Parliamentary panel seeks hike in ESIC wage ceiling
A parliamentary committee has urged the Ministry of Labour and Employment to expedite the revision of the wage ceiling under the Employees’ State Insurance Corporation (ESIC) scheme at the earliest. The panel also recommended reviewing and enhancing the minimum pension under the Employees’ Pension Scheme, 1995 (currently Rs 1,000 per month), which it described as insufficient amid rising living costs.The Standing Committee on Labour, in its report tabled in Parliament on Tuesday, noted that the existing wage ceiling of Rs 21,000 per month for coverage under ESIC has remained unchanged for a considerable period, despite sustained demands from workers and trade unions for its upward revision.
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“In view of the fact that enhancement of the wage ceiling has the potential to bring a substantial number of additional employees under the ambit of social security benefits, the Committee is of the considered view that the matter warrants expeditious consideration and an early decision,” the report reads.
The ministry informed the committee that an estimated additional 5.6 million employees are likely to be brought under ESIC coverage if the wage ceiling is enhanced to Rs 25,000. If the ceiling is raised to Rs 30,000 or Rs 35,000, the estimated additional number of employees would be 9.7 million or 12.2 million, respectively. The number would rise to 13.18 million if increased to Rs 40,000, and to 17.27 million if the ceiling exceeds Rs 40,000.
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The committee further stated that any revision should be based on actuarial evaluation, financial sustainability of the ESI Fund, and projected beneficiary expansion, while ensuring that contribution rates remain reasonable for both employers and employees.
Under the ESIC scheme, employees and employers contribute 0.75% and 3.25% of wages, respectively. The proceeds are utilised to provide medical care and various cash benefits to insured persons (IPs). Meanwhile, employees with daily wages up to Rs 176 are exempted from paying their contribution.
The committee also stressed the need for periodic revision of the wage ceiling to ensure that ESIC coverage keeps pace with changing wage levels and inflationary trends in the economy. “The absence of a structured mechanism for periodic review often results in long gaps between successive revisions, thereby excluding a significant number of workers from the ambit of social security coverage.”
It recommended that the ministry evolve a structured mechanism for periodic review of the wage ceiling under ESIC, taking into account wage growth, inflation, and labour market conditions. Such a mechanism would help progressively realise the objectives of universalising social security coverage under the Code on Social Security, 2020, the parliamentary panel noted.
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