MSMEs.

The potent barriers in the way, namely, the high cost of compliance and low quality of benefits, drive away both the employers from adopting the schemes and in turn forces the MSMEs to employ less people in the formal sector.

FISME has written to the Prime Minister’s Office to bunch all employers’ contributions    for future security of a worker to 10% of his wage and subsume EPF etc. in the same.

FISME has also asked for a single return to be filed by the MSMEs against all social security Acts.

While the demand may look to be a tall order, according to experts on the subject, the spin offs are huge. Firstly it will encourage the 4 crore plus enterprises in the unorganised sector, who so far largely remained ‘invisible’ to the authorities, to come  under the legal regime, thus paying taxes and other contributions.

The more important spin off, from welfare angle, will be access to social security measures like pension by the workers of these enterprises who may count to be nearly 10% of the India’s population.

Another game changing proposal of FISME to the Prime Minister is to abolish the ESI scheme, which both the entrepreneurs and the workers want to be wound up.

The scheme neither provide effective healthcare to the workers nor is cost efficient due to huge bureaucratic burdens.

FISME’s suggestion is to take all workers in the universal healthcare system, already pronounced by the Government and stop differentiation in healthcare between workers of the organised and unorganised sector.

This will eliminate the enormous transaction costs involved in recording of workers’ details, timely payment of contributions and above all, the inspector raj involved in present ESI scheme.

FISME has also drawn the attention of the Government to the   Budget speech (2015-2016) of Shri Arun Jaitley, Minister of Finance, where he remarked that both EPF and ESI have hostages, rather than clients. The Finance Minister also talked about alternate schemes to the above.

The MSME sector eagerly looks forward to labour reform being the next big agenda of the Government after GST implementation. (KNN/DB)