The government is working towards expanding the coverage of the Employees? Provident Fund Organisation (EPFO), the country?s largest retirement fund, by making it mandatory for companies with even ten employees (from the current 20) to make PF contributions towards their employees.
But a recent report on some of EPFO?s key field offices on securing compliance by the existing 4.7 lakh-odd firms reveals a shocker: almost two-thirds of them do not contribute the employees? PF savings. EPFO reckons it would take almost 300 man-years to bring all the guilty firms to book.
While the EPFO claims that ?on an average, 48% of all establishments default on remitting dues?, the number is far more staggering in some field offices. A sample of default levels: 88% in Delhi (North) (only 9% firms in full compliance); 85% in Mumbai (II) (10.7% in full compliance) and 82.6% in UP (just 14.7% firms in compliance).
These default figures do not include thousands of moribund firms that are labelled ?inactionable?, as they have stopped complying for over three years. Worryingly, while assessed defaults have risen from Rs 453 crore in 2001-02 to Rs 939 crore in 2006-07, the EPFO?s enforcement machinery is only able to initiate proceedings on an average of 20,000 cases a year. Even if the productivity of officers is raised from the current ten cases a month to 50, default by over 1 lakh establishments goes unchecked.
Though the EPFO has around 20,000 staffers, their primary function is only to secure compliance and maintain records. The other functions–collecting contributions, disbursing claims and managing investments?are carried out by EPFO?s banker, State Bank of India. The EPFO attributes the dilution in the quality of compliance to changes in the labour market.
The number of firms covered under the EPFO has gone up from 2.48 lakh in 1994-95, on the basis of which fresh manpower was last sanctioned, to 4.71 lakh in 2006-07, an increase of 88%, accompanied by a 137% increase in the number of members covered.
The EPFO has, in a note to the board of trustees, demanded an additional 1,000 section supervisors and enforcement officers each, and 305 additional PF commissioners at the cost of Rs 70 crore a year. The executive committee of the board met in the second half of April, but did not take a decision on EPFO?s proposal.