In a significant move to enhance employment opportunities and support both workers and employers, the Government has unveiled three new schemes under the ‘Employment Linked Incentive’ initiative. Union Minister for Finance & Corporate Affairs, Nirmala Sitharaman, detailed these schemes during the presentation of the Union Budget 2024-25 in Parliament. These schemes are designed to address various aspects of employment generation and support, targeting different sectors and demographics.
Scheme A: First-Time Workforce Entry Incentive
The first scheme is aimed at providing financial support to individuals newly entering the workforce across all formal sectors. This initiative will offer a one-month wage as a direct benefit transfer to first-time employees registered with the Employees’ Provident Fund Organisation (EPFO). The maximum benefit is capped at ₹15,000, distributed in three installments. Eligible employees must earn up to ₹1 lakh per month.
Moreover employees must complete an online financial literacy course before claiming the second installment and if a first-time employee leaves the job within 12 months of recruitment, the subsidy will be refunded by the employer. The scheme will run for 2 years.
Expected Impact
This scheme is projected to benefit approximately 2.10 crore youth who are registering as first-time employees in the formal sector. By alleviating some of the initial financial pressures associated with starting a new job, the scheme aims to encourage more young people to enter the workforce.
Scheme B: Job Creation in Manufacturing
The second scheme focuses on incentivizing additional employment in the manufacturing sector, particularly for first-time employees. It provides financial incentives to both employees and employers based on their EPFO contributions during the first four years of employment. Incentives will range between 8-24% and will be paid directly to both parties. Employers of both corporate and non-corporate entities with a minimum of three years of EPFO contribution record are eligible.
Expected Impact
The scheme aims to support around 30 lakh youth entering the manufacturing sector. By offering financial incentives, the scheme seeks to stimulate job creation and foster growth within the manufacturing industry.
Scheme C: Support to Employers for Additional Jobs
The third scheme is designed to support employers across all sectors by providing financial relief for hiring additional employees. Employers will be reimbursed up to ₹3,000 per month for each new employee hired, covering EPFO contributions for up to two years. This incentive applies to employees earning up to ₹1 lakh per month.
Expected Impact
The scheme is expected to incentivize the creation of additional employment for around 50 lakh individuals. By reducing the financial burden on employers, the scheme aims to boost overall employment and drive economic growth across various sectors.
Implementation and Future Outlook
The three schemes will be administered based on enrolment in the Employees’ Provident Fund Organisation (EPFO) and will focus on recognizing first-time employees and supporting both employees and employers. The government aims to enhance job creation and provide financial stability to new workers, contributing to a more robust employment landscape in India.
The announcement of these schemes represents a proactive step by the government to address unemployment and stimulate economic growth. As these initiatives roll out, they are expected to make a substantial impact on the job market, fostering a more inclusive and supportive environment for both new entrants and established employers
