ESIC raises wage threshold to Rs.21,000, aims to add 50 lakh workers

The move is expected to bring in 2 crore people—assuming a family of 4—under the Employees State Insurance Corporation net

The government on Tuesday overruled opposition from employers to allow an increase in the number of people eligible for Employees’ State Insurance (ESI), which provides medical care to industrial workers and their dependents, by raising the salary cap of beneficiaries to Rs.21,000 per month from Rs.15,000.

This means all industrial workers drawing a salary of up toRs.21,000 will be eligible for health care—from primary to tertiary—at more than 1,500 clinics and hospitals run by the Employees’ State Insurance Corporation (ESIC) directly or indirectly.

The move will add three million workers to the ESIC pool, benefiting 12 million more people when their dependents are taken into account.

Tuesday’s decision will add nearly Rs.3,000 crore to the labour ministry-run ESIC’s corpus annually.

The pro-worker step comes days after a nationwide labour strike disrupted normal life in parts of the country.

Under the Employees State Insurance Act, eligible employees contribute 1.75% of their salary (basic+allowances) and employers contribute 4.75% to the ESI corpus every month.

“The ESIC board approved the wage ceiling hike toRs.21,000,” said Michael Dias, an ESIC board member and secretary of the Employers’ Association, Delhi.

While the labour ministry and the employees’ representatives were for increasing the wage ceiling toRs.25,000 per month, the employers’ representatives resisted, leading to the board settling for Rs.21,000 per month, Dias added.

The last increase in the salary cap for ESI was made back in May 2010, when it went from Rs.10,000 to Rs.15,000.

As of 31 March 2016, there were some 21 million insured persons or members of ESIC and a total of over 60 million beneficiaries.

A labour ministry official, who attended the board meeting, said that while labour unions are portraying the National Democratic Alliance government as pro-industry, “we are taking several measures which will benefit the workers. After hiking the minimum wage for unskilled labourers in the central government sphere, we have now increased the salary cap for ESI benefits.”

The official, who declined to be named as a formal announcement is slated to be made in a few days’ time, said that Tuesday’s move will widen the social security benefit net for millions of workers.

The decision will be effective from 1 September.