Wage ceiling increased to Rs 15,000 for social security schemes; SMEs fear cost to employer
Updated: Aug 29, 2014 04:42:05pm
New Delhi, Aug 29 (KNN) The small entrepreneurs have raised concerns over governments notification about raising the higher wage ceiling to Rs 15,000 for social security schemes run by Employees’ Provident Fund Organisation (EPFO).
Labour Minister Narendra Singh Tomar has notified the minimum monthly pension of Rs 1000 and a higher wage ceiling of Rs 15, 000 for social security schemes run by the retirement fund manager EPFO.
The changes will come into effect from September 1, 2014.
The government’s move of enhancing the minimum wage ceiling for becoming an EPF subscriber will bring approximately 50 lakh additional formal sector workers under its ambit.
The SMEs fear that the cost burden will pass on to them and it will also be a “Forced savings from the economically weaker section in the name of social security”.
According to Managing Director of Dayachand Engineering, Naveen Jain from Meerut upto August 31, 2014, the cost to the employer was Rs 17,683.5, whereas from September 1, 2014, the cost to the employer will be Rs 19,725. There will be an increase of Rs 2, 041.5 in cost to the employer.
The in hand salary of employees with basic pay of Rs 15000 from September 1 will be Rs 12937.5, which earlier was Rs 14737.5 after the deductions of ESIC at of 1.75 per cent and EPF at 12 per cent.
The employers expense, which earlier was Rs 2683.5, will now be Rs 4725 after all the deductions - ESIC at 4.75 per cent; EPF at 13.61 per cent; Bonus at 8.33 per cent; and Gratuity at 4.81 per cent.
“By implementing this, the employee gets Rs 1800 less in hand while the employer has to pay Rs 2041.5 extra,” said Jain.
“The PF contribution is 12 per cent of Basic salary from both employee and employer. The main problem that the SMEs will face now is that they will have to increase the wages of the labourers as they are only bothered about their in-hand salary and not about any deductions. They don’t want to contribute 12 per cent from their salary towards their PF fund,” Jain, who was also a Treasurer of Federation of Indian Micro & Small and Medium Enterprises (FISME), earlier, told KNN.
“At a time when the industry is already facing labour shortage, we will have to agree to the demands of the labourers and increase their daily wage,” Jain said. (KNN/SD)
Labour Minister Narendra Singh Tomar has notified the minimum monthly pension of Rs 1000 and a higher wage ceiling of Rs 15, 000 for social security schemes run by the retirement fund manager EPFO.
The changes will come into effect from September 1, 2014.
The government’s move of enhancing the minimum wage ceiling for becoming an EPF subscriber will bring approximately 50 lakh additional formal sector workers under its ambit.
The SMEs fear that the cost burden will pass on to them and it will also be a “Forced savings from the economically weaker section in the name of social security”.
According to Managing Director of Dayachand Engineering, Naveen Jain from Meerut upto August 31, 2014, the cost to the employer was Rs 17,683.5, whereas from September 1, 2014, the cost to the employer will be Rs 19,725. There will be an increase of Rs 2, 041.5 in cost to the employer.
The in hand salary of employees with basic pay of Rs 15000 from September 1 will be Rs 12937.5, which earlier was Rs 14737.5 after the deductions of ESIC at of 1.75 per cent and EPF at 12 per cent.
The employers expense, which earlier was Rs 2683.5, will now be Rs 4725 after all the deductions - ESIC at 4.75 per cent; EPF at 13.61 per cent; Bonus at 8.33 per cent; and Gratuity at 4.81 per cent.
“By implementing this, the employee gets Rs 1800 less in hand while the employer has to pay Rs 2041.5 extra,” said Jain.
“The PF contribution is 12 per cent of Basic salary from both employee and employer. The main problem that the SMEs will face now is that they will have to increase the wages of the labourers as they are only bothered about their in-hand salary and not about any deductions. They don’t want to contribute 12 per cent from their salary towards their PF fund,” Jain, who was also a Treasurer of Federation of Indian Micro & Small and Medium Enterprises (FISME), earlier, told KNN.
“At a time when the industry is already facing labour shortage, we will have to agree to the demands of the labourers and increase their daily wage,” Jain said. (KNN/SD)
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