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Informist, Wednesday, Aug 28, 2024

 

By Priyasmita Dutta

 

NEW DELHI – There may be a delay in the implementation of the newly announced employment-linked incentive schemes, which the government wanted to roll out in a 'mission mode', as trade bodies protested against the lack of consultation and planning before the announcement, leader of a trade body said today.

Labour Minister Mansukh Mandaviya invited all central trade unions today to hold an introductory meeting to discuss the employment-linked incentive schemes, the Unified Pension Scheme, and other issues. 

 

"Majority of trade bodies are sceptical about the feasibility of employment-linked incentive schemes...there are many caveats and the government has also overestimated what it can actually deliver," the union leader, who was part of the meeting, told Informist. "The Budget announcement was based on a preliminary plan, there is no backbone to implement the scheme yet, so it will definitely take time before it can be rolled out," the leader said. 

 

Today's meeting was just the first meeting with trade unions where the government took feedback on the issues in the schemes. Labour Minister Mandaviya will hold consultations within the ministry and give feedback from the government's side and then hold a series of meetings with trade unions before finalising the details, another leader of a trade union, who was also part of the meeting, said. 

 

In the Union Budget for 2024-25 (Apr-Mar), Finance Minister Nirmala Sitharaman announced three employment-linked incentive schemes as part of the Prime Minister's package.

 

Under the first scheme, the government will provide one month of wages in three instalments to first-time employees in all formal sectors up to 15,000 rupees. Any first-time employee with a salary less than 100,000 rupees will be eligible for this scheme. The first time employee will have to undergo a compulsory online financial literacy course before claiming the second instalment. The subsidy will have to be refunded by the employer if the employment for the first timer ends within 12 months of recruitment. The enrolment duration for this scheme is two years, and the government will spend 230 bln rupees on it.

 

The second scheme will focus on job creation in the manufacturing sector. This scheme will incentivise additional employment in the manufacturing sector, linked to the employment of first-time employees. An incentive will be provided at a specified scale directly both to the employee and the employer with respect to their Employees' Provident Fund Organisation contribution in the first four years of employment, Sithraman had said. The scheme will be for two years and is expected to benefit 3 mln youth entering employment, and their employers. It will cost the government a total 520 bln rupees.

 

The third scheme aims to provide support to employers in all sectors. The government will reimburse employers up to 3,000 rupees per month for two years towards their Employees' Provident Fund Organisation contribution for each additional employee. The scheme is expected to incentivise additional employment of 5 mln. It will cost the government 320 bln rupees. 

 

The EPFO is the nodal body for rolling out the benefits under the three schemes.
 

The first trade union leader cited above said that there are already pending issues with the labour ministry, resolving which will automatically generate more employment. "Instead, the government chose to announce fresh, half-baked schemes with high financial outlay to address the issue of employment," the leader said. 

 

On the newly announced Unified Pension Scheme, another trade union leader who was part of the meeting, said that there are mixed feelings among the trade bodies about the new scheme. While some were happy with the assured returns under it, many were not in favour of a contributory pension system, the person said.

 

"All social security systems have been changed by this government...every economic policy is turning out to be anti-labour," the trade union leader said, adding that a majority of trade bodies continue to bat for the Old Pension Scheme and discontinuation of the National Pension System.

 

On Saturday, the Cabinet announced the Unified Pension Scheme which aims to provide an assured pension, family pension, and assured minimum pension for government employees. To address the demand for assured returns, the Cabinet decided that 50% of the average basic pay drawn in the last 12 months prior to superannuation for a minimum qualifying service of 25 years would be given as an assured pension. For those with less than 25 years but over 10 years of service, the assured sum would be a proportionate sum calculated on a pro-rata basis.

 

The second feature of the Unified Pension Scheme is assured family pension, under which 60% of immediate pension before the demise of an employee will be given to their immediate family. The third feature is an assured minimum pension, which is devised to address the issue of employees with government service for less than 10 years. Under this, 10,000 rupees will be given to such employees as a minimum assured pension. 

 

While employees' contribution to the Unified Pension Scheme will continue to be at 10%, the Centre's contribution will be raised to 18.5% from 14%. This new pension plan will take effect from Apr 1, 2025.

 

The government introduced the defined-contribution National Pension System on Jan 1, 2004, replacing the defined benefit pension scheme. All states, except Tamil Nadu and West Bengal, joined the new plan.

 

Under the Old Pension Scheme, government employees who have completed at least 10 years of service receive a monthly guaranteed pension based on their last drawn basic salary and the years of service. Under this, employees do not need to make a contribution.

 

The National Pension System is a market-linked annuity scheme in which individuals can invest a regular amount during employment and receive an annuity when they retire. Under the National Pension System, state government employees make a monthly contribution at the rate of 14% of their salary to the pension fund, and a matching contribution is paid by the state government. The system is administered and regulated by the Pension Fund Regulatory and Development Authority. The pension system is mandatory for central government employees, while others can join it voluntarily.

 

The other issues that were discussed in today's meeting included the need to simplify labour codes and the urgent recruitment in public sector undertakings that have been vacant for years, one of the leaders cited above said. 

 

The labour minister seemed to be keen on getting the consent of unions on implementing the four Labour Codes, one of the trade union leaders said, adding that it was a tall task as the demand among the unions is still to scrap the four labour codes and restore the labour laws that were consolidated into the codes. 

 

The government consolidated 29 central labour laws into four labour codes--Code on Wages, 2019; Industrial Relations Code, 2020; Code on Social Security, 2020; and Occupational Safety, Health and Working Conditions Code, 2020.  End

 

Edited by Deepshikha Bhardwaj

 

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