Employment Linked Scheme (ELS) announced by FM Sitharaman

Context: Three new employment schemes were introduced by the Central Government in the Union Budget 2024.

Employment Linked Scheme (ELS)

• The Union Budget 2024 announced the launch of 3 schemes to boost employment and hiring in the formal sector, known as ‘Employment Linked Incentive’ schemes.
• These schemes provide benefits to employers and first-time employees who have enrolled in the EPFO (Employees Provident Fund Organisation).

About 3 Schemes

Scheme A – First-time Employment

• Under this scheme, all newly joined employees in the formal sector will receive a direct benefit transfer of one month’s salary in 3 instalments of up to Rs.15,000
• Eligibility: enrolment in the EPFO and a salary of up to 1 lakh per month.
• The employees have to mandatorily undergo a Financial Literacy course to receive the second instalment.
• The scheme is expected to benefit 210 lakh youth.

Scheme B – Job Creation in Manufacturing

• An incentive will be provided at a specified scale directly both to the employee and the employer with respect to their EPFO contribution in the first 4 years of employment.
• The scheme is expected to benefit 30 lakh youth entering employment, and their employers.

Scheme C – Support to Employers

• The government will reimburse EPFO contributions paid by the applicable employers for the additional employees hired in the previous year up to 3,000 per month for 2 years.
• This employer-focussed scheme will cover additional employment in all sectors.
• All additional employment within a salary of Rs.1 lakh per month will be counted.
  • The scheme is expected to incentivize additional employment of 50 lakh persons.

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