The Government will implement 3 schemes for ‘Employment Linked Incentive’, as part of the Prime Minister’s package. These will be based on enrolment in the EPFO, and focus on recognition of first-time employees, and support to employees and employers. This was announced by Union Minister for Finance & Corporate Affairs, Smt. Nirmala Sitharaman while presenting the Union Budget 2024-25 in Parliament today. The three schemes to be implemented are as below:  

Scheme A: First Timers

The Union Finance Minister said that this scheme will provide 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 ` 15,000. The eligibility limit will be a salary of ` 1 lakh per month. “The scheme is expected to benefit 210 lakh youth”, she said.

Scheme B: Job Creation in manufacturing

The Union Finance Minister stated that this scheme will incentivize additional employment in the manufacturing sector, linked to the employment of first-time employees. An incentive will be provided at specified scale directly both to the employee and the employer with respect to their EPFO contribution in the first 4 years of employment. Smt. Nirmala Sitharaman stated that the scheme is expected to benefit 30 lakh youth entering employment and their employers.

Scheme C: Support to employers

This employer-focused scheme will cover additional employment in all sectors, said the Union Finance Minister. All additional employment within a salary of ` 1 lakh per month will be counted. The Government will reimburse to employers up to ` 3,000 per month for 2 years towards their EPFO contribution for each additional employee. “The scheme is expected to incentivize additional employment of 50 lakh persons”, she added. 

Employment-linked incentives to boost formal hiring via EPFO enrolment, wage support for first-time hires and employer contribution subsidies. Implementation of three schemes creates an incentive framework tied to EPFO enrolment to promote formal employment: Scheme A provides a one-month wage via direct benefit transfer to first-time EPFO registrants within a specified salary ceiling; Scheme B subsidises EPFO contributions for both first-time employees and employers in manufacturing during the initial four years of employment on a prescribed scale; Scheme C reimburses employers a fixed monthly portion of EPFO contribution for additional employees across sectors within a salary ceiling for two years. Eligibility depends on EPFO registration and incremental job creation.