Labour ministry takes up concerns on mandatory health covers with FinMin

CII seeks clarification on coverage amount, wants medical insurance made compulsory only for those not covered under corporate group policy or ESIC

The Union labour and employment ministry has taken up with the Union finance ministry, concerns raised by the industry about fresh government guidelines requiring companies to provide medical insurance to all workers while restarting operations during the lockdown.

According to sources, the labour ministry has informed the finance ministry that the industry has sought help on two counts – providing medical insurance to workers and wage assistance to the Micro, Small and Medium Enterprises (MSMEs).

According to the guidelines issued by the Home Ministry on April 15, industries were allowed to begin operations from April 20 in areas with low incidence of Covid-19 positive cases, after taking permission from local authorities.

The government guidelines said that “medical insurance for the workers to be made mandatory.” The Confederation of Indian Industry had written to the government seeking clarification about the coverage amount and suggesting that the medical insurance be made compulsory only for those who aren't covered under the corporate group policy or the Employees’ State Insurance Corporation (ESIC).

The ESIC provides medical insurance to workers in case they work in establishments employing at least 10 workers (except in Maharashtra and Chandigarh where the threshold is 20). But employees earning monthly wages more than Rs 21,000 aren't covered. ESIC coverage is also not available across the country. 

“A proposal to increase the wage threshold of workers to be covered under ESIC is on the table,” a senior government official said, requesting anonymity.

Labour and employment secretary Heera Lal Samariya didn’t respond to queries sent through text messages.

In India, over 98 per cent of all the establishments employ less than 10 workers, according to the latest Economic Census of 2013-14. Also, the ESIC covers around 31 million workers, which constitutes roughly 6 per cent, of the total workforce of 471 million.

Extending the ESIC to establishments hiring less than 10 workers will require an amendment to the ESI Act.

Another alternative being explored by the government is to provide medical insurance to workers through the Pradhan Mantri Jan Arogya Yojana which provides a cover of up to ~500,000 a family every year. This proposal would lead to a financial outgo from the government.

"Providing insurance to the entire workforce at a time when firms are facing a cash crunch is not feasible," an industry executive said.

The industry’s concerns of footing a portion of wage bill of the MSMEs has also been taken up by the labour ministry with the finance ministry, sources said.

Industry bodies have requested the government to allow more companies to take the benefit of the EPF subsidy, under the Pradha Mantri Garib Kalyan Yojana announced by the government last month. Under the scheme, only companies (with a manpower of up to 100 employees) which employ 90 per cent of workers below the monthly wage of Rs 15,000 a month will receive provident fund contribution from the government for 3 months. The industry want the cap of 90 per cent workers earning less than Rs 15,000 a month in a factory to be removed, which is leading to non-exclusion of many small firms.