Sustainable Growth and the Role of Trade Unions
- Ardhendu Dakshi
Sustainable growth of the economy is extremely vital for the working class and the trade unions. A steady and all round expansion of production and services means steady jobs, a secured life and prospect of a decent wage and a better career. Continuous growth of economy also denotes higher consumption by the people, general improvement of their standard of living and the working class, being a part of the society, also is the beneficiary of sustained growth of the economy. A balanced growth in all the three major sectors like agriculture, industry and services signifies a mutually supportive system with a better distribution of the wealth generated by the society. With a proper distributive system in place, the economy develops into a self-sustaining or self-generating one. This is something that not only the working class but also all other sections of toiling people want to have for their prosperity and peace in life. A proper macro-economic management can bring about big social changes and stability in the society that can usher in a situation conducive for further growth. The fundamental principles for the policy makers must be driven by the desire to uplift the condition of the common people who will ultimately hold the economy up and help it to expand.
The class, conscious trade unions look beyond the primary task of looking after the welfare of their members, to the other aspects of economic management and related developments. We have seen in the past as well as in the present time that wrong policies and mis-management of the economy can bring disaster in the life of the people but the working class are always hardest hit during an economic downturn. When the economic slow-down starts because of unbalanced and unplanned growth driven only by profit-motiveness by the capitalist class the workers are simply thrown out of their jobs, common people are forced to suffer all their hardships in life and when protests grow and situation become unmanageable, their democratic rights are trampled down. In the world of capitalism this is the general rule. In spite of all the known fault lines of capitalism, the governments run by the capitalists, in order to maintain their dominance have resorted to violence against their own people in their own countries as well as against other countries and the people there. The horrors of war all through the twentieth century are results of capitalist crises and the pursuit of world capitalism to establish their absolute dominance over world economy.
The Role of Trade Unions
There are two types of responses from trade union when the crisis strikes the head of the workers. One section of trade unionists call such crises as "natural" by claiming that economy, as always, have "ups" and "downs" and therefore, the workers shall have to bear it out and, with great hope, should wait for better times. They also are keen to protect the domestic employers, for obvious reasons, and the governments by shifting the responsibility to the "global" phenomenon of economic crisis. This is an easy option to deceive the workers and the people. They preach tolerance and ask workers to make sacrifices in order to protect capital and the capitalists though they are mainly responsible for such crises.
Last 20 years, in the matters of economic development, is a period fit for a close study. The period of "Neo-Liberal Globalization" is marked by high rate of growth but is a disbalanced and skewed one is proving to be un-sustainable and the crisis is deepening. We have witnessed a massive transfer of wealth from poor countries to rich countries and from poor people to rich people. Huge production capacities have been generated by paying "One dollar or, at the best, two dollars to the workers". In the process some people have become phenomenally rich and a new middle class has emerged enjoying the best of their life at the cost of the working class. Most of the national governments and policy makers have put a supportive frame-work to help such a crude, ruthless exploitation of labour. Some trade unions also fell in line calling globalsition as "inevitable".
Apart from the economic suffering by the working class the other big loss is their trade union rights. Except for the socialist countries, there has been a pervading decline of trade union rights in both developed and developing world. In the developing countries labour law enforcement has been lax and in some countries the entire legal framework for protection of labour has been demolished. All these steps have led to further impoverishment of the working class in both industrial and rural agricultural sectors.
In such a situation the role of class oriented trade unions has been altogether different, if not opposite. As for example, we, in the Centre of Indian Trade Unions (CITU), have all along opposed this model of growth as we knew that it would not be sustainable. Another major development is causing more worry for the workers in developing countries.
For various reasons the western economies have shifted their manufacturing base to the developing countries. Availability of cheap and skilled labour, raw materials and better infrastructural facilities are the main considerations. But to keep their control over the emerging economies they have kept their hold over the stock markets and investment agencies. This is a dangerous situation because, in such a mechanism, the economy of developing country is tuned to the needs of developed world without creating a strong domestic market to fall back on, in case there is a demand slump in developed world. All these will lead to a globalized crisis and the main sufferers will be the workers in developing countries. Their trade unions will have little chance to protect jobs of their members, not to speak of decent wage and labour rights.
The duty of the class-based trade unions is to hit at the root of the cause of fragile and vulnerable economic structure. Understanding the cause unsustainable growth and to fight for changing the macro-economic policies is the fundamental duty of class conscious trade unions.
The capitalists preach that poverty anywhere is danger for prosperity everywhere but they do not practice their own dictum. Poverty has increased in most of the developing countries in last 20 years. In some countries, like India, the recent growth is impressive but illusory because there has been no simultaneous growth of domestic market. 80 per cent of people live just at subsistence level and 90 per cent of the workers cannot buy the products they produce. In case of a slack international demand the growth in India cannot be sustained. The government may only try to prop up the stock market, the manufacturing sector is bound to face a collapse in a global slump.
The role of trade unions has to be one to avoid such a situation. Trade unions must play a role of intervention in the policy making stage through mass action, should oppose wrong policies by the government, particularly in capitalist economies, and fight for distribution of wealth to the people and the workers so as to ensure a better real income by them. These steps only can guarantee a sustainable growth of the economy where production, distribution and consumption can be evenly matched and market is developed in the country. When the orthodox capitalist system fails, trade unions, obviously, should have a role to intervene to change the economy and the society. More than anything else, sustainable growth of economy is extremely vital for the working class a well as their trade unions.
Internationalisation of Movement
All said and done we believe that when trade union movement becomes a social movement for a change, it cannot be confined in one country, inside one geographical boundary, in this era of globalization. We are witnessing two dangerous trends all over the capitalist world that are influencing the life of conventional working class in post world war-2 situation, particularly in the era of globalization.
Firstly, there is gradual displacement of regular workers in advanced countries by informal and illegal immigrant workers who do not enjoy same rights like regular workers. Secondly, in the developing countries there is large-scale displacement of regular workers by contractors' workers or informal workers. Outsourcing of jobs are rampant almost everywhere.
While the employers are totally united and employing the same methods, bargaining with national governments in the same way, about everywhere across the globe, unfortunately national governments are competing with each other to grant more liberal concessions in the matters of wages benefits, social protection and labour rights. The workers are at the receiving end.
This situation compels the trade unions to join hands nationally, regionally and globally. Without a concerted resistance there is poor chance to fight such exploitation at the local level. Let us admit the fact that the multinational corporations are taking full advantage of this situation and maximizing their profit.
We welcome the move by the ACFTU to organize this meeting. Such regional understanding and co-operation will go a long way for protection of the workers job and rights in our respective countries. We in the CITU have always aspired for building up of an Asian Confederation of Trade Unions, where trade unions of all affiliations could work together on common goal of protecting the workers rights. In the present situation such an organization has become a necessity as we apprehend that with accentuating of economic crisis, attack on the workers will intensify particularly in the Asian region.
ACFTU has the strength stature and the wherewithal to help building up an Asian Confederation of Trade Unions. We look forward for the day when such an initiative is taken by the trade unions in different countries and ACFTU takes an appropriate lead to fulfill the important international task.
Our greetings to ACFTU from Centre of Indian Trade Unions (CITU).
(Speech by Ardhendu Dakshi in Beijing Conference of Trade Unions in South Asia)
Sunday, December 14, 2008
Trade unionsin massive campaigns
Trade Unions to Unleash Massive Campaign -
On ILO Core Conventions
- Swadesh Dev Roye
According to the call of the 87th session of International Labour Conference (ILC) of the International Labour Organisatioon (ILO) the trade union movement all over the world is observing the 60th anniversary of the adoption of the Core Convention No.87.
The Central Trade Unions (CTUs) in our country jointly organized a 'National Workshop on ILO Core Conventions' on 4th November 2008 at the Constitution Club, New Delhi. The presidium of the workshop consisted of MK Pandhe (CITU), H. Mahadevan (AITUC), RA Mital (HMS), R.Sharma (AIUTUC), Abani Roy (UTUC) and Thomas (AICCTU).
A Keynote Paper was presented in the Workshop. Initiating the discussion Com. Pandhe deplored non-ratification of all the Core Conventions by India, which is a founder member of ILO. He spoke on the need for conducting countrywide massive campaign to popularise the Core Conventions of ILO amongst the working class. He put forward suggestions for carrying out protracted propaganda and agitation to mount pressure on the Government to ratify the remaining Core Conventions in India. More and more cooperation and coordinated activities by trade unions and Sub-Regional Office of ILO in India was stressed upon by Com. Pandhe.
It is to be noted that out of the 8 Core Conventions, India, a founder member of ILO and holding a non-elective seat of the Governing Body, has so far ratified only four - Convention Nos. 29,100, 105 and 111 in the years 1954, 1958, 2000 and 1960 respectively. Notably, the two most important Core Conventions i.e., Conventions No. 87 and 98 are not yet ratified by India.
Apart from the members of the presidium those who spoke in the Workshop included Ms. Leyla Tegmo-Reddy, Director and ILO Representative in India, Pong-Sul Ahn, Senior Specialist for Activities with Workers’ Organisations, ILO, India. Those who spoke representing CITU included Tapan Sen, Swadesh Dev Roye, Kashmir Singh Thakur, Sudhir Kumar, D.P. Dubey and Ranjana Nirula. Glaring examples of serious violation of trade union rights and attack on trade union functionaries were presented by speakers from states and industries.
Extracts from the Keynote Paper are as follows: The freedom and rights conferred on workers by ILO Convention No.87 can be precisely summarised as follows: The right freely exercised by workers to organize for furthering and defending their interests. The right to establish and to join orgnisations of their own choosing by workers. Public authorities shall refrain from any interference which would restrict their right or impede the lawful exercise of this right. The organizations shall have the right to establish and join federations and confederations, which shall enjoy the same rights and guarantees and also provides for the rights to affiliate with international organizations. The acquisition of legal personality by all these organizations shall not be subject to restrictive conditions. The law of the land and the way in which it is applied shall not impair the guarantees provided for in the Convention. (ILO Bureau of Workers’ Activities)
Similarly, the salient features of ILO Convention No.98 can be briefly summarised as follows: Protection to workers who are exercising the right to organize, non-interference between workers' organization and employers' organization. Promotion of voluntary collective bargaining. Workers shall enjoy adequate protection against acts of anti-union discrimination. Workers shall be protected against refusal to employ due to trade union membership. Against dismissal or any other prejudice by reason of union membership or participation in trade union activities. (ILO Bureau of Workers' Activities).
The Government of India has been continuously failing to ratify the left out Core Conventions on different pleas. In view of the collapse of the 'market driven' finance capital dominated economic policies of globalization, liberalization and privatisation as manifested in the worst ever capitalist economic crisis since the Great Depression of 1930s, the forthcoming days willl be very challenging for the working class. Already attack has been launched on jobs and wages and to blunt the inevitable resistance struggles by the trade union movement, the employers' class will resort to attack on trade union rights.
To carry forward the campaign through out the country the next joint consultation of the trade unions shall consider Regional Conventions at Kolkata, Mumbai, Chennai, Bangalore, Hyderabad and Chandigarh and to culminate into a massive National Convention at New Delhi which will adopt further course of action. A delegation of the trade unions will submit a memorandum to the Government. Technical cooperation of ILO, both at the levels of headquarters and at the New Delhi office, will be worked out.
On ILO Core Conventions
- Swadesh Dev Roye
According to the call of the 87th session of International Labour Conference (ILC) of the International Labour Organisatioon (ILO) the trade union movement all over the world is observing the 60th anniversary of the adoption of the Core Convention No.87.
The Central Trade Unions (CTUs) in our country jointly organized a 'National Workshop on ILO Core Conventions' on 4th November 2008 at the Constitution Club, New Delhi. The presidium of the workshop consisted of MK Pandhe (CITU), H. Mahadevan (AITUC), RA Mital (HMS), R.Sharma (AIUTUC), Abani Roy (UTUC) and Thomas (AICCTU).
A Keynote Paper was presented in the Workshop. Initiating the discussion Com. Pandhe deplored non-ratification of all the Core Conventions by India, which is a founder member of ILO. He spoke on the need for conducting countrywide massive campaign to popularise the Core Conventions of ILO amongst the working class. He put forward suggestions for carrying out protracted propaganda and agitation to mount pressure on the Government to ratify the remaining Core Conventions in India. More and more cooperation and coordinated activities by trade unions and Sub-Regional Office of ILO in India was stressed upon by Com. Pandhe.
It is to be noted that out of the 8 Core Conventions, India, a founder member of ILO and holding a non-elective seat of the Governing Body, has so far ratified only four - Convention Nos. 29,100, 105 and 111 in the years 1954, 1958, 2000 and 1960 respectively. Notably, the two most important Core Conventions i.e., Conventions No. 87 and 98 are not yet ratified by India.
Apart from the members of the presidium those who spoke in the Workshop included Ms. Leyla Tegmo-Reddy, Director and ILO Representative in India, Pong-Sul Ahn, Senior Specialist for Activities with Workers’ Organisations, ILO, India. Those who spoke representing CITU included Tapan Sen, Swadesh Dev Roye, Kashmir Singh Thakur, Sudhir Kumar, D.P. Dubey and Ranjana Nirula. Glaring examples of serious violation of trade union rights and attack on trade union functionaries were presented by speakers from states and industries.
Extracts from the Keynote Paper are as follows: The freedom and rights conferred on workers by ILO Convention No.87 can be precisely summarised as follows: The right freely exercised by workers to organize for furthering and defending their interests. The right to establish and to join orgnisations of their own choosing by workers. Public authorities shall refrain from any interference which would restrict their right or impede the lawful exercise of this right. The organizations shall have the right to establish and join federations and confederations, which shall enjoy the same rights and guarantees and also provides for the rights to affiliate with international organizations. The acquisition of legal personality by all these organizations shall not be subject to restrictive conditions. The law of the land and the way in which it is applied shall not impair the guarantees provided for in the Convention. (ILO Bureau of Workers’ Activities)
Similarly, the salient features of ILO Convention No.98 can be briefly summarised as follows: Protection to workers who are exercising the right to organize, non-interference between workers' organization and employers' organization. Promotion of voluntary collective bargaining. Workers shall enjoy adequate protection against acts of anti-union discrimination. Workers shall be protected against refusal to employ due to trade union membership. Against dismissal or any other prejudice by reason of union membership or participation in trade union activities. (ILO Bureau of Workers' Activities).
The Government of India has been continuously failing to ratify the left out Core Conventions on different pleas. In view of the collapse of the 'market driven' finance capital dominated economic policies of globalization, liberalization and privatisation as manifested in the worst ever capitalist economic crisis since the Great Depression of 1930s, the forthcoming days willl be very challenging for the working class. Already attack has been launched on jobs and wages and to blunt the inevitable resistance struggles by the trade union movement, the employers' class will resort to attack on trade union rights.
To carry forward the campaign through out the country the next joint consultation of the trade unions shall consider Regional Conventions at Kolkata, Mumbai, Chennai, Bangalore, Hyderabad and Chandigarh and to culminate into a massive National Convention at New Delhi which will adopt further course of action. A delegation of the trade unions will submit a memorandum to the Government. Technical cooperation of ILO, both at the levels of headquarters and at the New Delhi office, will be worked out.
Employees Provident Fund
Employees' Pension Scheme -
Oppose Arbitrary Reduction of Benefits, Demand Improvments
- W. R. Varada Rajan
The Employees’ Pension Scheme (EPS) was introduced in 1995 as an additional scheme under the Employees' Provident Fund Miscellaneous Provisions Act, 1952. A fierce debate preceded the enactment of legislation in Parliament in this regard. The CITU and some other Left Trade Unions had demanded Pension as a third benefit and pointed out the inadequacies and shortcomings in the EPS put forth by the then Congress Government at the Centre. However, the INTUC, BMS, AITUC and HMS had lent unqualified support to the EPS as brought out by the Government and justified such support with an ingenious argument that once the Scheme comes into vogue, improvements could be made subsequently. The Government on its part included a provision for annual valuation of the Employees' Pension Fund and also assured a comprehensive review after 10 years of introduction of the EPS.
The first four annual valuation reports brought out at the end of November 1996, March 1998, March 1999 and March 2000 had resulted in grant of paltry relief of 4 per cent, 5.5 per cent, 4 per cent and 4 per cent respectively. Thereafter, the annual valuation reports for the period from 2001 to 2005 incorporated an alarming picture of huge deficit in the Pension Fund, based on the assessment of growing contingent liability. Besides, the Employees' Provident Fund Organisation and the Ministry of Labour have been resorting to unilateral interpretation of the provisions of the EPS, adversely affecting even the grossly inadequate benefits contained in the Scheme. The Supreme Court verdict upholding the EPS 1995 had emboldened the Government to take drastic measures detrimental to the interests of the workers.
The Ministry of Labour had put forth several proposals for reducing the benefit-package under the EPS 1995. These proposals were opposed by the representatives of the central trade unions inside the Central Board of Trustees of the EPF. The Government of India attempted to push these proposals at the meetings with the representatives of the central Trade Unions held with the Secretary, Ministry of Labour on 21.4.2005, 21.6.2005 and 18.7.2005 and the Minister of Labour on 16.11.2006. In all these meetings, all the central trade unions had rejected these proposals and unanimously demanded that the contribution from the employers and the Government of India should appropriately be increased in order to grant improved pension benefits and index linked dearness relief to the pensioners.
The Employees' Provident Fund Organisation (EPFO) has constituted a committee to conduct a comprehensive review of the Pension Scheme. Besides, there is a Pension Implementation Committee under the CBT to continuously monitor the Pension Scheme.
But, the Governmnet of India had issued a Gazette notification (GSR Nos. 688 (E) dated the 26th September, 2008) incorporating several amendments They are:
1. Amendment to Para 12 (7).
2. Deletion of Para 12 A.
3. Deletion of Para 13.
These amendments have far reaching consequences by way of substantially altering the benefit package of the EPS'95 to the detriment of the interests of workers.
The first amendment to Para 12 (7) has increased the rate by which the amount of pension is to be reduced in the case of early pension (availed by those who have completed 50 years of age but are below the age of 58) from 3 per cent to 4 per cent. This will result in immediate reduction in the quantum of pension.
If for example, the eligible pension on completing 58 years of age is Rs. 1000 per month and the employee has to exit the job on completion of 50 years of age, either due to resignation, retrenchment, illness or otherwise, he would get an early pension applying a reduction of 3 per cent per year i.e. 24 per cent reduced from the monthly pension and would get Rs. 760 per month. This reduction rate has now been enhance to 4 per cent and in this case the reduction would be 32 per cent or the monthly pension would be Rs. 680 only.
The second amendment (Deletion of Para 12 A) is altogether eliminating the option available at present for commutation of pension. The existing provision enables a member to commute up to a maximum of one-third of his pension so as to receive hundred times the monthly pension. This facility was mad available after three years of commencement of the Pension Scheme i.e. from 16.11.1998 onwards.
If for example, the eligible pension is Rs. 1000 per month and the pensioner opts to commute one-third of his monthly pension the commuted value of will be equal to 1/3 x 1000 x 100 = Rs. 33333 and the same will be paid at the time of exercise of option for commutation. The balance pension payable on monthly basis will be Rs. 667.
This option for commutation is totally abolished now. The pensioner is thus denied the opportunity to commute one-third of his monthly pension and avail a lump sum amount to meet exigencies like marriage in the family, death of kin, medical expenses etc. The concept of commutation is a universal component of any pension scheme and this is done away with arbitrarily.
The third amendment (Deletion of Para 13) eliminates the existing option available to a member eligible for pension to draw reduced pension and avail a return of capital under any of the three alternatives provided. Unlike the option for commutation, the option for return of capital must be exercised at the time of applying for pension itself.
The three alternatives are:
i. A pensioner during his lifetime can opt to avail a revised pension of 90 per cent of original pension with return of capital equal to 100 times the original monthly pension on death of the member payable to the nominee.
ii. A pensioner during his lifetime can opt to avail a revised pension of 90 per cent of original monthly pension; the widow of the pensioner can opt to avail a revised pension of 80 per cent of original monthly pension on the death of her husband; the nominee of the pensioner can also exercise this option on the remarriage of the widow; In these case the return of capital will be equal to 90 times the original monthly pension.
iii. A pensioner can opt to avail a fixed pension for a period of 20 years notwithstanding whether the member lives for that period or not. Under this option the member can avail a 87.5 per cent of original monthly pension for 20 years and at the end of 20 years, avail return of capital equal to 100 times the original monthly pension.
All these three alternative options for availing return of capital have now been totally eliminated.
Besides these adverse changes in the benefit package under the Employees' Pension Scheme 1995, the notification incorporates an amendment to the table under the EPS revising the rates of damages to be levied from an employer who makes a default in the payment of contributions/charges payable as prescribed in the scheme.
The existing rate of damages and reduced rates are as under:
Period of Delay (Pre-revised) Rate of damages (As amended)
Less than two months 17 % 5 %
2 months & above but less than 4 months 22% 10%
4 months & above but less than 6 months 27 % 15 %
6 months & above 37 % 25 %
Such damages are levied under the Employees' Provident Fund (EPF) Scheme and Employees' Deposit Linked Insurance (EDLI) Scheme as well. The Government of India has issued two other Gazette Notifications (GSR Nos. 689 (E) to 690 (E) dated the 26th September, 2008) incorporating identical amendments to the tables under these two schemes as well.
These amendments arte intended to benefit the employers who are defaulting the remittance of contributions under these schemes. While on the one hand the Government of India has virtually abolished the inspection of establishments to do away with the 'harassment' of employers and has pledged to promote voluntary compliance, the penal element in respect of defaults in compliance have also been softened.
Only the subject of reducing the rate of damages was placed as an agenda item of the 181st, 182nd and 183rd meetings of the Central Board of Trustees (CBT), EPF held on 24.1.2008, 17.4.2008 and 5.7.2008. In the CBT, the agenda item was deferred on all the three occasions. A decision has since been taken on this deferred item of the agenda at the back of the CBT. This is highly deplorable.
While the first amendment to Para 12 (7), i.e. enhancement of the rate of reduction in the case of early pension, had been mooted by the Consultant Actuary and the Valuation Reports. But the other amendments had never been raised at any time before either in the meetings of the CBT or in the meeting of the Pension Implementation Committee. Moreover, these issues were not discussed in the meetings with the representatives of the Central Trade Unions, referred to earlier.
These arbitrary decisions have been given effect to even while a comprehensive review of the EPS' 95 is under way and the Committee set up for the purpose has held two sittings.
The trade union movement should vehemently protest over this unjustified move, which has rendered the statutory tripartite body of the CBT irrelevant and reduced the tripartite consultation mechanism in the Labour Ministry to a mockery.
Here it is also worthwhile to record here that a decision taken by the CBT after due deliberations at its 182nd and 183rd meetings for reduction of threshold limit for coverage of the EPF & MP Act, 1952, from the existing limit of 20 workers to 10 workers had not been given effect to. While the Ministry of Labour has chosen to maintain a studied silence over this decision, it has no qualms to decided with unseemly haste flouting all norms to impose adverse changes in the benefit package of the EPS' 95.
The trade union movement should demand immediate withdrawal of these Notifications and urge the Government of India to initiate a dialogue with the Central Trade Unions for bringing meaningful improvements in the Employees' Pensions Scheme like enhancement of the minimum pension bringing it on par with the minimum pension available under the central government pension scheme applicable to pre – 2004 recruits and provision of index linked dearness relief for the pensioners. For this, the contribution from the employers and the Government of India should appropriately be hiked.
Oppose Arbitrary Reduction of Benefits, Demand Improvments
- W. R. Varada Rajan
The Employees’ Pension Scheme (EPS) was introduced in 1995 as an additional scheme under the Employees' Provident Fund Miscellaneous Provisions Act, 1952. A fierce debate preceded the enactment of legislation in Parliament in this regard. The CITU and some other Left Trade Unions had demanded Pension as a third benefit and pointed out the inadequacies and shortcomings in the EPS put forth by the then Congress Government at the Centre. However, the INTUC, BMS, AITUC and HMS had lent unqualified support to the EPS as brought out by the Government and justified such support with an ingenious argument that once the Scheme comes into vogue, improvements could be made subsequently. The Government on its part included a provision for annual valuation of the Employees' Pension Fund and also assured a comprehensive review after 10 years of introduction of the EPS.
The first four annual valuation reports brought out at the end of November 1996, March 1998, March 1999 and March 2000 had resulted in grant of paltry relief of 4 per cent, 5.5 per cent, 4 per cent and 4 per cent respectively. Thereafter, the annual valuation reports for the period from 2001 to 2005 incorporated an alarming picture of huge deficit in the Pension Fund, based on the assessment of growing contingent liability. Besides, the Employees' Provident Fund Organisation and the Ministry of Labour have been resorting to unilateral interpretation of the provisions of the EPS, adversely affecting even the grossly inadequate benefits contained in the Scheme. The Supreme Court verdict upholding the EPS 1995 had emboldened the Government to take drastic measures detrimental to the interests of the workers.
The Ministry of Labour had put forth several proposals for reducing the benefit-package under the EPS 1995. These proposals were opposed by the representatives of the central trade unions inside the Central Board of Trustees of the EPF. The Government of India attempted to push these proposals at the meetings with the representatives of the central Trade Unions held with the Secretary, Ministry of Labour on 21.4.2005, 21.6.2005 and 18.7.2005 and the Minister of Labour on 16.11.2006. In all these meetings, all the central trade unions had rejected these proposals and unanimously demanded that the contribution from the employers and the Government of India should appropriately be increased in order to grant improved pension benefits and index linked dearness relief to the pensioners.
The Employees' Provident Fund Organisation (EPFO) has constituted a committee to conduct a comprehensive review of the Pension Scheme. Besides, there is a Pension Implementation Committee under the CBT to continuously monitor the Pension Scheme.
But, the Governmnet of India had issued a Gazette notification (GSR Nos. 688 (E) dated the 26th September, 2008) incorporating several amendments They are:
1. Amendment to Para 12 (7).
2. Deletion of Para 12 A.
3. Deletion of Para 13.
These amendments have far reaching consequences by way of substantially altering the benefit package of the EPS'95 to the detriment of the interests of workers.
The first amendment to Para 12 (7) has increased the rate by which the amount of pension is to be reduced in the case of early pension (availed by those who have completed 50 years of age but are below the age of 58) from 3 per cent to 4 per cent. This will result in immediate reduction in the quantum of pension.
If for example, the eligible pension on completing 58 years of age is Rs. 1000 per month and the employee has to exit the job on completion of 50 years of age, either due to resignation, retrenchment, illness or otherwise, he would get an early pension applying a reduction of 3 per cent per year i.e. 24 per cent reduced from the monthly pension and would get Rs. 760 per month. This reduction rate has now been enhance to 4 per cent and in this case the reduction would be 32 per cent or the monthly pension would be Rs. 680 only.
The second amendment (Deletion of Para 12 A) is altogether eliminating the option available at present for commutation of pension. The existing provision enables a member to commute up to a maximum of one-third of his pension so as to receive hundred times the monthly pension. This facility was mad available after three years of commencement of the Pension Scheme i.e. from 16.11.1998 onwards.
If for example, the eligible pension is Rs. 1000 per month and the pensioner opts to commute one-third of his monthly pension the commuted value of will be equal to 1/3 x 1000 x 100 = Rs. 33333 and the same will be paid at the time of exercise of option for commutation. The balance pension payable on monthly basis will be Rs. 667.
This option for commutation is totally abolished now. The pensioner is thus denied the opportunity to commute one-third of his monthly pension and avail a lump sum amount to meet exigencies like marriage in the family, death of kin, medical expenses etc. The concept of commutation is a universal component of any pension scheme and this is done away with arbitrarily.
The third amendment (Deletion of Para 13) eliminates the existing option available to a member eligible for pension to draw reduced pension and avail a return of capital under any of the three alternatives provided. Unlike the option for commutation, the option for return of capital must be exercised at the time of applying for pension itself.
The three alternatives are:
i. A pensioner during his lifetime can opt to avail a revised pension of 90 per cent of original pension with return of capital equal to 100 times the original monthly pension on death of the member payable to the nominee.
ii. A pensioner during his lifetime can opt to avail a revised pension of 90 per cent of original monthly pension; the widow of the pensioner can opt to avail a revised pension of 80 per cent of original monthly pension on the death of her husband; the nominee of the pensioner can also exercise this option on the remarriage of the widow; In these case the return of capital will be equal to 90 times the original monthly pension.
iii. A pensioner can opt to avail a fixed pension for a period of 20 years notwithstanding whether the member lives for that period or not. Under this option the member can avail a 87.5 per cent of original monthly pension for 20 years and at the end of 20 years, avail return of capital equal to 100 times the original monthly pension.
All these three alternative options for availing return of capital have now been totally eliminated.
Besides these adverse changes in the benefit package under the Employees' Pension Scheme 1995, the notification incorporates an amendment to the table under the EPS revising the rates of damages to be levied from an employer who makes a default in the payment of contributions/charges payable as prescribed in the scheme.
The existing rate of damages and reduced rates are as under:
Period of Delay (Pre-revised) Rate of damages (As amended)
Less than two months 17 % 5 %
2 months & above but less than 4 months 22% 10%
4 months & above but less than 6 months 27 % 15 %
6 months & above 37 % 25 %
Such damages are levied under the Employees' Provident Fund (EPF) Scheme and Employees' Deposit Linked Insurance (EDLI) Scheme as well. The Government of India has issued two other Gazette Notifications (GSR Nos. 689 (E) to 690 (E) dated the 26th September, 2008) incorporating identical amendments to the tables under these two schemes as well.
These amendments arte intended to benefit the employers who are defaulting the remittance of contributions under these schemes. While on the one hand the Government of India has virtually abolished the inspection of establishments to do away with the 'harassment' of employers and has pledged to promote voluntary compliance, the penal element in respect of defaults in compliance have also been softened.
Only the subject of reducing the rate of damages was placed as an agenda item of the 181st, 182nd and 183rd meetings of the Central Board of Trustees (CBT), EPF held on 24.1.2008, 17.4.2008 and 5.7.2008. In the CBT, the agenda item was deferred on all the three occasions. A decision has since been taken on this deferred item of the agenda at the back of the CBT. This is highly deplorable.
While the first amendment to Para 12 (7), i.e. enhancement of the rate of reduction in the case of early pension, had been mooted by the Consultant Actuary and the Valuation Reports. But the other amendments had never been raised at any time before either in the meetings of the CBT or in the meeting of the Pension Implementation Committee. Moreover, these issues were not discussed in the meetings with the representatives of the Central Trade Unions, referred to earlier.
These arbitrary decisions have been given effect to even while a comprehensive review of the EPS' 95 is under way and the Committee set up for the purpose has held two sittings.
The trade union movement should vehemently protest over this unjustified move, which has rendered the statutory tripartite body of the CBT irrelevant and reduced the tripartite consultation mechanism in the Labour Ministry to a mockery.
Here it is also worthwhile to record here that a decision taken by the CBT after due deliberations at its 182nd and 183rd meetings for reduction of threshold limit for coverage of the EPF & MP Act, 1952, from the existing limit of 20 workers to 10 workers had not been given effect to. While the Ministry of Labour has chosen to maintain a studied silence over this decision, it has no qualms to decided with unseemly haste flouting all norms to impose adverse changes in the benefit package of the EPS' 95.
The trade union movement should demand immediate withdrawal of these Notifications and urge the Government of India to initiate a dialogue with the Central Trade Unions for bringing meaningful improvements in the Employees' Pensions Scheme like enhancement of the minimum pension bringing it on par with the minimum pension available under the central government pension scheme applicable to pre – 2004 recruits and provision of index linked dearness relief for the pensioners. For this, the contribution from the employers and the Government of India should appropriately be hiked.
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