EPFO's Employment Linked Incentive: Govt To Give 1-month Salary To New Entrants, Check All 3 Schemes

The government on July 23 announced three schemes aimed at boosting employment for new entrants in the organised sector through the retirement fund body EPFO, with a total central outlay of Rs 1.07 lakh crore.

Union Budget 2024 introduced a significant Employment Linked Incentive (ELI) scheme to boost job creation and support both employers and employees.

The scheme consists of three components targeting different segments of the workforce.

In her budget speech, Finance Minister Nirmala Sitharaman said, “Our government will implement 3 schemes for ‘Employment Linked Incentive’, as part of the Prime Minister’s package.”

EPFO-based Schemes

These will be based on enrolment in the Employees’ Provident Fund Organisation, and focus on recognition of first-time employees, and support to employees and employers, she said.

Scheme-A

For the first-timers, Scheme-A will provide a one-month wage to all persons newly entering the workforce 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 Rs 15,000.

The eligibility limit will be a salary of Rs 1 lakh per month. The scheme is expected to benefit 210 lakh youth.

Scheme-B

The Scheme-B for job creation in manufacturing will incentivize additional employment in the manufacturing sector, linked to the employment of first-time employees.

An incentive will be provided at a specified scale directly both to the employee and the employer concerning their EPFO contribution in the first 4 years of employment, she stated.

The scheme is expected to benefit 30 lakh youth entering employment, and their employers.

Scheme-C

Scheme-C for support to employers, will cover additional employment in all sectors.

All additional employment within a salary of Rs 1 lakh per month will be counted.

The government will reimburse employers up to Rs 3,000 per month for 2 years towards their EPFO contribution for each additional employee.

The scheme is expected to incentivise additional employment of 50 lakh persons, she added.

Promote Formal Hiring Practices

Kartik Narayan, CEO- Staffing, TeamLease Services feels that by providing financial support and incentives to both employers and employees, the scheme aims to promote formal hiring practices and ensure essential benefits.

Budget For Employment Linked Incentive (ELI)

The three schemes will have a total central outlay of Rs 1.07 lakh crore (Rs 23,000 crore for Scheme A, Rs 52,000 crore for Scheme B and Rs 32,000 crore for Scheme C).

Sitharaman added, “Our government will facilitate the provision of a wide array of services to labour, including those for employment and skilling.”

Comprehensive integration of the e-shram portal with other portals will facilitate such one-stop solution, she said.

Open architecture databases for the rapidly changing labour market, skill requirements and available job roles, and a mechanism to connect job-aspirants with potential employers and skill providers will be covered in these services.

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

According to the latest payroll data, EPFO recorded the highest net addition of 19.50 lakh members in May 2024.

The addition during the month is the highest since the first payroll data was issued in April 2018.

Year-over-year analysis showed a 19.62 per cent growth in net member additions compared to May 2023.