UNION BUDGET 2024: SOCIAL WELFARE AND EMPLOYMENT UPDATE

EMPLOYMENT LAW UPDATE

23^rd July 2024

Issue No. 12/24-25

Finance minister Nirmala Sitharaman unveiled the Union Budget 2024, a bold plan outlining the government’s goals for economic expansion, employment creation, and skill development. In an effort to promote job creation and economic development, the budget includes a number of new initiatives and incentives that will improve the skill sets of the Indian workforce and provide employment opportunities. Three novel employment-linked incentive schemes and a sizeable allocation of Rs 2 lakh crore for job development over the next five years are among the major announcements.

The Union Budget of 2024 represents a pivotal step in India’s path toward achieving developed nation status by 2047. Prime Minister Narendra Modi highlighted the budget’s crucial role in shaping India’s trajectory for growth and development. The government’s emphasis on generating jobs, enhancing skills, and providing economic incentives underscores its dedication to tackling the nation’s employment issues and equipping the youth with essential skills for a thriving future.

Union Budget 2024: Three Schemes Announced Under Employment-Linked Incentives; Rs 2 Lakh Crore Announced for Job Creation:

Scheme A: Direct Benefit Transfer for First-Time Employees:

Scheme A aims to offer financial assistance to newly employed individuals registered with the Employees’ Provident Fund Organization (“EPFO”). Eligible participants will receive a Direct Benefit Transfer (“DBT”) equivalent to one month’s salary, disbursed in three installments, capped at a maximum of Rs 15,000. This initiative is designed to encourage young job seekers to enter the formal workforce and gain valuable work experience.

Key Features of Scheme A:

Eligibility: First-time employees registered with EPFO.
Benefit: Direct Benefit Transfer of one month’s salary in three instalments, up to Rs 15,000.
Objective: Encourage youth to join the formal workforce and reduce unemployment.

By providing a financial incentive to first-time employees, Scheme A aims to reduce the barriers to entry into the job market, making it easier for young individuals to secure employment and contribute to the economy.

Scheme B: Manufacturing Incentives for Job Creation

Scheme B is centered on boosting job growth within the manufacturing sector. It offers direct incentives to employees and employers based on their contributions to EPFO over the initial four years of employment. This alignment of incentives with EPFO contributions aims to foster continuous employment and stimulate growth in the manufacturing sector, which plays a pivotal role in driving economic development. The scheme is expected to benefit 30 lakh youth entering employment, and their employers.

Key Features of Scheme B:

Eligibility: Employees and employers in the manufacturing sector.
Benefit: Direct incentives based on EPFO contributions for the first four years of employment.
Objective: Promote job creation and growth in the manufacturing sector.

The manufacturing sector is a key component of India’s economy, and Scheme B aims to stimulate job creation by providing financial incentives that benefit both employees and employers. This initiative is expected to lead to increased productivity, innovation, and competitiveness in the sector.

Scheme C: Support to Employers for Additional Employees

Scheme C aims to assist employers by reimbursing a portion of their EPFO contributions for each additional employee hired. Employers can receive reimbursement of up to Rs 3,000 per month for two years for each new employee added to their workforce earning up to Rs 1 lakh per month. This initiative is intended to alleviate financial pressures on employers, incentivizing them to expand their workforce and generate more employment opportunities.

Key Features of Scheme C:

Eligibility: Employers adding new employees to their workforce.
Benefit: Reimbursement of up to Rs 3,000 per month for two years for each additional employee.
Objective: Encourage employers to hire more workers and expand their operations.

By providing financial support to employers, Scheme C incentivizes businesses to grow and create more jobs, contributing to the overall economic development of the country.

Skilling Initiatives:

In addition to the employment-linked incentives, the Union Budget 2024 also emphasizes the importance of skilling and higher education. The government announced a new centrally-sponsored scheme for skilling 20 lakh youth over the next five years. This initiative will be implemented in collaboration with states and industry, ensuring that the training provided is relevant to the needs of the job market.

Key Features of the Skilling Initiative:

Target: Skilling 20 lakh youth over five years.
Collaboration: Implemented in partnership with states and industry.
Objective: Equip youth with relevant skills for the job market.

To further support skilling efforts, 1,000 Industrial Training Institutes (ITIs) will be upgraded on the hub-and-spoke model. This model will enhance the quality of training provided and ensure that ITIs are better equipped to meet the demands of the industry.

Support for Higher Education:

The government plans to offer financial assistance for loans up to Rs 10 lakh for higher education in India. Additionally, adjustments to the model skilling loan scheme will facilitate loans up to Rs 7.5 lakh. These initiatives aim to increase accessibility and affordability of higher education, enabling more students to pursue advanced studies and acquire skills essential for high-paying jobs.

Impact on the Job Market:

Economic Growth and Job Creation

The allocation of Rs 2 lakh crore for job creation over the next five years is expected to significantly influence the Indian job market. By fostering economic growth and encouraging businesses to expand their workforce, the budget aims to create an environment conducive to job creation

Increased Employment in Manufacturing

The manufacturing sector, crucial for economic development, stands to benefit from incentives under Scheme B. By aligning incentives with EPFO contributions, the scheme promotes sustained employment and sectoral growth, enhancing productivity, innovation, and competitiveness.

Enhanced Skilling and Employability

Emphasis on skilling and higher education aims to bridge the skills gap and enhance employability. These initiatives will equip youth with the necessary skills to succeed in a dynamic job market.

Support for Employers

The support provided to employers under Scheme C will reduce the financial burden on businesses and encourage them to hire more workers. This will not only create more job opportunities but also contribute to the overall economic development of the country.

LABOUR RELATED REFORMS:

The government will facilitate the provision of a wide array of services to labour, including those for employment and skilling. A comprehensive integration of e-shram portal with other portals will facilitate such one-stop solution. Open architecture databases for the rapidly changing labour market, skill requirements and available job roles, and a mechanism to connect job-aspirants with potential employers and skill providers will be covered in these services.
Shram Suvidha and Samadhan portals will be revamped to enhance ease of compliance for industry and trade.

CONCLUSION:

The Union Budget 2024 outlines a comprehensive strategy for job creation, skilling, and economic development. With initiatives like direct financial support for new employees, incentives for manufacturing, and support for higher education, the government aims to foster economic growth and equip the workforce with necessary skills. These measures are pivotal, and hopefully will have the desired effect in advancing employment growth and prosperity.

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