Amid a host of measures proposed in the Budget to boost employment generation, the proposal that the government will bear employers’ entire 12% Employees’ Provident Fund contribution for all new industrial workers earning Rs 15,000 a month for three years, under the PMRPY scheme, will create 5 lakh new jobs in 2018-19 alone, according to the government’s estimate. Finance minister Arun Jaitley has allocated Rs 1,652 crore for 2018-19 for the job-incentivising Pradhan Mantri Rojgar Protsahan Yojana (PMRPY), first launched in August 2016, against an estimated Rs500-crore actual outlay in 2017-18. These new jobs, essentially formal in nature, will further add to the “formal” nature of the jobs that the country’s estimated 24 crore non-agricultural workforce have.
Deriving the definition of formality for employees who are part of firms paying taxes under the goods and services tax (GST), the Economic Survey for 2017-18 arrived at the number of country’s formal employment at 11.2 crore. Adding up the regular government employees of 1.5 crore, the total number of formal employment in the country stands at 12.7 crore, excluding those work in the defence, health and education sectors. Formal employment does not only ensure social sector benefits such as EPF and Employees’ State Insurance a worker, it also leads to more harmonious relationship between employer and employee, resulting in less industrial disputes and ensuring the ease of doing business, where India stormed into the top 100 for the first time recently. Under the PMRPY scheme, launched in August 2016, the government is obliged to pay the entire employee pension scheme (EPS) component of the employer’s EPF contribution for the first three years of their employment.
Of the employer’s share of EPF kitty, 8.33% goes to EPS, 3.67% to EPF, 0.65% towards administrative charges, 0.5% to Employees’ Deposit-linked Insurance Scheme (EDLI) and 0.01% for EDLI maintenance. Under PMRPY, the EPS share is provided by the government so that firms are encouraged to recruit unemployed persons and also bring informal workers onto the payroll. The scheme was further sweetened for the beleaguered textiles sector, under the Pradhan Mantri Paridhan Rojgar Protsahan Yojana (PMPRPY) and lately, for the leather sector where the government pledged to pay employers’ remaining 3.67% mandatory contribution towards EPF. Other conditions remained same.