The special package for the garment sector unveiled by the Modi government in June last year doesn’t appear to have made instant appeal to the firms in this labour-intensive industry. Despite a crucial component of the package that the government will bear the entire 12% employer’s contribution to the employees provident fund (EPF) for the first three years, just 20 units have availed themselves of the benefit so far and only 4,300 people have got jobs. Under the Pradhan Mantri Rozgar Protsahan Yojana, the government bears 8.33% of the employer’s contribution to EPF in other sectors.
According to the labour ministry sources, the tepid start is because of the slow implementation of the scheme and not enough publicity for it. “The scheme, approved by the Cabinet in June, got other necessary clearances only in August. EPFO had to ready the software and so the enrollment started only from October onwards. Finally, in December, fund disbursements by the government started,” a ministry official said. The software was also such that even a slight incompatibility between the credentials of the employee, as provided by employer, and his/her Aadhaar card details would automatically reject the enrollment, he said.
The Pradhan Mantri Paridhan Rozgar Protsahan Yojana (PMPRPY) scheme for the apparel sector was subsequently extended to the made-ups sector too. A budget of `6,006 crore was approved for the scheme, with the objective of creating 1 crore new jobs, additional exports of $30 billion and `74,000 crore more investments over three years.
According to government’s estimate, for every `1 crore investment in the garment sector, a minimum of 70 new jobs are created as compared with 10 in steel and 25 in automotive sectors.
Analysts said the package did not yield the desired results as sectoral players were perhaps more comfortable with the informal nature of the jobs in the sector since it reduces their burden of complying with labour rules. However, official sources said the number of PMPRPY beneficiaries would go up in the coming months as the government has now decided to bear employers’ contribution of 8.33% of basic pay to the Employees’ Pension Scheme (EPS) for new employees under the PMRPY even if new posts are not created by the firm. The benefit was earlier available only for new posts created.
The package for the sector included making EPF optional for employees earning less than Rs 15,000 per month. The idea was to ensure there is more cash in the hands of such workers. Sources said even this has come a cropper since the proposal needs an amendment to the EPF Act and even the process for the same has not started yet.
For the proposal to take effect, the EPFO needs approval of its highest decision-making body, the Central Board of Trustees (CBT), to be followed by the Cabinet’s approval and vetting by the law department before it could be tabled in Parliament. Many trade unions are, however, not happy with the proposal, as they think that it would deprive the workers of even a modicum of social security.
The package for the garment sector, which policymakers want to be extended to other employment-intensive sectors like leather and footwear, included introduction of fixed-term employment (in line with the seasonal nature of the industry), additional interest subsidy incentives under the technology upgradation fund scheme and enhanced duty drawback coverage for exports.