The quarter after Lehman Brothers? collapse has rendered at least half a million Indians jobless, but the three stimulus packages have done little for them, as is evident from Surat?s erstwhile diamond workers signing up to the NREGS. Despite Prime Minister Manmohan Singh?s concern about India ?s labour law ?rigidities,? his regime has failed to reform them in sync with the industrial liberalisation.

This leaves 90% of India?s 400 million-odd workforce, including Surat?s new ?jobless?, in the informal sector ? with no social security under the Employees? State Insurance Scheme (ESIC) or the Employees? Provident Fund (EPF). Some sops for labour-intensive export sectors in the foreign trade policy apart, the UPA has handed out just two sops for the working class?extending ESIC?s unemployment benefits to one year from 6 months; and paying an EPF rate of 8.5% for 2008-09, though earnings justify a 8.25% rate.

To bridge the Rs 140 crore chasm between paying 8.25% and 8.5%, the EPFO?s contingency reserves have been virtually emptied. Since it took over in May 2004, the UPA had already siphoned out around Rs 1,800 crore from EPF?s reserves to keep the EPF rate artificially high.

But this means little to 85% of the 4 crore EPF members, who retire with EPF balances of just Rs 3,133. The latest 0.25% largesse would put a measly eight rupees into their hands.

It would be tougher to prop up the EPF rate in 2009-10. Most EPF money still goes into government bonds. The recent spate of interest rate cuts have not just lowered bond yields but also made them highly volatile.

In November, the Labour Ministry asked the Finance ministry to raise the 8% return on the Special Deposit Scheme, a major parking place for EPF monies?it wanted 2% more than the yield on government bonds. But yields on 10-year gilts fell to 5.4% by the end of 2008 and the EPFO must be thanking its stars the demand wasn?t met (yields now hover around 6.2%).

A higher EPF rate won?t help pink-slipped workers. With EPF?s reserves exhausted and the scourge of layoffs expected to worsen, the next government better address the real problems in our labour market rather than dress up the PF rate.

?vikas.dhoot@expressindia.com