CTUs up the Ante Ahead of General Strike as EPFO Rate Slashed to 4-Decade Low

New Delhi: Central Trade Unions upped the ante against the Narendra Modi-led central government and called for making the upcoming nationwide general strike successful as the Centre recommends new interest rate for the country’s largest retirement fund, which is lowest in nearly four decades.

The Central Board of Trustees of the Employees’ Provident Fund Organisation (EPFO) on Saturday recommended slashing of its interest rate from the existing 8.5% to 8.1% for the fiscal 2021-22. According to media reports, this is the lowest rate since 1977-78, when it was 8%.

The latest decision was taken during the meeting of the EPFO’s central board of trustees (CBT) held in Guwahati. It is a statutory body consisting of members from the central government, state governments, employers, and employees.

Headed by the Union Labour Minister, the CBT recommends the interest rate, which is then ratified by the Union Finance Ministry. Subsequently, after getting notified, the return is credited into the accounts of the subscribers by the EPFO. Currently, there are over five crore subscribers of EPFO.

All representatives of the employees in the said meeting of EPFO’s CBT “opposed” the decision to slash the interest rates, the Centre of Indian Trade Unions (CITU) said on Saturday. Denouncing the move, Tapan Sen, general secretary, CITU said that the argument that is pushed by the Centre is to treat the EPFO’s return on par with interest rates of any other deposits in bank.

This, “can never be acceptable as EPF is a recurring life time savings of the employees meant for their future as part of social security,” Sen argued.

To be sure, over the years, the Finance Ministry has questioned the high rate retained by the retirement fund body and has been nudging it to reduce it in line with the overall interest rate scenario, according to media reports. In India, small savings rates range from 4% to 7.6%.

However, when it comes to EPFO, which usually tantamounts to offering protection through provident fund accumulation to senior citizens, the reduction of interest rates is bound to not go down well with the trade unions.

The Centre is “abdicating its responsibility,” to provide social security to the industrial workers and, is “leaving them to the vagaries of financial markets,” said Amarjeet Kaur, general secretary, All India Trade Union Congress (AITUC).

“It is high time the government contributes to social security funds to take care of all sections of toiling people from kisans to organised and unorganised sector workers. No amount of playing around with financial markets will help the crores of toiling people, who are rightfully demanding their share in the national wealth, which they alone produce,” she said in a statement on Saturday.

Both the central trade unions urged the workers in the country to raise their voice against the latest decision in the upcoming nationwide general strike on March 28 and 29. Jointly called by ten CTUs in the country, the strike action would press the Centre, among others, to withdraw the four Labour Codes.

The decision to slash rates has also prompted opposition parties including Congress and Trinamool Congress to flay the Centre.

Meanwhile, Union Labour Minister Bhupendra Yadav sought to justify the decision on Saturday by arguing that social security has to be considered along with keeping the global situation and market volatility in mind.

In the past, the retirement fund saw high withdrawals and lower contributions in the aftermath of the Covid-19 pandemic. During this period, in 2020-21, the EPFO had retained the interest rate on PF deposits at the same rate as in the previous year.

On Saturday, Yadav said that the EPFO’s corpus for FY22 stood at Rs 9.4 lakh crore, up from Rs 8.29 lakh crore last fiscal. Its income from investments in 2021-22 stood at Rs 76,768 crore from about Rs 70,457 crore in 2020-21.