Moneycontrol PRO
Upcoming Event:Attend Algo Convention Live, 2 Days & 12+ Speakers at best offer Rs.999/-, exclusive for Moneycontrol Pro subscribers. Register now!
you are here: HomeNewsBusiness

Experts welcome extension of EPFO subsidy scheme but call for direct support

FM Nirmala Sitharaman also announced that, so far, a benefit of Rs.902 crore had been given to 21.42 lakh beneficiaries of 79,577 establishments.

June 29, 2021 / 03:03 PM IST
EPFO wage subsidy scheme is expected to provide dual benefits.

EPFO wage subsidy scheme is expected to provide dual benefits.


Finance Minister Nirmala Sitharaman, on June 28, extended the EPFO wage subsidy scheme, Atmanirbhar Bharat Rozgar Yojana from June 30, 2021 to March 31, 2022.

FM Sitharaman also announced that, so far, a benefit of Rs.902 crore had been given to 21.42 lakh beneficiaries of 79,577 establishments.

While the industry experts welcomed the decision to extend the scheme, many called for direct support.

K R Shyam Sundar, Professor, HRM, XLRI, Xavier School of Management, said, "In this difficult labour market scenario, any decision is welcome but the question of a sustainable employment as the scheme is only for a period of two years."

According to Sundar, the scheme is dependent on a variety of criteria and therefore the government should announce a more sustainable and direct employment generating wage subsidy as the EPFO scheme will cover only a part of the labour market and therefore the benefit will be limited.

Close

"What is needed is a combination of direct benefit transfer and both rural and urban employment guarantee scheme on the condition that the urban employment scheme could be a short term solution so it will not only put more money in the hands of the people but also lead to demand creation which would incentivise employment generation," noted Sundar.

"Urban employment schemes must be complemented if not shed," argued Sundar.

Speaking on the condition of anonymity, a senior research fellow from a Delhi based think tank said, "After a devastating impact of the second wave, extending the scheme is a good move as it will incentivise the employers to hire. However, the benefit is very limited in nature because only the EPFO registered establishments can avail it. The government should instead bring in a scheme which casts a wider net."

Like Sundar, the person mentioned above also said that the government should focus on providing a direct benefit transfer as it would lead to a more sustainable employment generation.

According to Prashant Singh, Vice President and Business Head-Compliance and Payroll Outsourcing, TeamLease Service, with the ongoing vaccination drive and its impact, along with the precautionary measures undertaken by States and festive season around , the extension of the would create a multiplying effect to benefit industry and employees earning wages less then Rs. 15,000 a month.

Singh further added that industries like healthcare, e-commerce, retail, FMCG and construction have already picked up hiring pace and other industries will be boosted to increase hiring with the extension of the scheme.

With an aim to spur employment generation in the COVID-19 pandemic-hit economy, Finance Minister Nirmala Sitharaman on November 12, 2020 announced the Atmanirbhar Bharat Rozgar Yojana. The scheme offers subsidies to employers for hiring new employees. It also aims to help those who lost jobs in the wake of the pandemic.

Under this scheme, the central government will take care of the provident fund contributions of employees and employers for two years from the date of registration.

The scheme is aimed at incentivising the creation of new employment opportunities during the COVID-19 recovery phase, wherein the government will give the subsidy for the new employees joining an EPFO-registered establishment with a monthly wage less than Rs 15,000, who lost job due to the COVID-19 pandemic and regained employment after October 1, 2020.

Under the scheme, for the establishments employing up to 1,000 workers, the central government will provide employee’s contribution at 12 percent of the wages and employer’s contribution at 12 percent of the wages thereby covering a total of 24 percent of the wages for a period of two years.

The scheme is expected to provide dual benefits. While on one hand, the scheme is expected to encourage the employers and business establishments to increase the number of workers hired, on the other hand, the scheme will help a large number of job seekers find employment in EPFO-registered establishments.



Download your money calendar for 2022-23 here and keep your dates with your moneybox, investments, taxes

Shreeja Singh
first published: Jun 29, 2021 03:03 pm
Sections
ISO 27001 - BSI Assurance Mark