Scheme to Create More Jobs Soon
Labour min moves to incentivise employers
New Delhi: The labour ministry plans to soon release details of a scheme aimed at incentivising employers to create additional jobs following an announcement in the Budget. The move is expected to create more jobs besides increasing formalisation as 90% of the country’s workforce is in the informal sector.
A senior government official told ET that the draft scheme is ready and it could be made public soon considering that it was among the key announcements in the Budget this year.
Finance Minister Arun Jaitley had in his Budget speech said that to incentivise creation of new jobs in the formal sector, the Centre will pay the Employee Pension Scheme (EPS) contribution of 8.33% for all new employees enrolling in Employees’ Provident Fund Organisation (EPFO) for the first three years of their employment. “This will incentivise the employers to recruit unemployed persons and also to bring into the books the informal employees,” Jaitley had said.
The official cited earlier said, “The scheme will be applicable to those with salary up to .₹ 15,000 a month to ensure that jobs are given to semiskilled and unskilled workers, who need it the most.”
He said .₹ 1,000 crore has been set aside for implementing the scheme in the first year.
Under the Employees’ Provident Funds and Miscellaneous Provisions Act, employees contribute12% of their salary towards the EPF, with a matching contribution from the employer. However, 8.33% of the employers’ contribution subject to a maximum of .₹ 1,250 a month goes to the EPS for social security benefits of the subscriber. “The ministry will reimburse 8.33% to the employer for any new employment generated for the first three years to ensure that jobs are not only created but also sustained over a period of time,” the official said. The employer will have to show the additional hands hired and subsequently claim the benefit after submitting the required proof.
The idea was first mooted by a group of secretaries at the behest of PM Narendra Modi.
1,000 crore has been set aside to implement the scheme in first year