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Budget 2018: FM announces lower PF contribution of 8% for women employees

Move aimed at increasing participation of women in formal sector workforce

Somesh Jha  |  New Delhi 

FM Arun Jaitley presenting the budget in the Parliament
FM Arun Jaitley presenting the budget in the Parliament

In a bid to boost women’s participation in formal sector jobs, Finance Minister Arun Jaitley on Thursday announced a lower rate of contribution towards schemes under the Employees’ Provident Fund Organisation (EPFO) scheme for women workers.

“Women workers’ contribution towards EPF will be reduced to 8% for the first three years, without employer’s contribution being reduced. This will allow more women to get into formal economy,” Jaitley said, while delivering the speech for Union 2018-19, adding the take-home salary of women employees will also go up with this move.

At present, employers pay 12% as the employee’s share and 9.49% as employer’s share from the former's monthly salary towards various schemes under the EPFO. Formal sector workers are entitled to insurance, pension, and provident fund benefits from the EPFO, which covers all establishments hiring at least 20 workers.


So, employers need to pay 8% as employee's share and 9.49% as employer's share for hiring women workers in the first three years of their employment.

The Finance Minister said that the Employees’ Provident Fund and Miscellaneous Provisions 1952 Act will be amended to reduce the rate of contribution, as employee’s share, for women workers in the first three years of their employment.

While listing out various measures taken by the government to help boost employment generation, Jaitley, quoting an independent study, said that 7 million new formal jobs have been created in the economy in 2017-18.

The Finance Minister also said the government will finance 12% as employee’s share under the EPFO for first three years of new employees in all private sector jobs, in a bid to bring more workers under the formal sector fold.

The Union government is already implementing the Pradhan Mantri Rojgar Protsahan Yojana (PMRPY) scheme under which it pays the employers’ contribution of 8.33% of wages under the Employees’ Pension Scheme in the first three years of hiring a new employee.


The Finance Minister further said that the government will bring back fixed-term contracts in all the sectors of the industry. The move will enable industries to hire workers for short-term assignments and terminate their services once the projects are completed.

Budget 2018: FM announces lower PF contribution of 8% for women employees
The government had allowed fixed-term employment only for apparel manufacturing sector so far and had proposed to extend it to footwear, leather, and accessories sector workers in a decision taken by the Union Cabinet recently.

Under fixed-term employment, workers are entitled to all statutory benefits available to a permanent worker in the same factory. The benefits include the same working hours, wages, and allowances.

However, employers may not give notice to a fixed-term worker on non-renewal or expiry of his or her contract. Additionally, the employers are not mandated to provide retrenchment benefits to workers hired on fixed-term contracts. 

First Published: Fri, February 02 2018. 02:32 IST
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