The government is aiming to create at least 50-60 lakh jobs by June next year in the formal sector through its Atma Nirbhar Bharat Rozgar Yojana (ABRY), which Finance Minister Nirmala Sitharaman announced last week.
The Employees' Provident Fund Organisation (EPFO) data showed that around 20 lakh jobs were lost in the initial months of the coronavirus pandemic, thus, the government is targeting 50-60 lakh jobs by June 2021.
"We are targeting 5-6 million jobs by June next year. The Employees' Provident Fund Organisation (EPFO) data shows that around 2 million jobs were lost in the initial months of the pandemic," a government official told the Business Standard.
Speaking about the Atma Nirbhar Bharat Rozgar scheme, the official said that the private companies will have to maintain a minimum net addition to their workforce each month from October 2020-June 2021 to get the Employees' Provident Fund (EPF) subsidy for the new recruits, adding that the Centre will monitor the payroll of all such private firms.
The official further stated that an employer will have to give jobs to two new employees if the workforce of the firm was less than 50 in September this year. And, if the workforce is 50 or above then at least five employees must be hired by the company. However, this is only applicable for employees with a monthly wage of up to Rs 15,000.
The official said firms will have to ensure the threshold for minimum job creation is maintained each month.
"If the minimum job addition becomes less than five in a month for a firm employing at least 50 workers, the subsidy (EPF) will be discontinued for that particular month," the official told the publication.
Currently, employers and employees contribute 12 per cent each of a worker's wage towards schemes under the EPFO.
Last week, FM Sitharaman announced a job creation scheme (Atma Nirbhar Bharat Rozgar Yojana) by giving subsidy to those establishments that make new hires.
The FM announced a subsidy for retirement fund contributions by employees as well as employers for two years.
Employee contributions (12 per cent of wages) and employer contributions (12 per cent of wages) totalling 24 per cent of wages would be given to establishments for two years, she said.
According to the finance ministry, the Atma Nirbhar Bharat Rozgar Yojana will cover any new employee joining employment in an EPFO-registered establishment on monthly wages less than Rs 15,000.
It would also cover EPF members drawing monthly wages of less than Rs 15,000, who made an exit from employment during the COVID-19 pandemic from March 1, 2020, and are employed on or after October 1, 2020.
The scheme would cover establishments registered with EPFO if they add new employees compared to the reference base (of employees) as in September 2020.
The scheme would be operational till June 30, 2021.
In 2016 the Centre launched a similar scheme called Pradhan Mantri Rojgar Protsahan Yojana (PMRPY) under which it paid the employee's share of PF contribution for three years for "new" recruits. However, under that scheme, the government found many loopholes. It found that around 900,000 beneficiaries of the scheme were ineligible in the first place because they were part of the formal economy even before the inception of the scheme.
About 80,000 companies had taken financial incentives of around Rs 300 crore from the government on account of such false beneficiaries. Thereafter, the EPFO recovered Rs 222 crore from employers by July 2019.