The Employees’ State Insurance Corporation (ESIC) has approved a new scheme- Atal Bimit Vyakti Kalyan Yojna for Insured Persons covered under the Employees’ State Insurance Act.

The scheme is directed for wellness of who lost their job covered under the Employee’s State Insurance Act, 1948 in the form of cash payable to their Bank Account. The decision was taken during ESIC board meeting conducted by Labour minister.

The ESIC also approved the proposal for increasing the funeral expenses from existing 10 thousand rupees to 15 thousand rupees being paid on the death of Insured Person.

What are the key features of the Atal Bimit Vyakti Kalyan Yojana (ABVKY)?

The ABVKY is a scheme approved by the Employees’ State Insurance Corporation (ESIC) that aims to benefit its subscribers, who are mainly formal sector workers who have become unemployed for whatever reason, by providing cash through bank account transfer.

What is the need for a new unemployment allowance?

The labour and employment ministry said in its official statement on Wednesday that the move was necessitated “considering the change in employment pattern and the current scenario of employment in India which has transformed from a long-term employment to fixed short-term engagement”.

Currently the permanent employees in the economy are on a decline and future industry is more inclined towards hiring workers on a contract now.

The government allows establishments to recruit workers on a fixed-term contract on condition that they receive similar allowances given to a permanent worker in the same establishment.

That said, due to the unavailability of official data on employment, there is no evidence to suggest that permanent jobs are on a decline and contract workers are being hired more.

How is the new scheme an improvement over the previous one offered by the ESIC?

The RGSKY (Rajiv Gandhi Shramik Kalyan Yojana) was introduced in 2005 for employees who were left unemployed for three reasons,

  1. The closure of factory or establishment
  2. Retrenchment
  3. Permanent invalidity

However, if an employee became unemployed for some other reason, no unemployment benefit was offered to him/her under the RGSKY scheme.

The ABVKY will provide cash allowance to ESIC subscribers who are unemployed for at least three months in a row after leaving their previous jobs, for reasons apart from retrenchment and factory closure.

The new scheme will be availed of by those who are insured by ESIC for a period of at least two years.

Is there any data to measure the performance of the earlier scheme?

Official data states, in 2016-17, 508 people facilitated of the unemployment allowance under the RGSKY scheme, down from 1,146 in 2015-16 and 1,030 in 2014-15.

According to the ESIC, the number of beneficiaries declined largely because the allowance was solely dependent on closure of a factory or retrenchment.

In 2016-17, Rs 3.72 crore was paid to unemployed people compared to Rs 5.48 crore in 2015-16 and Rs 4.47 crore in 2014-15, under the RGSKY scheme.

In 2016, the ESIC made the RGSKY more attractive by allowing those who had subscribed to the ESIC for at least two years to avail of the benefits, as against three years previously.

Also, the benefit period was enhanced from one year to two years.

Despite these measures, the scheme remained unattractive due to its limited scope, according to the ESIC.

This also creates fuzzy mindset whether government is predicting unemployment in future years.

Who will fund the new scheme?

The scheme will be funded by the employees themselves. Nearly 4.75 per cent of a worker’s monthly salary goes towards ESI as the employer’s contribution, 1.75 per cent of the income is the employee’s share.

Those who had subscribed to the ESIC for two years continuously will be allowed to avail of the unemployment benefit to the tune of 47 per cent of their total contribution.

The ESIC conducted a sample survey in Noida and Varanasi to find out the financial implications based on the average number of persons leaving the job in the two areas.

The expected expenditure for all-India coverage of the scheme is estimated to be Rs 1,600 crore a year, according to the ESIC.

The move is expected to benefit over 10 lakh workers.

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