The Union Budget 2024 has placed stress on employment and job creation. But how far are these proposals practicable? The Economic Survey admits that the employment situation is serious. To meet the backlog of employment and ensure development, employment generation of 80 lakh per annum is necessary up to 2030. Before going into further detail, let us see the budget proposals on job creation. The Government has unveiled spending of Rs 2-lakh crore ($24 billion) for job creation and skilling for 4.1 crore youth in the next five years. The Budget has made provision of Rs 1.48 lakh crore for education, employment and skilling in the current year. The objective is noble as far as it goes.

Critics are apprehensive about the road map and possibilities of attainment of the goals, as there will be many “externalities” on which the Government has no control, as job creation in the present scenario largely depends upon market forces. This proposed $24-billion spend is associated with the Prime Minister’s package of five schemes and initiatives to facilitate employment, skilling and other opportunities for the young population. These include three employment-linked, incentives-based schemes. The three schemes will be based on enrolment in the Employees’ Provident Fund Organisation (EPFO), and focus on recognition of first-time employees, as well as support to employees and employers, according to the Finance Minister.

The three schemes are as follows: a) Scheme for First Timers: The scheme would provide one-month’s wage to all persons newly entering the workforce in all formal sectors. The direct benefit transfer of a month’s salary in three instalments to firsttime employees, as registered in the EPFO, will be up to ?15,000. The eligibility limit will be a salary of ?1 lakh per month. The scheme is expected to benefit 210 lakh youth. b) Scheme of Job Creation in manufacturing sector: This is to incentivise additional employment in the manufacturing sector, linked to the employment of first-time employees. An incentive will be provided at a specified scale directly both to the employee and the employer with respect to their EPFO contributions in the first four years of employment.

The scheme is expected to benefit 30 lakh youth entering employment, and their employers. c) Scheme of support to employers: This is an employer-focussed scheme. It covers additional employment in all sectors. All additional employment within a salary of ?1 lakh per month will be counted. The government will reimburse employers up to ?3,000 per month for two years towards the EPFO contribution for each additional employee. The scheme is expected to incentivise additional employment of 50 lakh people. The success of these schemes will depend upon many factors. The roadmap must be revealed in detail without any ambiguity or confusion. Moreover, the schemes are related with EPFO enrolment.

In many enterprises, Provident Fund accounts are not opened for employees if their number is below 19. Thus, in the MSME sector many enterprises do not offer EPFO coverage. In a growing economy, EPFO accounts should increase over time. But the scenario is highly unstable, characterised by enrolment decline. Preliminary data says there was a 5 per cent drop in new subscribers to EPFO, down to 736,015, and a 10.5 per cent decline in the Employees’ State Insurance Corporation, down to 1.16 million, in November 2023 when compared to the previous month.

The November 2023 figures show the sixth consecutive month of decline. The FM also announced a new centrally sponsored scheme on skilling, as the fourth scheme under the PM’s package for skilling in collaboration with state governments and Industry. About 20 lakh youth will be skilled over a five-year period. As many as 1,000 Industrial Training Institutes will be upgraded in huband-spoke arrangements with outcome orientation. Course content and design will be aligned to the skill needs of industry, and new courses will be introduced for emerging needs, Sitharaman added.

She also announced that the Model Skill Loan Scheme will be revised to facilitate loans up to Rs 7.5 lakh, with a guarantee from a government promoted fund. This measure is expected to help 25,000 students annually. Experience tells us that skill development schemes have not been successful in the past in terms of employment generation. Not even per cent of trainees could be absorbed after training from the National Skill Development Corporation. To help youth who are not eligible for any benefit under government schemes and policies, the FM has announced financial support for loans up to Rs 10 lakh for higher education in domestic institutions.

“E-vouchers for this purpose will be given directly to 1 lakh students every year for annual interest subvention of 3 per cent of the loan amount,” she added. The Finance Minister also introduced a new internship programme, enabling companies to employ interns at Rs 5,000 per month for a year. This would be funded through corporate social responsibility (CSR) funds and the initiative aims to skill 10 million youth over five years. The above schemes may sound big but implementation will be difficult as job creation will depend upon market forces as the government depends a lot on the private sector for fulfilment of their objectives.

The private sector does not respond to stark realities of socio economic necessities, but operates with optimum employment aimed at profit maximisation. The apprenticeship scheme is practical as it will up-skill trainees and new entrants to the job market. But after training, will there be recruitment of a huge number of trained people? Many nationalised banks are recruiting apprentices with a salary of Rs 15,000 per month for one year. Their future is uncertain, like the Agniveers of the Indian army. If the market forces do not create enough jobs for recruitment of newly trained apprentices, the scheme will be a fiasco like many other experiments in the past.

More stress needs to be given for promotion of manufacturing and service industries since the agriculture sector suffers from an excess labour syndrome. We need non-farm sectors to grow to absorb new entrants in the job market. Last but not the least, the government must fill up vacancies in their own establishments to promote employment. The employment scenario is critical. According to CMIE, unemployment rose sharply to 9.3 per cent in June 2024 from 7 per cent in May. While the Labour Participation Rate (LPR) rose to 41.4 per cent in June from 40.8 per cent in May, and up from 39.9 per cent in June 2023, the rural unemployment rate rose to 9.3 per cent in June from 6.3 per cent in May. The urban unemployment rate climbed from 8.6 to 8.9 per cent.

LPR is made up of people working or willing to work and actively looking for a job among the total working-age population (15 years and above). We require a concrete action plan for the generation of more employment. Government should form a committee consisting of experts and industrialists to formulate a long-term strategy for employment generation. Indirectly incentivising the EPFO recipients or apprenticeship will not bring any big change. We will create skill and capacity but will there be enough recruiters?

(The writer is on the faculty of Sister Nivedita University.)