Union Budget 2018: Govt may cite job creation numbers to blunt criticism

Centre also expected to highlight employment generation through roads, railways and highways construction

Written by Aanchal Magazine | New Delhi | Updated: January 28, 2018 9:10:42 am
Union Budget 2018, Jobs, Unemployment, Arun jaitley, Budget, Indian Express, India Jobs, Business News The ‘Code on Wages Bill’, which was introduced in Lok Sabha last August, is likely to be pushed for passage in the upcoming Budget session

The government is likely to showcase a compilation of numbers on jobs generated through its flagship schemes over the last four years in the upcoming Budget for 2018-19 to blunt criticism on the employment front.

In the absence of any major official set of employment data, job generation numbers from schemes such as Pradhan Mantri MUDRA Yojana, public infrastructure projects and Employees’ Provident Fund Organisation (EPFO) enrollment, along with a primer for minimum social security benefits, are likely to be the key thrust areas for the government in the Budget.

According to a September 2017 report by SKOCH Group, the Pradhan Mantri MUDRA Yojana generated around 5.5 crore jobs in the two years through disbursement of loans to small entrepreneurs since its launch in 2015. The SKOCH research study said that the disbursement of loans has had a multiplier effect on job creation, which has largely gone unnoticed in traditional economic analysis and surveys.

According to government data, 3.03 crore loans worth Rs 1.5 lakh crore have been sanctioned in 2017-18 (till January 19) under the MUDRA Yojana, out of which Rs 1.44 lakh crore has been disbursed. Cumulatively from 2015-16 to 2017-18, 10.49 crore loans worth Rs 4.68 lakh crore have been sanctioned under the scheme, out of which Rs 4.53 lakh crore has been disbursed.

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The government is also expected to highlight employment generation through roads, railways and highways construction. According to government estimates, construction of 10,000 km of highways annually has the potential of creating around four crore man-days of work.

The recently released study related to employment numbers through EPFO enrollment will also feature in the jobs creation highlight. As per a report prepared by Professor Pulak Ghosh of IIM-Bangalore and Dr Soumya Kanti Ghosh, Group Chief Economic Adviser of the State Bank of India released earlier this month, India would have added over 7 million new jobs in the current fiscal year.

The estimate in the report is based on organised sector employment data — EPFO, Employees’ State Insurance Corporation (ESIC) and National Pension System (NPS) enrollment numbers — up to the end of November 2017, which the researchers have extrapolated for the full year 2017-18. In order to be conservative on estimates, and to avoid any data anomaly, they have excluded the zero-contribution accounts and considered new workers in the age group of 18-25.

The government is also expected to work towards ensuring a stipulated level of social security benefits for all workers in the form of minimum wages and ensuring labour market liquidity through fixed-term employment for all sectors. By applying fixed-term employment for all sectors, the government aims to reduce the role of middlemen and ensure the flow of social security benefits to all workers, which in turn, will also make it easier for companies to hire-and-fire.

“Middleman’s role becomes less when you get fixed-term employment. The employer can directly have the contract with the employee and start disbursing the wages. Since you have only one employer to deal with, as the principal employer, we will be able to enforce social security easily. That in turn, will help the workers,” said a senior labour ministry official.

“This (fixed-term employment for all sectors) should help both sides. Number one, give the required flexibility to the employer to have employment in a contractual way for a limited period or for a longer period and the worker also because he is not going to shell out any money to the middlemen and social security can be monitored,” said the official.

The long-pending consolidation exercise of 44 central labour laws into four major codes — industrial relations, wages, social security, and occupational safety, health and working conditions — is also expected to fructify in the upcoming Budget session. The ‘Code on Wages Bill’, which was introduced in Lok Sabha last August, is likely to be pushed for passage in the upcoming Budget session, a government official said. The Code on Wages, which proposes a national minimum wage, amalgamates provisions of the four labour laws of The Minimum Wages Act, 1948; The Payment of Wages Act, 1936; The Payment of Bonus Act, 1965, and The Equal Remuneration Act, 1976.

“Codes are being pursued, codification of Acts is in final stages. Just one or two decisions need to be taken by the Group of Ministers,” said the official. This year, the labour ministry has issued a draft notification for extension of fixed-term employment for all sectors through amendment of the Industrial Employment (Standing Orders) Central Rules, 1946, but is yet to notify it.

Industry experts believe that the extension of fixed-term employment to all sectors would help in formalisation of jobs. Sonal Arora, vice president, TeamLease Services said, “The employment trend is increasingly moving towards contractual nature. At present, workers approach small-time vendors for contractual jobs. Fixed-term employment for all sectors will help companies to bypass such vendors and there will be structural benefits to workers such as ESIC enrollment.”

According to the draft notification on fixed-term employment, a contractual worker engaged for a fixed period will be treated at par with a permanent worker. Fixed-term employment will ensure same work hours, wages, allowances and other benefits as that of a permanent worker along with all statutory benefits available according to period of service. However, no worker employed on fixed term employment basis as a result of non-renewal of contract or employment or on its expiry shall be entitled to any notice or pay in lieu thereof, if his services are terminated. The move towards fixed-term employment will make it easier for companies to layoff workers, which could have a bearing upon job creation.

As per the International Labour Organization’s World Employment and Social Outlook for 2018, India’s unemployment rate is estimated to rise to 3.5 per cent for 2018 from 3.4 per cent estimated earlier.

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