A day after a slew of employment-related schemes for companies were introduced in the Budget, the jury was out on how the schemes would be implemented and whether these would gain the intended traction .
Take the case of an internship programme, under which Rs 5,000 a month allowance is to be provided to 10 million individuals over 5 years. The government wants “top 500 companies” to join the scheme, each taking up an obligation to hire 4,000 interns each year. “Barring top companies like TCS, Infosys, RIL and some banks, other companies don’t hire so many interns in a year. The average employee count across top 500 companies is around 25,000-30,000. How can you expect companies to hire over 10% of their workforce as interns. They should expand the scope to beyond 500 companies,” said the HR head of a leading consumer company on condition of anonymity.
But expanding the scope is fraught with risks of misuse of the scheme, some feel.. “While the internship scheme has immense potential to drive job growth and formalisation, it’s crucial for the government to implement robust measures to prevent potential leakages. With incentives as high as they are, there’s a risk of misuse,” said Mayank Kumar, co-founder & MD at upGrad.
The other concern pertains to another proposal in Budget’s job package that seeks to provide 1-month salary for freshers (up to Rs 15,000) when they join a company. Experts suggest there’s a likelihood that employers can replace the existing staff with freshers, especially people with 2-3 years of experience.
“The incentives in this scheme are strong enough to compel companies to hire more freshers than laterals going forward. In some cases, we might see companies replacing its experienced staff with freshers in roles which are not experience-driven such as sales and collection agents in the BFSI sector or some jobs in the e-commerce industry,” said CEO of a headhunting firm.
Experts said that the schemes might not lead to more job creation, and there are also concerns that some entry-level employees may not remain committed beyond the initial incentives. “While employers bear responsibility for retaining their employees, many new workers may lack the internal drive to enhance their skills and stay in critical sectors such as manufacturing,” said Neeti Sharma, CEO at TeamLease Digital.
Deloitte India partner Saraswathi Kasturirangan said that the Budget’s fine print lacks clarity in a lot of areas. For instance, 1-month salary support by the government talks about eligibility criteria of below Rs 1 lakh monthly salary. Kasturirangan said that while determining the salary threshold, it is unclear whether the salary slip will be considered or the offer letter. “Then, under other schemes, will the employer be enabled to remit lower provident funds through ECR (electronic cum return) or will this operate as a reimbursement? In cases where the employee receives the benefit and leaves the organisation within 12 months, it is not clear whether the employer is liable to pay the amount back to the government or the employer will recover the amount from the employee,” she said.
While the intent is to benefit first-time employees and employers, experts said that questions around implementation and operational challenges need to be addressed for the schemes to have an impact.