The Union Cabinet’s decision to raise the wage ceiling for mandatory Employees’ Provident Fund Organisation (EPFO) coverage from Rs 15,000 to Rs 25,000 a month is expected to bring a large number of employees in Ludhiana under the formal social security net.
At present, 6,965 establishments in Ludhiana are covered under the EPFO jurisdiction, with around 3.60 lakh contributing members. Officials expect the revised ceiling to increase the number of covered workers and establishments in the city.
The decision is particularly relevant for Ludhiana, where a large workforce is employed in manufacturing, engineering, hosiery, garment, bicycle and other industrial units. Employees earning above existing Rs 15,000 threshold but up to Rs 25,000 will now fall within the proposed expanded mandatory coverage, subject to the applicable provisions.
The revised ceiling will provide eligible workers access to provident fund savings, pension benefits under the Employees’ Pension Scheme and insurance protection under the Employees’ Deposit Linked Insurance Scheme.
The wage limit had last been revised in September 2014, when it was increased to Rs 15,000. The latest increase comes amid rising wages and expansion of formal employment.
For Ludhiana employers, the change is expected to require wider compliance with the EPFO provisions and could increase the number of workers receiving formal social security benefits.
The Union Government estimates that the move will bring more than 51 lakh additional employees across the country under mandatory EPFO coverage. The annual government expenditure has been estimated at about Rs 11,339 crore, while the projected expenditure over five years is around Rs 56,696 crore.
Local officials said employers in Ludhiana would now have to take the necessary steps once the revised provisions were formally implemented.