Budget 2017: Sops for job creation likely in labour intensive sectors

NEW DELHI: The government is considering a comprehensive employment generation package for millions of youth that enter the workforce every year. This could lead to big-ticket announcements in the upcoming Union Budget on February 1, including incentives for employment generation in labour intensive sectors and a plan for setting up coastal employment zones that would directly link tax incentives to job creation, officials said.

The proposals under consideration include incentives for creating jobs in sectors such as leather, electronics manufacturing, and gems and jewellery, on the lines of sops introduced for textiles last year.

“The government is under pressure to speed up the process of job creation in the country because despite several efforts not many employment opportunities are opening up across sectors,” said a senior government official, who did not wish to be identified. Several ministries have raised concerns over not enough jobs being created in their sectors, the official said.

India is adding nearly 12 million people to the job market every year and more than 65% of its population is below the age of 35, a big demographic advantage for the nation that is aspiring to become the human resource capital of the world. In the government’s fifth annual employment-unemployment survey released in September 2016, about 77% of the households reported no regular wage earning or salaried person.

The labour ministry has proposed that employers across labour intensive sectors be given the option of fixed-term employment, along with waiving their contribution to provident fund and increasing overtime work hours.

Even workers earning less than Rs 15,000 a month across these sectors should get an option of not contributing to provident fund, the ministry has proposed in a move that will enhance the take-home salary of the employees.

“This in turn will push demand in the economy,” the official said. Extending fixed-term employment to all labour intensive sectors will give employers the flexibility to hire workers as per demand for a fixed period of time without compromising on their parity with permanent workers in terms of working hours, wages, allowances and other statutory dues.

Besides, the government could announce setting up of coastal employment zones wherein incentives will be given to manufacturing units that create employment by setting up shops in these economic clusters. The proposal, first mooted by Niti Aayog, includes a five-year tax holiday on corporate tax for firms generating 10,000 jobs and 10-year tax holiday for companies employing more than 20,000 workers.