India will allow private sector hiring through government job exams
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New Delhi: Private companies will be permitted to hire employees through government job tests, Prime Minister Narendra Modi said, outlining a move that can cut private sector hiring costs and create a better employment ecosystem.
Modi announced the initiative at an event organised by Bloomberg LP in New Delhi on Monday.
Already, admission tests devised by medical colleges and technical schools such as the Indian Institutes of Management (IIMs) and Indian Institutes of Technology (IITs) are used by private educational institutes for selecting students.
Modi said his government will now share the results of government recruitment exams after taking the consent of candidates so that other employers can benefit from that. For example, the common entrance test conducted by government banks may also be used by private banks for hiring.
“I am happy to announce one more measure to improve the labour market and benefit the unemployed,” the Prime Minister said.
“The government and public sector undertakings conduct a number of recruitment examinations. So far, the scores in these examinations have been retained by the government. Hereafter, we will make available the results and the candidate information openly to all employers, wherever consent is given by the candidate,” Modi said in his speech.
“This will create a positive externality. It will provide a rich data base which can be used by private sector employers as a ready-made and objective sourcing and screening mechanism,” the Prime Minister said.
“It will reduce search costs in the labour market for both employers and employees. It will enable better matching of candidates from labour surplus areas with jobs in other regions,” he added.
Modi also reiterated his government’s commitment to employment generation. “Firstly, if any firm subject to tax audit increases its work force, it will get a 30% weighted tax deduction on the extra wage cost for three years. Earlier, such a benefit was available only to very few industrial employers and had so many restrictions that it was practically ineffective. It will now cover all sectors, including services, for employees with a salary up to Rs.25,000 per month,” he said.
“Secondly, the government has taken the responsibility for paying pension contributions for three years for all new persons enrolling in the Employees’ Provident Fund. This will apply to those with wages up to Rs.15,000 per month. We expect lakhs of the unemployed, and the informally employed, to benefit from these steps,” the PM added.
To be sure, finance minister Arun Jaitley had announced the above two proposals in the 2016-17 annual budget that some experts termed as the beginning of a new “job subsidy” scheme, Mint reported on 29 February.