Staffing body unhappy with hike in salary cap of ESIC beneficiaries

The Indian Staffing Federation said more jobs would now move to informal sector

The Indian Staffing Federation (ISF), an apex body of flexi staffing industry in India said it "strongly" disagreed with the labour ministry's decision to raise the salary cap of the Employees' State Insurance Corporation (ESIC) beneficiaries to Rs 25,000 from the current Rs 15,000.

The federation stated as of 2012, ESIC was sitting on a corpus in excess of half the contribution of Rs 7,070 crore. That amounts to a substantial fund to address plaguing issues, including inadequate doctors, poor diagnostic services and non-availability of common drugs.

It is more critical to address the absolutely lack of faith in the institution of ESIC among the very people that the authorities are presumably trying to protect.

In a statement, it said, an employee with a gross salary of Rs 25,000 a month works up to a cost-to-company salary of approximately Rs 28,000. "This single move would lead to an additional burden of Rs 1,200 for employers on every employee with a gross salary of Rs 25,000 and decrease the net pay of the employee by Rs 450. Given the uncertainty all around, which is affecting industries, this single move is yet another step discouraging the job creation and encouraging available work to be shifted to the informal sector."

On the outcomes of this decision, it said, so far informal jobs were largely at the grass-root level. This move actually would add impetus for informality to creep in at higher level as well.

"The ISF would like to urge the ESIC authorities to take on greater accountability in making the scheme actually beneficial for the needy by easing the access to basic healthcare facilities and giving them the flexibility to choose the kind of healthcare they want for themselves," it said.