Minimum Wage Increases Risk Excluding Workers from EPFO Coverage
Minimum Wage Hike May Push Workers Out Of EPFO Net As Rs 15,000 Ceiling Stays Unchanged
News 18
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Recent minimum wage hikes in states like Uttar Pradesh and Haryana may push some workers out of the Employees Provident Fund Organisation (EPFO) coverage, as the wage ceiling remains fixed at ₹15,000 (approximately $180 USD). This situation raises concerns about the effectiveness of the social security net for lower-income earners.
- 01Minimum wages in states like Uttar Pradesh and Haryana have surpassed the EPFO threshold of ₹15,000.
- 02The EPFO wage ceiling has not been raised, risking exclusion of higher-paid workers from mandatory provident fund coverage.
- 03Current minimum wages for semi-skilled and skilled workers in many states now range between ₹15,000 and ₹20,000.
- 04Discussions are ongoing about raising the EPFO wage ceiling to ₹25,000, but employer resistance is a barrier.
- 05The unchanged EPFO threshold could weaken the social security net for low-income workers.
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Recent increases in minimum wages across several Indian states, including Uttar Pradesh and Haryana, have raised concerns about the coverage of workers under the Employees Provident Fund Organisation (EPFO). The EPFO's current wage ceiling of ₹15,000 (approximately $180 USD) per month has remained unchanged for years, despite many states now setting minimum wages above this threshold. For instance, in Uttar Pradesh, semi-skilled and skilled workers in districts like Ghaziabad and Gautam Budh Nagar now earn above ₹15,000, while Haryana has set the minimum wage for unskilled workers at ₹15,220. This situation means that workers earning above the ceiling may find EPFO enrollment voluntary, potentially leading to a decline in coverage. Discussions at the national level about raising the EPFO ceiling to ₹25,000 have not gained significant traction, primarily due to resistance from employers. Economists emphasize the need for reform, as the current cap risks excluding workers from the intended social security benefits.
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Workers earning above the EPFO threshold may lose access to mandatory provident fund benefits, which could affect their long-term financial security.
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