Unemployment surge: Centre likely to extend PF subsidy for new recruits

According to CMIE estimates, as many as 2.53 crore jobs were lost between February and May

  • Money9
  • Publish Date - June 10, 2021 / 08:36 PM IST
Unemployment surge: Centre likely to extend PF subsidy for new recruits
Representative Image (Pixabay)

Jobs and money have been the biggest victims of the vanishing trick that Covid-19 has unleashed on the economy since March last year. While the unorganised sector – eateries, transport, travel agencies, tiny manufacturing units – has been severely hit, with millions of employments simply evaporating during the two phases of lockdowns in 2020 and 2021, the organised sector, too, has had a rude jolt. In the organised sector, jobs would much longer to return compared to the unorgansied sector. As many as 2.53 crore jobs were lost between February and May this year, Centre for Monitoring Indian Economy (CMIE) estimated.

EPF subsidy

To help job creation in the organised sector, the Centre has decided to extend its Atmanirbhar Bharat Rojgar Yojana to help create employment by the private sector as unemployment meters kept ticking away constantly during April and May.

In a meeting on December 9, 2020`, the Union cabinet approved a package of Rs 22,810 crore for the entire period up to FY23. Of this Rs 1,584 crore was for FY21 and the remaining Rs 21,226 crore for FY22 and FY23.

12% + 12%

Under this scheme, the Centre will pay both 12% employee’s contribution and 12% employer’s contribution towards employee’s provident fund for two years for employees employed in the 9-month window between October 1, 2020 and June 30, 2021.

According to government officials, this window would be extended beyond June 30 for a few months and the announcement would be made shortly.

However, for those establishments that employ more than 1,000 people, the government would pay only the employee’s contribution (or 12%).

Less than Rs 15,000

Those employees drawing less than Rs 15,000 a month and were not registered with the Employees Provident Fund Organisation and did not have Universal Account Number (UAN) before October 1, 2020 were eligible for this benefit.

At the same time, if any EPFO-registered worker who lost his job between March 1 and September 30 and did not join any EPF-covered establishment before September 30, would also be eligible for the subsidy.

Clearly the objective of the measure is to create blue collar employment, the sector that has been most vulnerable to the pandemic.

To understand why the government needs to extend this step, a glance at the unemployment rates will suffice.

Ocean of joblessness

The unemployment rates, as measured by CMIE, are climbing steadily during the past two month both in the urban and rural sectors.

“The unemployment rate that reached 11.9% in May 2021, continued to rise into early June. The 30-day moving average unemployment rate as of June 6, 2021 was 13%,” said CMIE.

“The last four weeks have seen a particularly sharp deterioration in labour market conditions. The downturn began in the week ended May 16….Unemployment rate shot up suddenly to 14.5% after remaining stable for several weeks at around 8%. IN the next week that ended on May 23, the situation got worse with the unemployment rate shooting up to 14.7%,” the think tank observed on June 7.

2.53 crore jobs lost

According to the CMIE, employment has been falling continuously since January this year.

It fell by 25 lakh in February, 1 lakh in March, 74 lakh in April and 153 lakh in May, taking the total loss in employment in the four months to 2.53 crore.

Any reversal in this trend can take place if the states now relax the restrictions they enforced to tackle the second wave of infections.

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