EPFO becomes a prime vehicle for government activism on unemployment
By Manohar Manoj
EPFO i.e. Employees Provident Fund Organization has rapidly come into the limelight through various schemes announced in the budget to remove unemployment. It is quite evident now that the Government of India is going to give more importance to the private sector than filling the vacancies in its departments to achieve the huge army of unemployed people in the country to fulfill the RBI’s target of creating 80 lakh jobs every year. The future form of employment generation will now be on the shoulders of the private sector, the government has demonstrated its intention regarding this. For this, the government is going to give many incentives to the private sector through its apex labor welfare organization EPFO. As in the recently announced budget, the government has made EPFO the biggest medium to provide training and skill development, and internship on a large scale on one hand and to provide employment to these trainees in the private sector on the other.To provide many incentives through EPFO to both the employment seekers and the companies offering employment, at least three employment schemes have been announced in the budget, in which the role of the Employees’ Provident Fund Organization will be directly implemented with a cost of Rs 1.07 lakh crore. It is noteworthy that in India, PF facility provided to the employees is considered a major indicator of labor welfare and better working conditions.In this organization, the contribution is given by the workers and their employers who get a maximum of Rs 15 thousand per month, which includes 12 percent of the employee’s basic salary and dearness allowance and 12 percent from the employer’s side, of which 3.67 percent is in EPF fund and the remaining 8.33 percent is in EPS fund. The maximum amount that is contributed is Rs 1250.A total amount of Rs 23 thousand crore will be spent on this. It clearly means that companies will be encouraged to recruit new workers through this scheme. A total of 210 lakh youth who receive up to Rs 1 lakh per month will be eligible for this scheme. Under the second employment scheme related to EPF, for the first time, the EPF amount will be paid by the government itself on behalf of the employer in favor of the employed people. Under this, the government will provide a total incentive amount of Rs 52 thousand crore to both the employees appointed for the first time in the manufacturing sector as EPFO members and employer organizations for the first four years, which will benefit about thirty lakh workers.The third employment scheme related to EPFO, under which companies will be paid Rs 3,000 per month per employee for additional appointments or recruitments other than the above two schemes, for the next two years, in which a total amount of Rs 32,000 crore will be spent by the government. Obviously, companies will pay the provident fund amount of their newly appointed employees from this amount and not from their own accounts. It is estimated that this incentive amount will encourage additional employment generation for about fifty lakh people in the country. The government is hoping to create employment on a large scale in the private sector, for which it is providing the role of a catalyst to EPFO. It is noteworthy that EPFO was inspired to promote new employment schemes by becoming a record 19.5 lakh new subscribers in May last. It is noteworthy that the highest interest rate paid on deposits in the EPFO money market is determined from time to time by the Board of Trustees of EPFO and the Government, which is currently 8.25 percent.
This fund also provides a financial security cover for the employee’s future or after his retirement. It is noteworthy that in India, about 1 crore 40 lakh workforces have accounts in the Employees Provident Fund Organization. The number of provident fund account holders has almost doubled in the last ten years. Employees Provident Fund Organization, started in 1951, is considered to be the largest organization for social security of workers in India.
It is noteworthy that the total corpus fund of the Employees Provident Fund Organization is currently around Rs 15 lakh crore and it is the largest capital providing institution to the Government of India. The organization invests about ten percent of its total deposits in the equity market and overseas markets. In this sequence, EPFO has been used extensively in the employment schemes announced in the budget by the government. Since EPFO carries out its financial business through contributions from employees and employers, it also provides labor welfare and social security.By using the deposited funds of EPFO, the government has killed three birds with one stone, firstly by increasing the subscriber base of EPFO and secondly by encouraging the private sector to provide employment to the unemployed and thirdly by reducing the burden of providing jobs at huge cost by the government. For a long time, there was a perception that the government, apart from many other things, is the biggest employer in the economy. However, the government is now rejecting this notion and wants to create not just a few but about three crore jobs through the above three schemes. In this sequence, the government has also announced a plan to provide internships to one crore youth of the country for the next five years in five hundred big companies of the country at a stipend amount of Rs. 5,000 per month. For this, companies will have to bear a ten percent stipend amount from their CSR fund. Now the question is whether the current economic growth rate of the country and the share of the market and private sector economic dynamism in it will be shown in such a sufficient quantity that it will be able to provide four crore jobs in the country in the next five years. It won’t be easy to estimate this from the newly announced plans just now.
