Employment Linked Scheme (ELS) announced by FM Sitharaman

Union Budget 2024 announced the launch of 3 schemes to boost employment and hiring in the formal sector, known as ‘Employment Linked Incentive’ schemes. Check here details of 3 new schemes.

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Context: Three new employment schemes were introduced by the Central Government in the Union Budget 2024.

Employment Linked Scheme (ELS)

The Union Budget 2024 announced the launch of 3 schemes to boost employment and hiring in the formal sector, known as ‘Employment Linked Incentive’ schemes.
These schemes provide benefits to employers and first-time employees who have enrolled in the EPFO (Employees Provident Fund Organisation).

About 3 Schemes

Scheme A – First-time Employment

Under this scheme, all newly joined employees in the formal sector will receive a direct benefit transfer of one month’s salary in 3 instalments of up to Rs.15,000
Eligibility: enrolment in the EPFO and a salary of up to 1 lakh per month.
The employees have to mandatorily undergo a Financial Literacy course to receive the second instalment.
The scheme is expected to benefit 210 lakh youth.

Scheme B – Job Creation in Manufacturing

An incentive will be provided at a specified scale directly both to the employee and the employer with respect to their EPFO contribution in the first 4 years of employment.
The scheme is expected to benefit 30 lakh youth entering employment, and their employers.

Scheme C – Support to Employers

The government will reimburse EPFO contributions paid by the applicable employers for the additional employees hired in the previous year up to 3,000 per month for 2 years.
This employer-focussed scheme will cover additional employment in all sectors.
All additional employment within a salary of Rs.1 lakh per month will be counted.
- The scheme is expected to incentivize additional employment of 50 lakh persons.

About EPFO

It is a statutory body that came into existence under the Employees’ Provident Fund and Miscellaneous Provisions Act, of 1952.
The administration of this Act and its associated schemes falls under the purview of a tripartite body known as the Central Board of Trustees, Employees’ Provident Fund.
The CBT comprises representatives from various sectors, including the government (both central and state), employers, and employees.
It is one of the World’s largest Social Security Organisations in terms of clientele and the volume of financial transactions undertaken.
It is under the administrative control of the Ministry of Labour and Employment, Government of India.