Exclusive: Wage subsidy scheme incentivises nearly 33 lakh new jobs in formal sector

(Representational image)

The union government’s wage subsidy scheme has incentivised almost 33 lakh new jobs in the formal sector in the past one year, including nearly 11.5 lakh workers in the July-September quarter of the current financial year (FY22).

Of the almost 33 lakh beneficiaries, at least 28.8 lakh are new employees, rest 4.18 lakh are workers who lost or left jobs after the pandemic outbreak but were reemployed by their employers after October 2020 when the scheme was effective, accruing to official data of the union labour ministry reviewed by Moneycontrol.

So far over, 100,000 companies have taken benefit under this wage subsidy scheme via EPF.

The Atmanirbhar Bharat Rozgar Yojana or ABRY was announced in November 2020 (effective October 2020) to incentivise employers for giving employment albeit at the lower end of the salary structure. As per the scheme, the union government is paying or shall pay the EPF dues on behalf of both employees and employers for new recruits or re-employing staff who lost jobs post the pandemic with a salary threshold of Rs 15,000 per month.

As per labour ministry data, by September-end, the union government had already contributed Rs 1,845.3 crore. At least 106,000 companies have taken the benefit under the scheme as of September.

From June 19 till 30 September, the union government's contribution has almost doubled and the number of beneficiaries has jumped by almost 12 lakh. During the same period, more than 26,000 more firms have come on board to take the EPF subsidy.

The union government is paying and will pay 24% of EPF dues --12% each of employees and employers – of this category of workers who join work during this period for two years from the date of joining. The wage subsidy benefits all those who are and will join between October 1, 2020, and March 31, 2022. This will be applicable to all companies employing up to 1,000 workers. In firms where the employee count is more than 1,000, the union government shall subsidise only 12% of EPF share of the employees.

Every month, an employee pays 12% of his basic wage and part of some allowances as statutory EPF deductions. A matching amount is given by the employer. The government subsidising this portion of the wage is a direct saving on employee cost for an employer and a little better take home pay for low-paid formal workers.