Budget 2022: It’s time for govt to address employment generation, growth across various sectors

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Less than two years ago, the world changed as we know it. The pandemic posed what seemed to be an insurmountable challenge, the depths of which few had witnessed in living memory or even in the past 100 odd years. However, the world stood resilient, and India was able to recover, along with the economy on a steady incline.

What the economy predominantly needs currently is fuel – in this case, land, labour, and capital. Capital is being pumped by the central banks across the world in the last 20-plus months, including the Indian central bank. At the same time, organizations and companies have had a faster-than-expected debt repayment, so money supply is not a problem. India is fortunate to have abundant land, both for farm and non-farm productive use. What India needs to sort out is its labour problem and this should be one of the prime focuses of the forthcoming Budget.

Budget 2022 should address the employment generation and growth across various sectors. While the Government has enabled fiscal capabilities and implemented several measures to support the economy in the last two years through initiatives such as PLI schemes, changes in the MSME sector, and Atmanirbhar Bharat, it is now imperative that the focus is on job creation.

The following measures can be implemented to ensure the same:

• Online upskilling needs to be the primary focus going forward, as most skill centres have remained non-functional due to COVID-19 in the last 22 months. This can be achieved through the government and Ministry of Skills pushing all skill partners to convert programs digitally and support entities with grants and credits.

• The Pradhan Mantri Rojgar Protsahan Yojana (PMRPY) Plan Scheme which had been designed to incentivise employers for the generation of new employment should be immediately brought back allowing EPFO grants for the first 3 years for all first-time UAN generators. While the scheme was extended, it was tweaked to primarily benefit organizations smaller than 1,000 employees despite massive employment generation taking place only in companies with more than 1,000 employees.

• Extension of benefits offered in Section 80JJAA of the Income Tax Act which supports job creation. Further, given the wage inflation in the past few years, entry-level employment should be considered at wages up to Rs 30,000 per month for the purposes of Section 80JJAA for employers that create net addition to employment, instead of the current amount of Rs 25,000 per month.

• Large employers who implement net addition to employment should be bestowed the Gold status as “Champion employers” across the government ecosystem.

• As per the EPFO records, growth in ‘Expert services’, i.e. Staffing, security, and facility management services are creating nearly 40 percent of the total new formal jobs. These organizations and industries need an Industry status. Today, this industry of manpower services would be one of the largest contributors to GST as well, besides social security coverage to all their employed talent at entry levels.

• The new Social Security Code offers protection for gig and platform workers, who, given the incoming third wave are increasingly being sought after. However, their implementation is key, and the government needs to expedite the utilisation of said funds to ensure maximum benefit for workers.

• Accommodations for employees who Work From Home: As the COVID-19 pandemic and subsequent protocols have created an environment in which employees are today working from anywhere—provision should be made to supplement for additional expenses that are incurred while working from home, such as electrical expenses, internet and connectivity expenses, office furniture as well as a one-time setup cost. To address this one-time setup cost, up to Rs 50,000 for the financial year can be provided and average support expenses up to Rs 5,000 per month or Rs 60,000 per annum can be allocated as tax-deductible expenses over and above Section 80C.

The ‘Great Resignation’ trend and consequent inflation of wages have highlighted talent shortages across sectors. This problem will only compound further as borders open and Indian talent is pursued by more developed countries.

Another critical aspect for consideration, especially for MSMEs, which traditionally hire around 90 percent of Indian labour, is their failure to enter the formal sector because of a lack of growth. Due to the same, employees are yet to receive the benefits of social security. To address this, the Ministry of MSME needs to take active steps to ensure sustainable growth at a minimum of 10 percent each year to eventually achieve large-scale development. The transition of the MSME sector from being in a minor category to entering the major leagues should be reinforced through wage and social security support by the government.

The writer is President - Workforce Management, Quess Corp. Views expressed are personal.

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Budget 2022: It’s time for govt to address employment generation, growth across various sectors
Budget 2022: It’s time for govt to address employment generation, growth across various sectors
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