The Indian government recently announced the implementation of three new schemes under the Employees’ Provident Fund Organisation (EPFO) aimed at boosting fresh employment in the organised sector. This initiative, introduced as part of the 2024 Union Budget, reflects the government’s commitment to addressing unemployment and stimulating economic growth. These schemes incentivise employers and first-time employees, providing financial support that encourages job creation and sustains employment.
Finance Minister Nirmala Sitharaman revealed these schemes in her budget speech, underlining their potential to benefit lakhs of job seekers entering the workforce. The schemes are expected to substantially impact the organised sector by making it easier for companies to hire new staff while simultaneously offering significant benefits to employees.
Overview of the EPFO Schemes
The three new schemes under the EPFO are tailored to target different aspects of employment, from supporting freshers to incentivising manufacturing jobs and providing subsidies to employers. Each scheme has specific goals and methods for encouraging job growth and retaining employees.
Scheme A: Incentives for First-Time Employees
Scheme A aims to support first-time employees entering the organised sector by offering them a one-month salary subsidy. The direct benefit transfer system will provide up to Rs 15,000 to new employees in three instalments. The eligibility criterion for this scheme includes a monthly salary cap of Rs 1 lakh, ensuring that a broad segment of the youth population benefits.
This scheme is anticipated to support approximately 210 lakh young individuals entering the workforce. Reducing the initial employment cost for businesses encourages employers to hire more first-time employees.
Scheme B: Encouraging Job Creation in Manufacturing
Scheme B focuses specifically on job creation within the manufacturing sector. Under this scheme, the employee and the employer will receive incentives related to their EPFO contributions for the first four years of employment. This initiative is expected to foster additional employment opportunities by making it financially attractive for manufacturing companies to hire new employees.
The scheme targets around 30 lakh young individuals and aims to boost job creation across various manufacturing industries. By alleviating some of the financial burdens associated with hiring and retaining employees, Scheme B helps stimulate growth in a crucial sector of the economy.
Scheme C: Support to Employers
Scheme C offers financial support to employers for new hires in different sectors. It reimburses employers up to Rs 3,000 per month for two years for each new employee’s EPFO contribution if the employee earns up to Rs 1 lakh monthly. This support helps businesses expand their workforce by easing their financial burden. The scheme aims to encourage employers to create more jobs by covering these costs.
Scheme C aims to incentivise the creation of approximately 50 lakh new jobs. This scheme encourages companies to hire more aggressively by offsetting part of the employment costs, aiding overall economic growth.
Financial Commitment And Impact
The government has allocated a substantial budget to ensure the success of these schemes. A total of Rs 1.07 lakh crore has been set aside, with Scheme A receiving Rs 23,000 crore, Scheme B Rs 52,000 crore, and Scheme C Rs 32,000 crore. This financial commitment underscores the government’s dedication to addressing unemployment and supporting economic development.
Recent payroll data shows initiatives like these have already shown promising results. The EPFO recorded a 19.62% growth in membership, with 19.50 lakh net members added in May 2024 alone. This increase indicates a positive trend towards higher employment rates, suggesting that these new schemes could further enhance job creation.
