New Delhi: Presenting the Union Budget 2018, finance minister Arun Jaitley on Thursday announced a reduction in the contribution that new women employees make to the provident fund, from 12% to 8%, to promote women’s participation in the labour force as well as increase their take-home pay.
“To incentivize employment of more women in the formal sector and to enable higher take-home wages, I propose to make amendments in the Employees Provident Fund (EPF) and Miscellaneous Provisions Act, 1952, to reduce women employees’ contribution to 8% for the first three years of their employment against the existing rate of 12% or 10% with no change in employers’ contribution,” Jaitley said in his budget speech.
Currently an employee contributes 12% of his or her basic salary as the statutory monthly contribution to EPF and a matching contribution is made by the employer. The budget announcement will mean that while employers’ contribution of 12% will continue, new women employees will be required to pay just 8% of their salary as EPF contribution.
Women’s labour force participation rate in India is below 25% as against 40% globally. Economists and industry veterans argue that improving female labour participation will help boost the economy.
Besides, the finance minister said the government will continue to “contribute 12% of the wages of new employees to the EPF for all sectors for the next three years.”
The EPF incentives, the government believes, will help in creation of new jobs, which is a pressing challenge for the central government ahead of the 2019 elections.