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Saving jobs: Allow PF contribution cuts, no wage hikes, ISF urges govt

Date: 2020-04-15 Author: Business Today

Indian Staffing Federation has proposed no increase in minimum wages next one year and bringing down the provident fund contributions from 12 per cent to 6 per cent

The extension of the coronavirus lockdown till May 3 would have sent jitters among sectors such as retail, travel and hospitality, which have come to a grinding halt. Their biggest worry would obviously be to save jobs. The retail industry employs 46 million people out of which six million work in modern retail. The textile industry employs 12 million people, while the restaurant industry employs seven million. With all these sectors staring at a 30-35 per cent fall in revenue, job cuts seem imminent. Associations such as the Retailers Association of India have already appealed to the government for financial support to help them restart their business post the lockdown.

The Indian Staffing Federation has recently sent a list of recommendations to the government to help industries save jobs. It has recommended that the provident fund contributions of both the employer and employee should be revised from the existing 12 per cent to 6 per cent. “This will give more cash to be utilised to meet the needs of both employer and employees for today. As the times are unprecedented, the contract workers were not prepared with savings. Today where almost close to 40 per cent of their salary is deducted towards securing the future, they are not able to make their ends meet today. The employers on the other hand are barely able to keep up with the productivity to be able to sustain paying wages, thus the revision for a limited period will allow employers to ensure that more people can be paid their wages. This will reduce the overall cost to company for employers and more in hand for employees,” says Lohit Bhatia, President, Indian Staffing Federation (ISF).

ISF has also proposed no increase in minimum wages across the country for next one year. “If the Central government may enact an ordinance whereby every state government commits not to revise minimum wages upwards for the financial year April 2020-March 2021, it will at least help the employers sustain the current employees, avoiding increased burden in the unpredictable times. This can also be seen as a saving for the employer as minimum wage revisions are usually in the range of 8-12 per cent annually,” explains Bhatia. He also recommends exemption of the mandatory payment of the 8.33 per cent bonus to employees as per the Payment Of Bonus Act. “In the face of adversity, if the government could consider making an amendment to the “Payment of Bonus act” such that no minimum bonus be paid during the financial year 2020-21,” he says.

The suggestions made by ISF, claims Bhatia, would in no way impact government exchequer. “The government has just enough to take care of the daily wage earners. They will depend on the companies to take care of their employees,” says Bhatia. From requesting for tax holidays to long term moratoriums industry bodies are doing everything possible to be able to avoid job cuts. Anurag Katiyar, President of National Restaurant Association Of India (NRAI) in a recent webinar said his industry is looking at paying sustenance allowance to its staff till the situation improves. “If I pay Rs 10,000 per month to an employee, I will pay Rs 5,000 per month for two months so that he can keep his kitchen fire burning.” From deferring bonuses to senior leaders taking pay cuts, Indian companies are doing everything in order to stay afloat.

Jobs cuts are not a solution to the crisis, said Paul Dupuis, CEO and MD, Randstad India, in a recent webinar. “Organisations that put people first during and after the crisis will always do better.” Bhatia of ISF says that Indian employers have shown far more maturity than their global counterparts during the COVID-19 crisis. “In markets such as the US, employers have looked at economics and have asked people to go. Around 16.8 million people have filed for unemployment allowance. Indian employers have an emotional connect with their employees.”

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(As originally appeared in Business Today – https://www.businesstoday.in/sectors/jobs/saving-jobs-allow-pf-contribution-cuts-no-wage-hikes-isf-urges-govt/story/400998.html)

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