During last budget, Shri Jaitley announced a scheme to incentivize employers to
increase employment
Under this scheme , Government would pay
8.33 % EPS , on behalf of Employers , for NEW hires drawing a monthly salary of Rs 15,000 or
less , enabling employers to pass on this " saved " amount to the
said employee , thereby increasing his " take home " salary
For an employee at exactly , Rs 15,000 pm
salary , this would amount to Rs 1250 pm or Rs 15,000 in a year ( like a one
month bonus ! )
If ALL those
NEW employees were to be drawing Rs 15,000 pm ,
then the budget provision of Rs
1,000 cr would benefit some 666,000 persons
But , considering that many may be
drawing a monthly salary of less than Rs 15,000 , the number of beneficiaries
could go up to ( say ) 1,000,000 ( 1 million against 12 million persons
entering job market each year ! )
But implementation of this scheme is anything but
simple !
MINT ( 22 Aug 2016 ) talks of the following problems
facing the government :
# How to verify that Companies are
simply sacking OLD
employees and hiring NEW
replacements to avail of the incentive ?
# To avoid any duplication , the
government will verify the number of people employed in a company through the
electronic challan-cum-returns ( ECR ) that companies file to submit PF
contributions online and UAN and PAN details to ascertain whether a person was
employed previously ( since no incentive in case of persons who have worked
elsewhere earlier, even for a short period ! )
# A govt officer said : " What
we are trying to do is creating a system where companies cannot MISUSE govt
money . We are trying to put up a FOOL-PROOF system where ONLY FRESH JOB creations
are incentivized "
# If a base employment number of a firm
falls at any time , the company will not be eligible for any incentives
# The government will pay the EPS
contributions for a period of 3 years, ONLY
if a NEW RECRUIT works with the company for at least as
many years
Given these complexities / hassle , what kind of
Companies are likely to claim the incentive ?
Certainly not the large / organized
companies , even though they have totally computerized PAYROLL SYSTEMS ! It would just not be
worth the trouble !
But , small scale companies employing a
few hundred persons - and needing to hire 10 / 15 FRESHERS each year , may get
tempted with this scheme
Only to discover that it takes them
hundreds of hours of clerical effort to claim that incentive , since their
payroll is manual !
I would not be surprised if the Scheme ,
* manages
to provide jobs to no more than 10,000 FRESHERS
*
ends up distributing less than Rs 14 crore
by way of incentives
*
costs the government, Rs
50 crores by way of " administering / monitoring / distributing
" expenses !
Truth may come out with a RTI application , this time
next year !
I earnestly request Shri
Arun Jaitleyji / Shri
Bandaru Dattatreyaji / Shri Prakash Javadekarji , to create millions of FRESH jobs
through implementation of my following suggestion ( sent to them earlier
through E Mail )
( http://myblogepage.blogspot.com/2014/02/create-wealth-to-create-jobs.html )
( 26 Feb 2014
)
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Here is my suggestion :
Set in motion , " INVERSION
of JOB REDUCTION " regime , under which ,
" The more jobs a company creates , the less
Corporate Tax it pays "
Example :
* Up to employment of 100 persons ...............................30 %
* 101 -
500 persons.................................................... 25
%
* 501 - 1000
persons ................................................... 20 %
* 1001 - 5000 persons
.................................................. 15 %
* 5001 - 10,000
persons ................................................. 10 %
* Above 10,000 persons
................................................. 5 %
Let us celebrate those who provide employment to large number of
persons
Let us celebrate BIGNESS
Let us create hundreds of WORLD SIZE corporations
and take on the World
On top of this , provide Additional Tax - Breaks ( Discounts ? ) to corporate as follows :
* Average Age of Employees at 30
years....................... 1 %
* Ave age at 25
years................................................. 2 %
* Ave age at 20 years
................................................. 3 %
Of course , very strict and transparent rules will need to be framed to compute :
> Number of Employees ( Only Permanent - not Probationers / Trainees / Apprentices )
> Average Age ( as on 31 March of Tax year )......etc
But , here is an important aspect of this ,
" Incentivize Job Creation " Scheme
Of course , very strict and transparent rules will need to be framed to compute :
> Number of Employees ( Only Permanent - not Probationers / Trainees / Apprentices )
> Average Age ( as on 31 March of Tax year )......etc
But , here is an important aspect of this ,
" Incentivize Job Creation " Scheme
Today's labour laws make it extremely difficult - if not
impossible - for employers to layoff / retrench workmen , if demand for their
products / services , shrinks
Hence , to take advantage of this Scheme , employers are unlikely to hire thousands of youth , if they cannot easily trim the workforce , to match the shrinking demand
So , an important corollary of this Scheme is to modify our existing Labour Laws to facilitate layoff / retrenchment , when situation so demands , while protecting the interests of the workmen concerned
Hence , to take advantage of this Scheme , employers are unlikely to hire thousands of youth , if they cannot easily trim the workforce , to match the shrinking demand
So , an important corollary of this Scheme is to modify our existing Labour Laws to facilitate layoff / retrenchment , when situation so demands , while protecting the interests of the workmen concerned
BENEFITS OF
MY SUGGESTION :
* Emphasize on TOTAL employment number
and not on " Additional Hire of only FRESHERS " , during a year
* No linkage to types of
employees , or amounts of salaries / wages ( whether covered by EPS or not )
* Only year-end ( 31
March ) Employment Numbers form the basis ( Just ONE figure )
* No need for any BASE YEAR
* No need for complicated
" checks " for duplications
* Involvement of just ONE government department
, viz: Income Tax Department
* No
need for checking whether FRESHER worked for 3 years or not ( or had earlier
worked anywhere else )
* Companies from all around the World, would
rush to "set up shop" in India and close their operations elsewhere
To know how simple it would be to implement my suggestion , read
detailed procedure in my following blog
( also sent to the NDA ministers as email , on 01 June 2016 )
( http://myblogepage.blogspot.com/2016/06/from-bad-to-mad.html )
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25 August 2016
www.hemenparekh.in / blogs