COVID-19 impact: Over 68 lakh formal workers dip into EPF savings in past eight months

The 68.1 lakh people dipping into EPF savings in the first eight months of FY22 stands close to what EPFO settled in the previous fiscal year. It means, during the current financial year, the number of COVID-19 advances may go beyond last year’s withdrawals.

According to the retirement fund manager, the COVID-19 advance is aimed at supporting its subscribers to deal with the hardship. The provision for special withdrawal to meet the financial needs of members during the pandemic was introduced in March 2020, under Pradhan Mantri Garib Kalyan Yojana (PMGKY).

On May 31, 2021, EPFO had said that the COVID-19 advance has been a great help to the EPF members during the pandemic, especially for those having monthly wages of less than Rs 15,000. As of date (May 31, 2021), EPFO has settled more than 76.31 lakh COVID-19 advance claims thereby disbursing a total of Rs 18,698.15 crore.

Under this COVID-19 advance provision, a non-refundable withdrawal to the extent of the basic wages and dearness allowances for three months or up to 75 percent of the amount standing to member's credit in the EPF account, whichever is less, is provided.

EPF subscribers can apply for a lesser amount also. After the second wave of the COVID-19, the union labour ministry had allowed a second advance in the current financial year.

Notwithstanding the ebbing of the second wave and the gradual rebound of the economy, the massive COVID-19 withdrawals indicate the financial hardship of workers especially in the lower rung of the salary structure.

Since the outbreak of the COVID-19, India is facing a massive stretch in the job market. Though things have improved considerably in recent months, the pre-pandemic time in the job scape is still far away.

Inspite of the recovery in some sectors such as IT and e-commerce, labour economists have been voicing concerns in several other core sectors and suboptimal recovery in many segments of the economy.