Industry
How India's provident fund subsidy scheme is creating jobs
Summary
The 2.2 million unique beneficiaries added in the lower band of the salary structure within nine months of companies being offered Employees’ Provident Fund (EPF) subsidy is much below the internal assessment of more than 5 million additions. Mint details the progress.The 2.2 million unique beneficiaries added in the lower band of the salary structure within nine months of companies being offered Employees’ Provident Fund (EPF) subsidy is much below the internal assessment of more than 5 million additions. Mint details the progress.
How is the EPF subsidy working out for firms?
The wage subsidy via the Employees’ Provident Fund Organization (EPFO) seems to be getting traction in boosting job creation in smaller firms. Of all the new job enrolments as a result of the new initiative, more than half have come from micro and small firms or those having an existing employee base of less than 50. It shows that this category of firms is benefiting most from the wage subsidy. These firms are also at the forefront of adding a large pool of new employees and taking back those who lost jobs between March and September 2020 because of the lockdowns imposed to curb the spread of coronavirus.
How many new jobs have been created?
In this first phase of the EPF subsidy period, from October 2020 to June 2021, micro and small firms added 1.14 million employees. They were followed by firms with existing employee count of more than 1,000, which have added 568,516 unique beneficiaries. Companies that have 50 to 1,000 people on their payroll had added 495,160 employees in this period. As many as 82,251 companies have enrolled for availing the benefit by 30 June, of which 23,881 are small firms, according to official data. Thus, while registration of small firms is low, their unique beneficiary addition is higher than those in other categories.
Is the subsidy aiding employment of women?
Of the 2.2 million unique beneficiary additions, 570,302 are female, 1.62 million are male, and 29 are transgender workers. Women beneficiaries account for slightly more than 25% of the total job additions, which is similar to the very low overall women labour force participation rate in the country that has been a talking point for several years.
What does the scheme provide?
The government will pay 24% of EPF dues of those who join work between 1 October 2020 and 31 March 2022 for two years from the date of joining, covering 12% share each for employees and employers. Employees with a maximum salary of ₹15,000 per month who join in this period shall get the subsidy. This subsidy is a direct saving for both employees and employers. Other than fresh hires, people who lost their jobs during first wave of covid-19 are also eligible, provided their salary is less than ₹15,000 per month.
How much has been spent by the Centre?
The Centre said it will spend ₹22,098 crore on the scheme, which ends on 31 March 2024. However, only ₹450 crore was released in 2020-21 and as of 30 June, ₹950 crore has been utilized. Of this, ₹540 crore has gone to small firms in the first nine months ending 30 June, ₹277 crore to large firms, and the remaining ₹132 crore to firms with 1,000 or more workers each. Tamil Nadu and Gujarat have added the most number of workers, while Assam and Bihar are laggards among large states
