Budget 2018: The government will make the contribution to the EPFO for first three years and has allocated an amount of Rs 1,652 crore, which is more than three times the actual spend under the job-incentivising Pradhan Mantri Rojgar Protsahan Yojana (PMRPY) in 2017-18.
Budget 2018: All new employees, across sectors earning less than Rs 15,000 per month, will benefit from the government’s plan to bear the employers’ entire contribution towards employees’ provident fund (EPF) of 12%. Moreover, the government also intends to extend the fixed-term employment scheme, already a feature in the labour-intensive garment and leather industries, to all sectors. Both measures are expected to encourage companies to hire more. The government will make the contribution to the EPFO for first three years and has allocated an amount of Rs 1,652 crore, which is more than three times the actual spend under the job-incentivising Pradhan Mantri Rojgar Protsahan Yojana (PMRPY) in 2017-18. By encouraging fixed-term employment the government is attempting to allay the apprehensions of employers who fear they may not be able to let go of workers when needed. This would improve the ease of doing business.
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Meanwhile, the government plans to amend the EPF and Miscellaneous Provisions Act, 1952 to lower the contribution of women to 8% for first three years of their employment, with no change in employers’ contribution. Currently, women contribute 12%. Via the PMRPY, the government commits to contribute the employers’ share of 8.33% towards Employee Pension Scheme (EPS) for all new employees, earning upto Rs 15,000 a month, for the first three years of their employment.
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Of the employers’ 12% contribution towards the retirement fund, the remaining 3.67% goes to the EPF kitty. Employees also make a matching 12% of their monthly wages as mandatory contribution towards EPF. The scheme was sweetened for the textile sector, and the government agreed to bear the entire contribution of employers towards EPF as part of a larger package that also includes introduction of fixed-term labour to the beleaguered sector where labour requirements are actually seasonal. Last December, the fixed-term labour, essentially a closed-ended contract between the employer and the employee for a specific period, was extended to the leather and footwear sectors. The combined package for textiles hasn’t gathered momentum with only 595 firms have availed themselves of the benefits till January 29, 2018, across 1,77,284 employees. All beneficiaries, however, are not necessarily new employees.