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New labour minister may cut PF rates

In a clear shift in stance from his predecessor, the new Labour Minister Sahib Singh Verma may overturn the line adopted by Sharad Yadav on the interest rate for Employees Provident Fund and on the radical law for layoffs.

While supporting the finance ministry recommendation that the interest rate should be reduced, Verma said: "I strongly feel that the recommendation is rational and the matter will be discussed on Tuesday by the Central Board of Trustees of EPF", Verma said on Friday.

On the controversial amendments to the Industrial Disputes Act, he did not subscribe to the view that the proposed changes in the Act would amount to the adoption of hire-and-fire system in the country. Except for the term 'hire-and-fire', he felt there was nothing wrong with it.

Asked to comment on the general impression that workers would be thrown out on the whims and fancies of the management, the minister said : "It is not so. If someone is incompetent, he should be given a chance to improve. If he does not, he should be removed as he becomes a blot on the workforce."

The proposal is to allow companies employing up to 1000 workers to effect lay off, retrenchment and closure without government permission. Presently, such action can only be taken by those companies employing less than 100 persons.

Following the controversy over the proposed amendment, the National Labour Commission has suggested that the limit be pegged at 300.

Verma said: "Before taking a decision we will try to find out how many industries are going to come under the purview of the amended Act, if the limit is raised to 300".

In his Budget speech, former Finance Minister Yashwant Sinha had said that the Act would be amended to raise the limit of workers to 1000, triggering widespread criticism from trade unions who apprehended that a majority of the industrial units would come under its purview.

Besides objecting to the changes in the ID Act, Verma's predecessor Sharad Yadav had opposed the move to lower interest rate in line with the reduction of interest on small saving schemes and General Provident Fund.

The CBT, chaired by Yadav as its ex-officio chairman at its last meeting earlier this year, had observed that even if the rate of interest continued at 9.5 per cent, the EPF corpus would still have surplus money and decided to retain 9.5 per cent interest for an "interim" period.

The finance ministry had two weeks ago asked the labour ministry to reconsider its recommendation for lowering the interest rate from 9.5 per cent to nine per cent.

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