AITUC criticises govt's decision to cut ESI contributions

The All India Trade Union Congress (AITUC) Friday said it strongly opposes the government's "unilateral decision" to cut contributions made by employers and employees towards the ESIC health insurance scheme.

The AITUC demanded that instead of reducing the rate of contribution, more benefits should be planned under the health insurance scheme and inspections should be restored to ensure compliance.

The government Thursday announced a cut in contributions made by employers and employees towards the health insurance scheme of Employees' State Insurance Corporation (ESIC) to 4 per cent from the existing 6.5 per cent, a move which would lead to an estimated annual saving of around Rs 5,000 crore for firms.

"The AITUC strongly opposes the unilateral decision of the central government to reduce (ESI) scheme contributions," an AITUC statement said.

It pointed out that Employees' State Insurance Corporation (ESIC) has a tripartite standing committee and a board in which trade union representatives had opposed the idea.

The reasons cited for this decision, in spite of trade unions' opposition, that this will encourage more employers to cover their employees and more workers will come into the formal sector are patently false, as inspection for coverage has been abolished, it added.

The union said that ease of doing business and reducing the burden of the employer were the main reasons for taking this decision.