Dear
Madam :
You
may like my following blog which addresses the common problem faced by entire
world
With
regards,
hemen
parekh
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Incentivizing Employment ?
During
last budget, Shri Jaitley announced a scheme to incentivize
employers to increase employment
Under this scheme , Government would pay 8.33 % EPS , on behalf
of Employers , for NEW hires drawing a
monthly salary of Rs 15,000 or less , enabling employers to pass on this "
saved " amount to the said employee , thereby increasing his " take
home " salary
For an employee at exactly , Rs 15,000 pm salary , this would
amount to Rs 1250 pm or Rs 15,000 in a year ( like a one month bonus ! )
If ALL those NEW employees were to be
drawing Rs 15,000 pm , then the budget provision of Rs 1,000 cr would benefit some 666,000
persons
But , considering that many may be drawing a monthly salary of
less than Rs 15,000 , the number of beneficiaries could go up to ( say ) 1,000,000 ( 1 million against 12 million
persons entering job market each year ! )
But
implementation of this scheme is anything but simple !
MINT
( 22 Aug 2016 ) talks of the following problems facing the government :
# How to verify that Companies are simply sacking OLD employees and hiring NEW replacements to avail of the incentive ?
# To avoid any duplication
, the government will verify the number of people employed in a company through
the electronic challan-cum-returns ( ECR ) that companies file to submit PF
contributions online and UAN and PAN details to ascertain whether a person was
employed previously ( since no incentive in case of persons who have worked
elsewhere earlier, even for a short period ! )
# A govt officer said : " What we are trying to do is
creating a system where companies cannot MISUSE
govt
money . We are trying to put up a FOOL-PROOF system where ONLY FRESH JOB creations are incentivized "
# If a base employment number of a firm falls at any time
, the company will not be eligible for any incentives
# The government will pay the EPS contributions for a
period of 3 years, ONLY if a NEW RECRUIT
works with the company for at least as many years
Given
these complexities / hassle , what kind of Companies are likely to claim the
incentive ?
Certainly not the large / organized companies , even though they
have totally computerized PAYROLL SYSTEMS
! It would just not be worth the trouble !
But , small scale companies employing a few hundred persons -
and needing to hire 10 / 15 FRESHERS each year , may get tempted with this
scheme
Only to discover that it takes them hundreds of hours of
clerical effort to claim that incentive , since their payroll is manual !
I
would not be surprised if the Scheme ,
* manages to provide jobs to no more than 10,000 FRESHERS
* ends up distributing less than Rs 14 crore by way of incentives
* costs the government, Rs
50 crores by way of " administering / monitoring / distributing
" expenses !
Truth
may come out with a RTI application , this time next year !
I earnestly request Shri Arun
Jaitleyji / Shri Bandaru Dattatreyaji
/ Shri Prakash Javadekarji , to create
millions of FRESH jobs through implementation of my following suggestion ( sent
to them earlier through E Mail )
(
26 Feb 2014 )
--------------------------------------------------------------------------------------------------------------------------------
Here is my suggestion :
Set in motion , " INVERSION of JOB REDUCTION " regime , under
which ,
" The more jobs a
company creates , the less Corporate Tax it pays "
Example :
* Up to
employment of 100 persons ...............................30 %
* 101
- 500 persons....................................................
25 %
* 501 - 1000
persons ................................................... 20 %
* 1001 - 5000
persons .................................................. 15 %
* 5001 - 10,000
persons ................................................. 10 %
* Above 10,000
persons ................................................. 5
%
Let us celebrate those who
provide employment to large number of persons
Let us celebrate BIGNESS
Let us create hundreds of
WORLD SIZE corporations and
take on the World
On top of this ,
provide Additional Tax - Breaks
( Discounts ? ) to corporate as follows :
* Average Age of
Employees at 30 years....................... 1 %
* Ave age at 25
years................................................. 2 %
*
Ave age at 20 years ................................................. 3 %
Of course , very strict and transparent rules will need to be framed to compute :
> Number of Employees ( Only Permanent - not Probationers / Trainees / Apprentices )
> Average Age ( as on 31 March of Tax year )......etc
But , here is an important aspect of this ,
" Incentivize Job Creation " Scheme
Of course , very strict and transparent rules will need to be framed to compute :
> Number of Employees ( Only Permanent - not Probationers / Trainees / Apprentices )
> Average Age ( as on 31 March of Tax year )......etc
But , here is an important aspect of this ,
" Incentivize Job Creation " Scheme
Today's
labour laws make it extremely difficult - if not impossible - for employers to
layoff / retrench workmen , if demand for their products / services , shrinks
Hence , to take advantage of this Scheme , employers are unlikely to hire thousands of youth , if they cannot easily trim the workforce , to match the shrinking demand
So , an important corollary of this Scheme is to modify our existing Labour Laws to facilitate layoff / retrenchment , when situation so demands , while protecting the interests of the workmen concerned
Hence , to take advantage of this Scheme , employers are unlikely to hire thousands of youth , if they cannot easily trim the workforce , to match the shrinking demand
So , an important corollary of this Scheme is to modify our existing Labour Laws to facilitate layoff / retrenchment , when situation so demands , while protecting the interests of the workmen concerned
BENEFITS OF MY SUGGESTION :
*
Emphasize on TOTAL employment number and
not on " Additional Hire of only FRESHERS " , during a year
*
No linkage to types of employees , or amounts of salaries / wages ( whether
covered by EPS or not )
*
Only year-end ( 31 March ) Employment Numbers form the basis ( Just ONE figure )
*
No need for any BASE YEAR
*
No need for complicated " checks " for duplications
*
Involvement of just ONE government department , viz: Income Tax Department
*
No need for checking whether FRESHER worked for 3 years or not ( or had earlier
worked anywhere else )
* Companies from all around the World, would rush to
"set up shop" in India and close their operations elsewhere
To
know how simple it would be to implement my suggestion , read detailed
procedure in my following blog
( also
sent to the NDA ministers as email , on 01 June
2016 )
--------------------------------------------------------------------------------------------------------------------------------
25
August 2016
www.hemenparekh.in / blogs
--------------------------------------------------------------------------------------------------------------------------
with
regards,
hemen
parekh
Marol
, Mumbai , India
( M
) +91 - 98,67,55,08,08
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