States request use of ESI fund for wages amid Covid-19 lockdown
Among the states that have raised the issue of allowing ESIC funds for the payment of wages are Himachal Pradesh and Punjab.Updated: Apr 23, 2020, 05:52 IST
A clutch of industries and a few states have written to the union ministry of labour and employment to allow the use of funds collected under the ESI or Employees’ State Insurance (ESI) scheme, to cover wages or part of the wages for employees during the lockdown.
According to an official aware of the details, these industries, mostly in the micro, small and medium sector, have pointed out that the ongoing coronavirus disease (Covid-19) pandemic is an extraordinary situation, and employers are facing difficulties in paying wages even as their establishments are shut, affecting their revenue generation.
Among the states that have raised the issue of allowing ESIC funds for the payment of wages are Himachal Pradesh and Punjab. According to the functionary aware of details, the states and the industry bodies have pointed out that they should be given some sort of financial aid to be able to adhere to the union home ministry’s advisory issued on March 29, to ensure that wages are paid in full and on time during the lockdown, now extended till May 3.
In a representation to the ministry, Himachal Pradesh has, for instance, said many sectors, including the industrial sector, have expressed difficulty in complying with the order of the government to pay wages during the lockdown. “Most of them are MSMEs with limited financial ability to sustain prolonged closure and still meet their obligations towards their employees. It may also jeopardise the industrial growth and productivity in the state. I would, therefore, like to make a special request to you to please directions to the ESIC to bring in proposed changes to providing unemployment benefits like release of financial assistance to the workers registered with the employees State insurance Corporation for the lock down period [sic],” the letter written by chief minister Jai Ram Thakur reads.
Punjab chief minister Captain Amarinder Singh had, on April 10, written to Santosh Gangwar, minister of state for labour and employment (independent charge), suggesting the utilisation of ESIC, MGNREGA and other such funds by the Centre to provide part of the wages or lump sum financial assistance to industrial workers during the lockdown.
He insisted that the industrial sector in Punjab, which largely comprises MSMEs, was already under a lot of stress and stretched for resources, and hence it would be impossible for them to implement the union home ministry’s March 29 directions that all employers pay wages to their workers on the due date without deduction.
A functionary of the ministry said no decision on the issue has been taken so far.
The ESI is a self-financing health insurance scheme for workers in the formal sector and offers compensation in the form of cash up to three months of unemployment. The social security scheme offers full medical care to the insured person and his or her family with no ceiling on expenditure on the treatment. It offers benefits during sickness, maternity and disability. It also offers unemployment allowance under the Rajiv Gandhi Shramik Kalyan Yojana to those rendered unemployed because of the closure of a factory/establishment, retrenchment or permanent invalidity; equal to 50% of wage for a maximum period of up to two years. And under the Atal Beemit Vyakti Kalyan Yojana, the ESIC offers cash compensation up to 90 days, once in a lifetime, to be claimed after three months during one or more spells of unemployment with certain preconditions.
CK Saji Narayanan, president of the Bharatiya Mazdoor Sangh, however, said the ministry should not consider the demand to divert funds from the ESI: “It is a bad move, the funds are created from the sweat and toil of workers and it is for their health and other benefits. The funds cannot be diverted for wages as it is bound by an act, and without the consultation of the ESIC board it be ultra vires [sic],” he said.