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Hire & Fire: A boost for job creation in Budget 2018

Source | : By Yogima Seth Sharma

NEW DELHI: In what is being seen as a big boost to job creation, the government will allow fixed-term hiring across sectors while committing itself to bear the entire 12% of the employers’ contribution to the provident fund for all new employees. The former will make it easy for employers to hire and fire workers thereby encouraging them to hire more, the latter will help incentivise employers creating more jobs in the formal sector.

Even women employees will benefit with higher salary in hand with their PF contribution being reduced to 8% for three years, indirectly giving a push to the consumption cycle. Currently, fixed-term employment is only allowed in the apparel manufacturing sector. The proposed plan is expected to be rolled out via an executive order.

The staffing industry has welcomed the move while calling for some safeguards. “Extending fixedterm contract to all sectors will ease business processes but it should be tripartite and not bipartite to ensure the worker is not without a job as this would add to loss of mandays,” said Suchita Dutta, ED at Indian Staffing Federation.

While the overall unemployment rate in India is around 3.5%, the bigger worry is the unemployment rate in the 15-24 age group—or those believed to be first-time workers—which jumped to 10.5% in 2017 from 10% in 2014, according to a recent International Labour Organization report.

Besides, one million people are added to the country’s workforce every month while the job creation is not keeping pace with this demand. About 2,164,575 employees across 30,475 establishments have been registered under the Pradhan Mantri Rojgar Protsahan Yojana (PMRPY) since its launch in 2016. Though it is not clear how many people were hired under the scheme.

The outlay for the scheme has been pegged at Rs 1,652 crore in 2018-19 against Rs 500 crore in the revised estimate of 2017-18. “The leather industry is a labour-intensive sector and has good growth potential,” said Panaruna Aqeel, vice chairman at Council for Leather Exports. “Already, thousands of unemployed youth have been trained and employed in the leather industry under the government schemes. The PMRPY will give further impetus to generate more employment opportunities in the leather and footwear industry.”

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