Workers forced to withdraw their own saving in EPF to cope with distress

Since the announcement of countrywide lockdown on account of COVID-19 pandemic government of India has announced a number of changes and revisions in various norms and procedures of the Employee Provident Fund Organisation (EPFO).

The first change is a special provision under which workers can withdraw up to three months’ salary or 75 percent of their own savings in Employees’ Provident Fund (EPF) account, whichever is less. EPFO has claimed that during April and May, it had settled 36.02 lakh claims amounting to Rs 11,540 crore. Of this, nearly half or 15.54 lakh claims, amounting to Rs 4,580 crore, were related to the recently introduced Covid-19 advance under the Pradhan Mantri Garib Kalyan Yojana (PMGKY).

According to the EPFO, 74% of the claimants were workers earning less than Rs 15,000 per month, while 24 % earned between 15,000 and 50,000 per month. Due to the unprecedented conditions created due to lockdown, while the workers were forced to withdraw money from their own long term life savings, the government is projecting as if it did a favour to the workers. The massive amount of withdrawal underscores the desperate conditions of the workers who were forced to dip into their life savings to survive in the present. Further there are many examples of working people who lost their jobs and applied for withdrawal from their account, and have waited for 3 months or more and are still waiting for the cash!

On 12 May the central government reduced statutory deductions on employees’ provident fund (EPF) contributions for employers and employees from the usual 12% each to 10%, for the May-July period. Capitalists have been for long demanding reduction of the employer’s contribution to the EPF. It has been the constant attempt by the government to reduce the percentage of contribution from 12% to 10% to reduce the contribution by the employer and their obligation in same proportion. This was always passed off as allegedly to increase the take home pay of workers! However as a result of resolute and consistent resistance from workers it was not able do so. Now under the pretext of the pandemic, the government is implementing this agenda. It must be noted that for workers provident fund is a major, and for many the only, source of security on retirement. Reduction in the contribution from 12 % to 10% would mean that the fund available to a worker on retirement would be lower by around 16%.

It has been reported in the press that the Employees’ Provident Fund Organisation (EPFO) is likely to further reduce the 8.5% interest rate declared for financial year 2020. This is being done under the pretext of reduction in the EPF amount collected during the year. This will further reduce the returns on the savings of the workers.

Workers must unitedly fight the attacks of the government on their life savings.