This is an indication that many low-wage earners in the organised sector were also under financial stress due to lockdown.
The Employees’ Provident Fund Organisation (EPFO) on Tuesday said 98% of 36.02 lakh subscribers who withdrew part of the funds from their retirement savings in April-May earn up to Rs 50,000 a month. Also, 74% of the withdrawals were by those earning Rs 15,000 a month or less.
This is an indication that many low-wage earners in the organised sector were also under financial stress due to lockdown. But the number of subscribers who withdrew EPF funds during the first two months of current fiscal was only 7% higher than the same period last year, implying that the lockdown hasn’t resulted in a big jump in withdrawals.
Preventing those earning less than Rs 15,000 a month from falling into indebtedness, EPFO had provided them with a special one-time facility of withdrawing a sum equivalent to their three months’ basic wages and dearness allowance or 75% of the amount standing to their credit in the EPF account, whichever is less.
“As per the EPFO data, the number of claims settled in April and May this year has gone up by around 7% over the April-May number of 2019. In fact, the growth of withdrawal in April-May, 2019 over April-May, 2018 was nearly at the same level, if not more,” said former central provident fund commissioner (CPFC) K K Jalan.
“So, essentially, the April-May withdrawal data for the current fiscal does not reflect anything about job loss or wage cut in the organised sector. However, it shows those earning less than Rs 15,000 a month were indeed in stress,” Jalan added.
Of the total Rs 11,540 crore disbursed by EPFO in April and May of the current fiscal, Rs 4,580 crore were disbursed to those earning less than Rs 15,000 crore a month.
India’s unemployment rate was at 23.5% both in April and in May, Centre for Monitoring Indian Economy (CMIE) said in a June 2 report. Between April and May 2020, while the count of those employed increased by 21.2 million; the count of unemployed also increased by 6.3 million, CMIE said.
EPFO said it worked with less than 50% staff during the lockdown; but despite manpower shortage, it significantly brought down the claim settlement period to three days for Covid-19 advances. Almost 54% of the Covid-19 claims are now being settled through the auto mode.
“With automation and dedicated workforce, EPFO is settling more than 80,000 claims every working day amounting to about Rs 270 crore, ensuring social security support for its members in times of crisis,” it said.
Jalan also commended at the speed at which EPFO was settling claims. “The tremendous work of settling more than 80,000 claims per day with almost 50% staff shows how effective and efficient organization EPFO has turned out to be over the last few years using technology,” he said.