States request use of ESI fund for wages amid lockdown; Labour secretary rules out funding

To cover wages or part of the wages for employees during the extended Coronavirus lockdown, a group 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.

Employers facing difficulties in paying wages

According to media reports, the industries mostly in the micro, small and medium sector, have pointed out that the ongoing COVID-19 pandemic is an extraordinary situation, and employers are facing difficulties in paying wages even as their establishments are shut which is hurting their revenue generation. States like Punjab and Himachal Pradesh have raised the issue of allowing ESIC funds for the payment of wages. 

However, Labour Secretary Heeralal Samariya on Wednesday ruled out appropriating funds of the Employees' State Insurance Corporation (ESIC) for payment of wages to workers or to employers to meet their salary bill during the Coronavirus lockdown.

Earlier this month, a labour ministry spokesperson had also denied any such move to appropriate funds of the ESIC and Employees' Provident Fund Organisation (EPFO) to give relief to workers under the Pradhan Mantri Garib Kalyan Yojana or any other scheme.

'...is not at all advisable'

During a webinar organised by industry body FICCI, Samariya said, "ESIC (fund) is the money of insured persons and employers who are contributing (to this social security scheme). It already has a provision that if an employee is unemployed then 25 per cent of wages can be paid." 

"...but diverting money (of the ESIC) to somebody else or paying the wages is not at all advisable because we want to reduce the contribution further so that it (ESI scheme) can run in a better way in future," he added.

Central trade unions had strongly condemned the idea of diverting funds of the EPFO as well as ESIC for giving relief to workers under the lockdown. They had demanded that the government should pay for relief from its own budget rather than dipping into the reserves or surplus of the two social security bodies.

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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.

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