New labour codes welcomed for worker welfare but raise cost concerns for employers
BENGALURU
The Centre’s newly notified labour codes — pitched as a major reform to strengthen worker welfare and workplace safety — have sparked concerns among industry bodies, which warn that expanded health safeguards should not translate into heavier financial burdens for small and medium enterprises (SMEs). While officials argue that the measures will improve social security coverage, industry representatives insist that the public sector must shoulder a larger share of Employees’ State Insurance (ESI) responsibilities instead of shifting costs to micro and small establishments.
Under the revised framework, employers are required to provide all workers above 40 years a free annual health check-up. Meanwhile, ESI coverage becomes voluntary for firms with fewer than 10 employees, but mandatory for establishments with even a single worker engaged in hazardous processes.
DP Danappa, president of the Peenya Industries Association (PIA), said the new provisions overlook a significant portion of workers. “Nearly 40 percent of the 13 lakh employees in the Peenya cluster earn more than the current ESI wage ceiling of ₹21,000 and are excluded from the scheme,” he said. The association has urged the government to raise the coverage limit to ₹30,000 so more workers in small and medium industries benefit from ESI protection.
Danappa noted that around five lakh garment and micro-industry workers — among the most vulnerable — currently rely on ESI. “Annual health checks must be covered under ESI. We contribute 3.2 percent of the 4 percent required for ESI. The scheme becomes stronger when more workers are included, especially now that minimum wages have been raised to ₹23,000,” he said.
PC Rao, Honorary President of the Bangalore Hotels Association and Director at FKCCI, said the push to expand ESI coverage was also highlighted at a recent regional committee meeting. “More than 50 percent of employees in the small and medium segment stand to benefit. A significant share of micro-industry workers will also come under ESI,” he said.