Apart from benefit hike, recent ESIC move to make jobless claims easier too

Topics ESIC | jobs | Unemployment in India

Four million ESIC members were rendered unemployed in during April and May, the first two months of lockdown
Members of the Employees’ State Insurance Corporation (ESIC) who were laid off during the Covid period in the organised sector can claim 50 per cent of their average salaries of the past two years as unemployment benefit.

This decision to hike the benefit from the current 25 per cent to 50 per cent was taken by the Corporation at its meeting on Thursday. The money will be given under the Corporation’s Atal Bimit Vyakti Kalyna Yojna. 

Hypothetically, if the salary of a sacked person is Rs 21,000 a month in the last two years--those above this level being ineligible for ESIC subscription--he will get Rs 10,500 a month for three months, or Rs 31,500 in all.  However, this could be claimed for the period March 24 to December 31. 

Though the hike seems to be just twice of what employees were anyway getting, the ramifications are much larger. This is because the Yojna has not taken off well under the previous eligibility criteria.

Previously, employers had to ask for benefits on behalf of jobless employees. “That is why the scheme did not do well,” explains an official.

Under the changed criterion, a jobless person insured under the scheme can submit the claim directly to the ESIC branch office instead of the last employer forwarding it. The payment will be made directly into the employee's bank account.

Besides, the relief would be given after 30 days of unemployment as against 90 days at present, according to a decision by the ESIC at a meeting chaired by labour minister Santosh Kumar Gangwar.

Four million ESIC members were rendered unemployed in during April and May, the first two months of lockdown. However, another official said that 50 per cent of those have got employment till now. But, these are only rough estimates.

The decision on increasing the employment benefit will not cost the exchequer because ESIC has surplus funds. It has a corpus of Rs 90,000 crore at present. After deducting its committed liabilities, the surplus comes at around Rs 55,000 crore.

However, the decision will benefit mainly workers in the organised sector. Employers contribute 3.25 per cent of the basic salary of employees, and the latter 0.25 per cent to ESIC.

The scheme is unique in a country that does not have many safety nets for those rendered jobless.

Though its difficult to estimate the number of jobless people due to Covid-19, a earlier study by the International Labour Organisation and Asian Development Bank said as many as 6.1 million young people (15-24 years) may lose jobs in India in 2020 if the containment of the virus takes six months (roughly till September). If it is contained by June, 4.1 million youth can be fired, the study shows.  But, the virus could not be contained till June across the country and many provinces went for regional lockdowns.

The scheme will be reviewed after December this year.

ESIC provides social security benefits like reasonable medical care and a range of cash benefits in times of need such as injury, sickness, death etc. It covers about 34.9 million families of workers, helping 135.6 million beneficiaries. 

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