PM Rozgar Protsahan Yojana: Encourage Emp. in Formal Sectors, Generating employment for millions of young job seekers. To address this challenge, the Government of India launched the Pradhan Mantri Rozgar Protsahan Yojana (PMRPY) in 2016. This scheme aims to boost employment generation in formal sectors by providing financial incentives to employers who create new jobs.
Pradhan Mantri Rozgar Protsahan Yojana (PMRPY)
PM Rozgar Protsahan Yojana: Encourage Emp. in Formal Sectors, The Pradhan Mantri Rozgar Protsahan Yojana (PMRPY) was introduced with the primary objective of encouraging employers to generate more employment in the formal sector. The scheme provides financial incentives to employers for recruiting new employees, specifically those who are new entrants into the job market.
Objectives of Pradhan Mantri Rozgar Protsahan Yojana
The PMRPY scheme was launched with specific objectives to address the employment needs of the country:
Encouraging Job Creation
The primary goal is to incentivize employers to hire more workers, particularly in the formal sector, by providing financial support to cover the cost of EPF contributions.
Formalizing the Workforce
A significant portion of India’s workforce is employed in informal sectors, where there are no social security benefits. PMRPY encourages employers to bring more employees under the social security net, offering them formal employment with benefits such as EPF, insurance, and pension.
Supporting New Entrants to the Workforce
The scheme is designed to help first-time job seekers, particularly young individuals entering the labor market, by making it easier for employers to hire them without worrying about the additional financial burden of social security contributions.
Boosting the Manufacturing and Service Sectors
By making it easier and more affordable for employers to hire new workers, the scheme aims to boost growth in sectors that have the potential to generate large-scale employment, such as manufacturing, services, textiles, and construction.
Encouraging Compliance
By offering financial incentives, the scheme encourages employers to register with EPFO (Employees’ Provident Fund Organization) and comply with labor laws, thus increasing the formalization of the workforce.
Key Features of Pradhan Mantri Rozgar Protsahan Yojana
The PMRPY scheme has several unique features that make it an effective tool for encouraging formal employment:
EPF Contribution Subsidy
Under the PMRPY scheme, the government pays the entire employer’s share of EPF contributions (12% of basic wages) for eligible new employees for the first three years of their employment. This subsidy is available to establishments that are registered with the Employees’ Provident Fund Organization (EPFO) and hire new employees who are covered under the EPF Act of 1952.
Eligibility for New Employees
The scheme is designed to benefit new employees who have never been enrolled in the EPF scheme before. New employees must have Aadhaar-linked Universal Account Numbers (UANs), and their wages should not exceed ₹15,000 per month at the time of hiring to be eligible under the scheme.
Coverage for Establishments
PMRPY is applicable to all establishments registered with EPFO that comply with labor laws. It encourages businesses to formalize their workforce, bringing more workers under the social security net. Employers from all sectors, including manufacturing, construction, textiles, and service industries, are eligible to benefit from the scheme.
Encouraging Female Employment
To promote gender equality and encourage the hiring of women, the scheme also includes women workers under its coverage. This provides an added incentive for companies to hire female employees, helping to reduce the gender gap in the formal workforce.
Promoting Job Creation in Small and Medium Enterprises (SMEs)
The PMRPY scheme offers them financial relief by subsidizing EPF contributions, enabling them to create more jobs without incurring additional financial strain.
Online Portal for Easy Access
This ensures that the scheme is accessible and user-friendly, encouraging more employers to participate.
Benefits of Pradhan Mantri Rozgar Protsahan Yojana
The PMRPY scheme provides a wide range of benefits for both employers and employees, making it a win-win initiative for all stakeholders involved.
Reduced Financial Burden on Employers
One of the most significant benefits of the scheme is that it reduces the financial burden on employers by covering the employer’s share of EPF contributions for newly hired employees. This allows companies to hire more workers without worrying about the costs associated with social security benefits, making it easier for them to expand their workforce.
Encouraging Formal Employment
The scheme plays a crucial role in formalizing employment, as it encourages employers to bring their employees under the EPF umbrella, providing them with access to important social security benefits such as pension, insurance, and savings. This improves the overall quality of employment in the country.
Social Security Benefits for Employees
For employees, especially those who are new to the workforce, the scheme offers a chance to gain access to the Employees’ Provident Fund and other social security benefits. This ensures financial security in the long run, helping employees save for the future while also benefiting from employer contributions to their EPF accounts.
Boost to Youth Employment
India’s youth population is one of its greatest assets, but ensuring that young job seekers find employment in the formal sector can be challenging. By offering incentives to employers, the PMRPY hiring of first-time job seekers, providing a significant boost to youth employment and ensuring that young workers gain access to formal sector jobs with social security benefits.
Increase in Women’s Workforce Participation
With the inclusion of women workers under the scheme, the PMRPY has also contributed to improving female workforce participation. By incentivizing employers to hire more women, the scheme helps to reduce the gender gap in employment and provides women with formal job opportunities that come with social security.
Boosting Economic Growth
By encouraging businesses to hire more workers, the PMRPY scheme plays a vital role in boosting economic growth.
Impact of Pradhan Mantri Rozgar Protsahan Yojana
Since its inception, the PMRPY scheme has had a notable impact on India’s employment landscape. 1.2 crore new employees and has provided incentives to more than 1.53 lakh establishments across the country. The scheme has been particularly effective in sectors like manufacturing, construction, garments, and services, where large numbers of workers have been hired.
Some of the most significant impacts of the scheme include:
Increased Formal Employment
The PMRPY scheme has contributed to a rise in the number of employees being brought under the formal employment sector. This has not only improved the quality of employment but has also helped reduce the disparity between the formal and informal sectors.
Enhanced Job Creation
By offering financial incentives to employers, the scheme has directly contributed to an increase in job creation. Employers are more willing to hire additional workers when the costs associated with EPF contributions are covered by the government.
Improvement in Worker Welfare
Employees who are hired under the scheme benefit from social security coverage, which improves their financial security and overall well-being.
Growth of Small and Medium Enterprises
Small and Medium Enterprises (SMEs), which often struggle with the financial burden of social security contributions, have greatly benefited from the PMRPY scheme. By reducing the cost of hiring, the scheme has helped SMEs expand their workforce, contributing to overall economic growth.
Increased Female Employment
This not only empowers women but also contributes to gender equality in the workforce.
Challenges Faced by PMRPY
While the PMRPY scheme has achieved significant success, it has also faced certain challenges:
Awareness and Outreach
There is a need for greater awareness campaigns to ensure that all eligible employers can take advantage of the scheme.
Limited to Formal Sector Jobs
Expanding the scope of the scheme to include informal sector workers could further boost employment and social security coverage.
Delays in Reimbursements
Some employers have reported delays in receiving reimbursements for EPF contributions under the scheme, which can discourage participation. Streamlining the process and ensuring timely payments will encourage more businesses to participate in the scheme.
Conclusion
The (PMRPY) has emerged as a critical initiative in India’s efforts to boost formal employment, especially for first-time job seekers and young workers. By offering financial incentives to employers, the scheme not only encourages job creation but also enhances the overall quality of employment. PM Rozgar Protsahan Yojana: Encourage Emp. in Formal Sectors, Generating employment for millions of young job seekers. To address this challenge,
know about our Blog