Centre Mulling Unemployment Benefits for COVID-19 Layoffs: Report
The Centre is planning to give unemployment benefits to some workers who get laid off due to the coronavirus crisis.
The Quint DAILY
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The Modi government is reportedly planning to provide unemployment benefits for a section of organised sector workers who lose their jobs due to the economic impact of the coronavirus crisis.
This comes at a time when several countries across the world, including the United States, China, Japan and South Korea, are extending employment and unemployment benefits to workers impacted by the pandemic. The economic and labour crisis created by COVID-19 could increase global unemployment by almost 25 million, according to an assessment by the International Labour Organization (ILO).
According to a Business Standard report, if the Modi government goes ahead with its plan, workers who have subscribed to the Employees’ State Insurance (ESI) scheme will be covered during the pandemic and will receive unemployment insurance under the Centre’s ‘Atal Beemit Vyakti Kalyan Yojana’ (ABVKY).
Benefits and Prerequisites
What does the scheme provide?
Under the scheme, workers who become unemployed are entitled to compensation in cash for up to three months of unemployment. The amount received is based on the average salary that they were getting in the last two years of their job.
However, the workers should have been subscribers of the ESIC for at least two years to avail the benefit.
The report quoted a senior government official saying, “The labour and employment ministry is looking to extend the scheme and allow workers to avail of unemployment insurance if they are impacted by coronavirus.”
When the ABVKY scheme was made effective in July 2018, around 1 million workers were eligible. In case you’re wondering why such a relatively small number of people were eligible at the time, it is because the coverage of the ESI scheme is quite limited.
The scheme only applies to all establishments employing at least 10 workers. According to the Sixth Economic Census 2013-14, around 98 percent of establishments in India employed less than 10 workers.
What is the ABVKY?
The Atal Beemit Vyakti Kalyan Yojana (ABVKY) is an unemployment insurance scheme that was introduced on 1 July 2018, and is currently functional on a pilot basis for an initial period of two years. It is available to those workers who have subscribed to the ESI scheme.
What is the ESI scheme?
The Employees’ State Insurance (ESI) scheme is a self-financing health insurance scheme for formal sector workers, managed by the Employees State Insurance Corporation (ESIC), which comes under the Ministry of Labour and Employment.
When a company has 10 or more employees, that company must compulsorily register with the ESIC.
In such a company, any employee who earns less than Rs 21,000 per month contributes 1.75 percent of their salary towards the ESI while the employer pays 4.75 percent towards the ESI, making up a net contribution of 6.5 per cent of the salary.
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