Amid reports of retrenchment and job losses, the Union labour ministry is considering reviving a Cabinet proposal it had made two weeks ago to provide social security cover to small units.
The proposal was returned by the Cabinet following representations from pressure groups and intervention by the ministries of information technology, finance and small and medium industries.
The labour ministry was seeking to lower the threshold limit for companies to come under the Employees Provident Fund Scheme, from a minimum of 20 workers to 10 workers.
Industry body Laghu Udyog Bharti (LUB), which represents around 1,700 small-scale units, has made a strong case to the IT and small and medium industries ministry against lowering the threshold.
According to LUB, the small-scale sector contributes 40 per cent of the industrial production, 35 per cent of the total exports and employs about 16.7 million people in about 3 million units. The added burden of EPF payments would put pressure on the bottomlines of these units, says LUB.
Though other ministries have endorse LUB’s position, the labour ministry feels a social security cover should be created for the workers given the present environment of employment insecurity.
More From This Section
Workers have the protection of the Industrial Disputes Act under which they have to be given a month’s notice and 15-day salary for every year served. But this is inadequate, the labour ministry feels.
A labour ministry official conceded that the government had no idea how many jobs had already been lost in the SME sector because of earlier pressures of a depreciating rupee, and now due to dwindling demand for exports.
CITU national secretary W R Varadarajan said the loss of jobs was alarming and the government should provide relief. If it could spare Rs 2,60,000 crore to bring liquidity in the economy, it should spare some to protect workers who were being dismissed, he said.
Labour Minister Oscar Fernandes had mooted a fund, partly financed by industry, to provide social security to workers rendered jobless by the economic meltdown.