Minimum wage hike may send many out of EPFO net

EPFO’s threshold, making it imperative for the retirement fund body to raise its own wage ceiling, which has remained unchanged since Sept 2014, so that workers in lower income groups are statutorily enrolled by their employers.

Amit Basole, professor at Azim Premji University said EPFO coverage is becoming increasingly skewed in favour of higher income workers. The latest revision by Haryana effectively provides employers with a chance to skip compliance for workers, who are in most need of social security. “Its high time that EPFO revises its own wage ceiling somewhere around Rs 22,000-25,000, so that workers at the bottom of pay scale are statutorily covered by this social safety net,” he said.

Labour economist KR Shyam Sundar said the biggest worry with minimum wage is non-compliance. Contractors and establishments anyway don’t pay the prescribed minimum basic wages.

The increase in minimum wages in states such as UP and Haryana will result in several workers getting out of the provident fund net as the current wage ceiling for mandatory contribution to Employees Provident Fund Organisation is Rs 15,000 a month.