Labour Ministry Unveils Fool-Proof Mechanism for Employment Linked Incentive Scheme to Create Jobs

The Labour Ministry has devised a comprehensive digital strategy to implement the Rs 1.07-lakh crore Employment Linked Incentive (ELI) scheme. This initiative aims to generate 3.5 crore jobs within two years. Approved by the Union Cabinet, the scheme will be executed through the social security programmes managed by the Employees' Provident Fund Organisation (EPFO).

Labour Minister Mansukh Mandaviya stated that a robust system has been established to ensure benefits reach both employees and employers under the ELI scheme. These benefits will be directly deposited into accounts. The mechanism was developed after learning from issues faced during the Aatmanirbhar Bharat Rozgar Yojana (ABRY), which encountered corruption and false claims.

Focus on Job Creation and Social Security

The ABRY was introduced to encourage employers to create new jobs while providing social security benefits and restoring employment lost during the COVID-19 pandemic. It aimed to lessen financial burdens on employers in various sectors, including MSMEs, encouraging them to hire more workers. Under ABRY, the government covered both employee and employer contributions of 12% of wages for EPFO-registered establishments.

The ELI scheme is designed to support job creation, enhance employability, and provide social security across all sectors, with a special emphasis on manufacturing. The scheme aims to incentivise the creation of over 3.5 crore jobs in two years, according to an official statement.

Incentives for Employers and First-Time Employees

Under this scheme, first-time employees will receive a month's wage up to Rs 15,000. Employers will receive incentives for two years for generating additional employment, with extended benefits for another two years in the manufacturing sector. Announced in the Union Budget 2024-25, ELI is part of a package of five schemes aimed at facilitating employment and skilling opportunities for 4.1 crore youth with a total budget of Rs 2 lakh crore.

The ELI scheme targets creating more than 3.5 crore jobs over two years, with 1.92 crore beneficiaries being first-time workforce entrants. Benefits apply to jobs created between August 1, 2025, and July 31, 2027.

Structured Benefits for Employees and Employers

The plan consists of two parts: Part A focuses on first-time employees registered with EPFO, offering a one-month wage up to Rs 15,000 in two instalments. Employees earning up to Rs 1 lakh are eligible. The first instalment is payable after six months of service, and the second after twelve months and completion of a financial literacy programme.

Part B focuses on employers, providing incentives for generating additional employment over two years. This structured approach aims to boost job creation while ensuring social security benefits are extended effectively across sectors.

With inputs from PTI