Budget 2018: Incentives likely for employers who hire women workers

Employers' contribution to provident fund might be cut

Finance Minister Arun Jaitley is likely to announce a slew of benefits to boost employment, particularly for women, in the Union Budget to be tabled in Parliament on Thursday.

Government sources said the Union Budget may announce a reduced rate of contribution towards schemes for women workers administered by the Employees’ Provident Fund Organisation (EPFO). A reduced rate of contribution for women workers may range between 6 and 10 per cent, as its own share towards provident fund schemes, official sources said.

“The Union Budget will announce a slew of measures focused on boosting employment, especially providing incentives for employers to hire women workers,” said a senior government official.

At present, employers pay 12 per cent as employee’s share and 9.49 per cent as employer’s share 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.

“The Budget will try to address the wide gender gap in the labour force of the country, as pointed out in the Economic Survey 2017-18. Employers will be incentivised to hire female workers,” another government official said.

The Economic Survey 2017-18 pointed out to more than a 50 per cent gender gap in the labour force participation rates in India — much more than other developing nations, such as Brazil, Italy, Indonesia, and Mexico.

“The lower participation of women in economic activities adversely affects the growth potential of the economy… Women workers are the most disadvantaged in the labour market, as they constitute a very high proportion among the low-skilled informal worker category, and are engaged in low-productivity and low-paying work,” the Economic Survey said.

The cover page of the Economic Survey tabled by Jaitley on Monday was “pink” in colour in a bid to support women’s empowerment.

The Union Budget may announce measures to reduce the cost of hiring workers in the formal sector and augment take-home salary.

One of the announcements likely could be a reduced contribution rate for all employers towards the Employees’ Deposit Linked Scheme (EDLI). Employers need to pay 0.5 per cent as its own share towards the EDLI scheme that provides financial assistance to family members of a deceased employee subscribed to EPFO.

The government may reduce the contribution rate to 0.1-0.2 per cent, sources said. It might also bring down the administrative charges for employers from 0.65 per cent at present to 0.25-0.5 per cent, sources said.

The EPFO collects administrative charges to meet costs, including staff pension and gratuity. In 2015-16, it had collected ~37.58 billion from administrative charges towards both EPF and EDLI schemes.