Thiruvananthapuram: The Kerala Finance Department has issued a directive to state-run public sector undertaking The Kerala State Financial Enterprises Limited (KSFE), mandating a reduction in pension contributions among several other alleged anti-employee measures. In the wake of the move, the Centre of Indian Trade Unions (CITU) has written to Finance Minister K N Balagopal, alleging that the Finance Department’s action appears to adhere to the Labour Code (Central Government's).

The order was issued following the implementation of a salary revision at KSFE. It mandates that the institution pay only the legally required ₹1,800 as the employer’s pension share for employees under the Employees' Provident Fund Organisation (EPFO).

Earlier, both the institution and employees contributed 12 per cent of total salary, a system that ensured higher pension benefits. The change will reduce the pension amount employees receive under the EPF scheme.

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The directive also introduces other changes affecting employees. KSFE had previously followed a system where staff could receive a promotion grade after two years of service. Under the revised policy, the grade will now be granted only after eight years.

In addition, while implementing the salary revision, the government set a ceiling on the increase in allowances. The maximum allowance has been capped at 10 per cent, and the weightage given for increments has also been reduced.

Ahead of the salary revision, representatives of employees, management and the government held discussions on the revision in the presence of the Finance Minister and reached an agreement on the terms. CITU alleges that these terms were overlooked and measures like reducing pension were included.

KSFE has two unions affiliated with the CPM — the Staff Association and the Officers’ Union. The Staff Association is headed by Elamaram Kareem, while the Officers’ Union is led by A K Balan.

Union leaders have also cautioned the government that implementing such a decision during the election period could have serious political consequences.

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Earlier, the government had maintained that the draft Labour Code provisions were prepared by officials and did not represent official policy. It had also maintained that the framework would not be implemented in the state.

However, CPM leaders and union office-bearers now allege that elements of the Labour Code are being implicitly introduced in the public sector, raising questions about the government’s stance on labour reforms. The controversy has put the state government on the defensive.