Union Budget 2024: Govt's major push to job creation, 3 employment-linked incentive schemes floated for employees, employers

Budget highlights: Union Finance Minister Nirmala Sitharaman on Tuesday announced that three employment-linked incentive schemes will be floated for employees and employers. These schemes will be based on enrolment in the EPFO, focusing on recognizing first-time employees.

Three schemes for employment-linked incentives

Scheme A: One month's wage for freshers

Scheme B: Job creation in manufacturing

Scheme C: Support to employers

Under this, Scheme A will offer one-month salary support to enterprises for first time employees. A Direct Benefit Transfer (DBT) is a payment scheme where an amount equivalent to one month's salary, not exceeding Rs 15,000, will be disbursed to eligible recipients in three separate instalments.

The eligibility limit will be Rs 1 lakh per month. She added 30 lakh youth entering employment and their employers to benefit.

"Our government will implement the following three schemes for employment -linked incentive as part of the Prime Minister's package — enrollment in the EPF, focus on recognition of first time employees, and support to employees and employers scheme," Sitharaman during her Budget speech.

"Direct Benefit Transfer of one month's salary in three 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," she added.

Besides, the Finance Minister announced that the upcoming scheme to promote job creation within the manufacturing sector. The scheme, designed to encourage the employment of first-time employees, will offer incentives related to EPFO contributions for the initial four years of their employment. This initiative is expected to benefit 30 lakh young individuals and generate supplementary job opportunities across various sectors. 

Employers stand to receive reimbursement of up to Rs 3,000 per month over a two-year period for EPFO contributions towards each newly hired employee. The overarching goal of this program is to drive the recruitment of an additional 50 lakh individuals, fostering economic growth and employment prospects.

The government has introduced an innovative job growth incentive plan aimed at enhancing employment opportunities for both employees and employers within the initial four years of employment. This plan encompasses all jobs with salaries up to Rs 1 lakh per month and entails reimbursing employers with Rs 3,000 per month towards EPFO contributions for a duration of two years for each additional employee hired.

The primary goal of this initiative is to create 50 lakh new job opportunities and positively impact the lives of 30 lakh young individuals seeking employment.

In a noteworthy development, a significant amendment has been made to the Model Skill Loan Scheme, which now permits loans of up to Rs 7.5 lakh with the backing of a government-guaranteed fund. This alteration is expected to benefit 25,000 students on an annual basis. Additionally, the government will extend financial assistance for higher education loans up to Rs 10 lakh for students in domestic institutions, with 1 lakh students slated to receive e-vouchers annually.

"The increase of about 30% in the budget dedicated towards Education, Skilling and Employment showcases the mindset of the government to significantly improve the employment and employability in the country (Last year 1.13L Cr -> going to 1.48 L Cr). The three schemes proposed by the government for encouraging employment for new candidates shall propel the employment scenario in the country. The wage subsidy for the employees and the support to the employers shall encourage employers to hire fresh candidates for their organisations; furthermore, the linkage to EPFO registration shall help teh cause of Formalisation of Jobs in the country," said Shantanu Rooj, Founder and CEO, TeamLease Edtech.

Arpit Mehrotra, Managing Director, Office Services, Colliers India, said: "The finance minister announced the launch of employment-linked incentives across three schemes, leading to 20 lakh youth being skilled over five years. The government might invest in infrastructure to support these schemes, leading to improved roads, transportation, and utilities, making nearby real estate more attractive."