Sinking fund to meet job loss payouts mooted

The fund, the Centre has suggested, could be carved out of contributions from the industry and its capital adequacy thereby ensuring that if the business shuts shop workers get suitable compensation, it is learnt.

Once the fund is put in place, workers will also be assured of their rightful dues as the units would be in a stronger financial position and avoid risk of industrial sickness and abrupt closure.

The Centre’s latest move comes in the wake of SMEs, predominently single ownership or family run businesses, resorting to casual/contract labour than employ full time workers, thereby drastically reducing job opportunities for millions of diploma and industrial trainees keen to eke out decent livelihood.

The current proposal by the Centre, it is understood, is aimed at economically and financially serving the interests of not only employees but also employers enabling them to channelise their engergies on core activities than seek out ways to reduce their workforce when facing losses. Under the proposed special purpose vehicle mechanism, SMEs could take to insuring workers against loss of employment following closures, and thereby meet statutory obligations according to the various industrial laws.  The corpus’ size and contribution is expected to be suitably worked out after taking into consideration SME’s solvency and liquidity position.

Incidentally, for year 2010-11, as on April 2011, cumulatively 4,14,676 MSMEs were registered in 30 districts of the State, with investments of Rs 12.50 lakh providing employment to 24.05 lakh.