Govt to facilitate entry of more SMEs into EPFO
2 min read . Updated: 05 Dec 2012, 11:59 PM IST
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Labour ministry to end manual intervention in registration, withdrawal of retirement funds managed by EPFO
New Delhi: The labour ministry is working to curb administrative inefficiencies and end manual intervention in the registration and withdrawal of retirement funds managed by the Employees’ Provident Fund Organisation (EPFO).
The move is likely to encourage more establishments, especially micro, small and medium enterprises (MSMEs), to join the social security net, said two ministry officials, requesting anonymity. There are about 700,000 units registered with the EPFO and this number can double in the next few years if SMEs join it in a big way, one of them said.
“MSME sector has a million establishments and if we manage to attract even 5%, it will make a huge difference for workers. This will, of course, bring more contribution to EPFO," said one of the two officials cited above. There are more than 26 million such establishments, according to the government.
“The major drawback is the registration process. Getting an employer code from EPFO is a cumbersome and time-consuming process. We wish to cut down the registration process from nearly six months to less than a week," the second official said.
This official said smaller units cannot afford to spare their human resources to spend time at regional provident fund offices.
“In the next few months, most probably before April, we will put in place a system that will allow firms to do all formalities of registration from their office, and within a week they will get an EPF code," the official said. Unless a company is registered and gets an EPF code, it cannot start deducting the EPF contribution from an employee’s salary.
Chandrakant Salunkhe, president of the SME chamber of India, said if the government is serious about providing social security to workers in the sector, it needs to talk to the stakeholders.
“They have not done it so far. We need to have a time-bound assurance about the registration, and no SME should face any harassment here. Unless you can make the process user-friendly, the outcome will be doubtful," said Salunkhe, who is also chairman and managing director of Maharashtra-based Micro Group of Industries.
He said the sector does not have a high percentage of permanent workers. “EPFO needs to tell us how they can enrol SMEs where over 90% of the workers are casual," he said. Besides, the EPFO is planning to make the withdrawal of funds paperless. “EPF subscribers need not even fill forms while applying for the withdrawal. The effort is to make it transparent and thus cut red tape," said the first official.
