The Indian job market was on a sturdy line until the coronavirus invaded the planet, causing the unemployment rate to peak up to 24 percent last year, according to reports by Statista. Drop in demand as well as the disruption in workforce faced by companies are two major reasons for the rise, leave alone social distancing among other restrictions responsible for forcing companies to go lean on their workforce. As this continued to spike, the economically backward households including MSMEs (Micro, Small and Medium Enterprises) took the most hits out of other sectors adding to more stress on the country’s economy. Upon this devastating scenario, it was then that the government commenced to roll out various programs and campaigns to bring harmony to the affected sectors.
Programs namely, Pradhan Mantri Garib Kalyan Yojana received a sum of Rs.312 billion clubbed with the facilitation of 331 million beneficiaries towards women, construction workers, farmers and senior citizens initiated.
Additionally, existing programs such as Pradhan Mantri Rojgar Protsahan Yojana (PMRPY) seems to be the talk of the town, as more than 1.2 crore have been benefited since the time of its inception in 2016. With that said, it’s key to look into factors behind the rise in these numbers.
Fueling Employment through Incentivization
Under the governance of the Ministry of Labour and Employment, the PMRPY is basically a scheme that incentivizes employers who have signed up for Employees' Provident Fund Organisation (EPFO). Its style of generating employment is by incentivizing employers with full payment of the employers’ EPS contribution of 12 percent for new employees for the first three years of their employment. It also aims to extend to semi-skilled and unskilled unemployed individuals as well.
It comes with two benefits, one, the employer is rewarded for growing the number of workers employed in the establishment, and the other, is that a huge number of people will be able to find work in such establishments. The fact that these employees have access to organized-sector social security payments is a clear benefit in its own right.
Employees Signed Up for EPFO is Eligible for Benefits
- Under the Shram Suvidha Portal, all EPFO-registered establishments shall be assigned a Labour Identification Number (LN). For all communication under the PMRPY Scheme, the LIN shall be the primary reference number.
- To receive those benefits under the Scheme from August 2016 forward, the qualifying employer must add new employees to the reference base of workers. The number of employees against whom the employer has deposited the 12 percent with EPFO as of March 31, 2016, is indicated by the monthly ECR for March 2016.
- The reference base for new establishments that come into existence or register with EPFO after April 1, 2016, will be Zero/NL employees. As a result, the company is able to take advantage of PMRPY advantages for new eligible employees.
- These eligible employees are those who earn less than Rs.15,000 per month, whereas new employees who make more than Rs.15,000 per month are deemed ineligible. These new employees are those who have not worked in an EPFO-registered establishment on a regular basis prior to April 1, 2016, and whose status will be determined by the assignment of a new Aadhaar seeded Universal Account Number (UAN) on or after April 1, 2016. If the new employee does not already have a UAN, the company must help them obtain one through the EPFO site.
- Employers or Establishments applying for the Scheme are solely responsible for the information uploaded and if found incorrect at any time, it will be presumed that the EPS and EPF payments for these employees have not been made. The employer will then be responsible for the dues and penalties set forth in the relevant sections of The Employees' Provident Fund Scheme, 1952.
However, it is important to keep in mind that this scheme will be in place for three years, with the Government of India continuing to pay the employer's full contribution for the next three years. That is, until 2019-20, all new eligible employees will be covered by the PMRPY Scheme.
The Procedure
- Employers must use their LIN/EPFO registration ID to access the PMRPY portal.
- Fill in the essential organizational information, including the Organizational PAN, as per the format. Here it’s important to state the nature of the industry or sector as defined by the Ministry of Statistics and Program Implementation's National Industrial Classification Code NIC-2008. The appropriate NIC code is determined or assessed based on the value added by the production of various products and services, or net revenue derived from various activities, that is, the industry code of that establishment's major manufactured product (output). In the event of multi-product businesses, the suitable NIC code is decided by the product category that contributes the most value to the company.
- New employment for those earning less than Rs.15,000 per month will be covered by the Scheme. The job description for the new job must be given including the date of hire and, if relevant, the date of departure.
- Eligible employers must submit the PMRPY form at the end of each month, ideally by the 10th of the following month.
- If the information on the PMRPY form is not submitted by the 10th of the following month, the employer will not be entitled for rewards under the PMRPY Scheme for that month.
- The employer must pay the EPS and EPF contributions for these new employees before the form may be submitted.
Recent Updates
- The Prime Minister's Cabinet Committee on Economic Affairs has now given its assent to expand the scheme's scope. For the first three years from the date of registration of a new employee, the government will make the entire permissible contribution for all sectors, including existing beneficiaries for the remaining three years.
- In the ECR 2.0, the employer is required to upload the ECR file and this file will be accompanied with a company-issued online certificate stating that the submission is just for new workers with no prior experience and for newly formed roles.