ESIC approves unemployment benefit scheme for formal sector workers

The Employees’ State Insurance Corporation (ESIC) has approved a scheme for providing unemployment allowance to workers rendered jobless due to the “changing employment pattern”, acknowledging the fact that permanent jobs are on a decline in the country.

The scheme, named Atal Bimit Vyakti Kalyan Yojana, will be applicable for employees covered under the Employees’ State Insurance (ESI) Act, 1948, the labour and employment ministry said in a press statement on Wednesday. It will benefit over 1 million workers across the country, a senior ESIC official said.

Workers who are left unemployed for whatsoever reasons will be paid money, from their own contribution towards the ESI scheme, in cash through bank account transfer. The step has been taken “considering the change in employment pattern and the current scenario of employment in India which has transformed from a long-term employment to fixed short-term engagement,” the official statement said.

The decision was taken in a meeting of the ESI Corporation chaired by Labour and Employment Minister Santosh Kumar Gangwar on Tuesday.

The scheme will be notified soon and workers who are ‘insured persons’ under the ESI Act for a period of two years continuously will be eligible to be a part of it.

Workers will be able to draw 47 per cent of their total contributions towards ESIC after remaining unemployed for at least three months from the date of leaving their previous jobs, according to the draft scheme.

“The person can choose to receive the cash at one go or in instalments,” the official quoted above said.

Nearly 4.75 per cent of a worker’s monthly salary goes towards ESI as the employer’s contribution, 1.75 per cent of the income is the employee’s share. The employees’ insurance scheme applies to all factories and establishments employing at least 10 workers.

Workers drawing salary up to Rs 15,000 per month are entitled to medical benefits for treatment during incidences of sickness, maternity, disability and death due to injury during work. The ESI Act applies to factories with 10 or more workers and it is also applicable to shops, hotels, restaurants, cinemas and road transport undertakings.

“There is a changing employment pattern in the country. Most of the factories are now hiring workers on contract. Permanent jobs are on the decline and more contract workers are being hired. But there are chances they become unemployed at the end of their contract tenure,” a senior ESIC official said.

The new scheme will be in addition to the Rajiv Gandhi Shramik Kalyan Yojana (RGSKY) under which ESIC subscribers are provided unemployment allowance. However, persons who have become unemployed after being insured for at least three years, only for three reasons – closure of factory, retrenchment or permanent invalidity – are entitled to be a part of the RGSKY scheme. Unemployment allowance equal to 50 per cent of wage for a maximum period of two years is provided, along with medical care for the worker and her family during the period of unemployment.

“We did not oppose the new scheme for providing unemployment allowance to workers registered with ESIC. However, the government itself is responsible for reducing job securities of workers by bringing in a policy of fixed-term employment. Workers are now being compensated through this route,” Prasanta Nandi Chowdhury, national secretary, Centre of Indian Trade Unions and a member of ESIC, said.

The government had earlier this year allowed industries from all sectors to employ workers on a fixed-term contract. The move enabled industries to hire workers for short-term assignments and terminate their services once the projects are completed. Such workers are entitled to all statutory benefits available to a permanent worker in the same establishment.