In the Union Budget 2024 presented on July 23, Finance Minister Nirmala Sitharaman announced three new schemes aimed at boosting employment through the Employees’ Provident Fund Organisation (EPFO). These schemes, part of the Prime Minister’s package for ‘Employment Linked Incentives,’ have a total central outlay of ₹1.07 lakh crore and are designed to incentivise new entrants into the organised sector and support job creation.

According to the Finance Minister, these schemes will be based on EPFO enrolment, ensuring that the benefits are provided to registered employees and employers. “These will be based on enrolment in the EPFO, and focus on recognition of first-time employees, and support to employees and employers,” Finance Minister said.

Scheme A – First Timers

It aims to provide direct financial support to first-time employees in all formal sectors. It will provide one-month salary to all the first- time employees in all formal sectors.

The direct benefit transfer of one-month salary in 3 instalments to first-time employees, as registered in the EPFO, will be up to ₹15,000. This subsidy would be vital for employees and employers in hiring of first timers, by supporting their learning curve before they become fully productive. However, the employee, in turn, must undergo compulsory online financial literacy course before claiming the second instalment.

Further, the subsidy would have to be refunded by the employer if the employment to the first timer ends within 12 months of recruitment.

The eligibility limit will be a salary of ₹1 lakh per month. The scheme is expected to benefit 2.1 crore youth over 2 years. It has been allocated a budget of ₹23,000 crore.

Scheme B – Job Creation in Manufacturing

It aims to promote job creation in the manufacturing sector by incentivising both employees and employers.

Under this, an incentive will be provided at specified scale directly, both to the employee and the employer with respect to their EPFO contribution in the first 4 years of employment. The subsidy would have to be refunded by the employer if the employment to the first timer ends within 12 months of recruitment.

The scheme with an outlay of ₹52,000 crore is expected to benefit 30 lakh youth entering employment, and their employers. 

Scheme C – Support to Employers

The scheme aims to encourage additional employment across all sectors. New employees under this Part need not be new entrants to EPFO.

Under this, reimbursement of up to ₹3,000 per month for two years towards EPFO contributions for each additional employee earning up to ₹1 lakh per month.

This employer-focussed scheme has a budget of ₹32,000 crore, and is expected to incentivise additional employment of 50 lakh persons.

Impact of EPFO Initiatives

According to the latest payroll data, EPFO recorded the highest net addition of 19.50 lakh members in May 2024, marking a 19.62% growth compared to May 2023. The surge in membership is attributed to increased employment opportunities, better awareness of employee benefits, and effective EPFO outreach programs. Notably, 58.37% of the new members added in May 2024 were in the 18-25 age group, highlighting the trend of young first-time job seekers joining the organised workforce.

These schemes are expected to significantly boost employment, support job creation, and enhance the financial stability of both employees and employers in the organised sector.

Additional Initiatives 

In addition to the three schemes, the FM also announced that the government plans to integrate the e-shram portal with other employment and skilling portals, creating a comprehensive, one-stop solution for labor services. “Our government will facilitate the provision of a wide array of services to labour, including those for employment and skilling.”

Open architecture databases will track the rapidly changing labor market, skill requirements, and available job roles, connecting job aspirants with potential employers and skill providers.

The ShramSuvidha and Samadhan portals will be revamped to improve ease of compliance for industry and trade.

A committee reviewing the NPS has made significant progress, with a focus on finding a balanced solution that addresses concerns while maintaining fiscal prudence.

Besides, the government will facilitate higher participation of women in the workforce by setting up working women hostels in collaboration with industry, establishing creches, and organising women-specific skilling programs and market access initiatives for women SHG (Self Help Group) enterprises.