Robbing workers’ savings
Posted on July 14th, 2019

The Editorial on  Monday 15th July, 2019 Courtesy The Island

Opposition Leader and former President Mahinda Rajapaska has taken up cudgels for the working class. He has warned of a government move to rob the Employees’ Provident Fund (EPF) by removing the Central Bank (CB) from the purview of the Ministry of Finance. A bill has been prepared to amend the Finance Act for that purpose, he says.

That the incumbent government is trying to dip into the 2.5-trillion-rupee superannuation fund is no secret. First, it sought to separate the EPF from the CB, but in vain. True, there is a conflict of interest on the part of the CB, which is tasked with raising funds for the state coffers at the lowest possible interest rates while trying to get the highest possible interest rates for the EPF, whose monies are mostly invested in government securities. But what matters most is the efficient administration and the safety of the EPF. The CB is one of the few professionally run state institutions. But for the intrepid whistleblowers among the CB officials, the bond scams which had a devastating impact on the EPF among others perhaps would not have come to light.

As for the EPF, successive governments have been behaving like greedy canines near a meat stall. Given half a chance they will rob workers’ savings. The Rajapaksa government was also salivating over the EPF. It sought to introduce a private sector pension scheme, which, on the face of it, looked a pro-worker move. But if it had been implemented, workers, upon retirement, would have had to settle for paltry sums a month by way of pensions; they would have been denied the right to lump sum withdrawals, which can be deposited with banks or other financial institutions, which offer much higher interest rates. When President Rajapaksa proposed that pension scheme through a national budget, we argued, in this space, that it would lead to disaster. Thousands of FTZ workers took to the streets in 2011, when an attempt was made to force the private pension scheme down their throats, and a brutal crackdown on protests left a worker dead.

EPF returns have since dipped to 9.5 percent! If governments and their leaders are really concerned about the private sector workers’ savings, they should do away with the extortionate taxes amounting to billions of rupees on the EPF. Trade unions are either really dumb or playing dumb. They are not fighting against the draconian tax system. Many private sector workers are taxed several times over. They have to pay the PAYE tax on their monthly earnings including their EPF contributions. Their savings in their superannuation fund are taxed again. Their lump sum withdrawals are also taxed. When their savings are deposited with banks, etc., they are made to pay withholding and other taxes. Trade union leaders are busy licking the boots and sandals of their political leaders and, frustratingly, workers also do not care to fight for their rights.

Those who are in power today alleged, before the 2015 regime change, that the EPF had been a victim of sordid pump and dump operations carried out by some moneybags close to the former ruling clan. They promised to probe the scams and bring the culprits to justice. Instead, they themselves got involved in bond scams, and the pump and dump racketeers who caused heavy losses to the EPF got away with their crimes.

President Maithripala Sirisena has appointed various probe commissions and committees; some of them have yielded discernible results. The bond probe commission is a case in point. The PRECIFAC also helped expose malpractices under the previous dispensation, but the promised action has not been taken against the culprits because the President and some members of the former regime have kissed and made up.

Private sector workers and their trade unions must call for a special commission of inquiry to probe the EPF and the losses it has suffered. They must not leave the fight for their rights to wily politicians who shed copious tears for them.

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