ILO Praises India’s Employment-Linked Incentive Scheme for Boosting Youth Jobs, Formal Workforce

The International Labour Organization (ILO) has lauded India’s newly approved Employment-Linked Incentive (ELI) Scheme, calling it a “notable policy development” to strengthen youth employment and formal workforce participation.
In a statement on X (formerly Twitter), the ILO India office said, “ILO’s global evidence suggests that Active Labour Market Policies (ALMP), if designed appropriately, can improve youth employment outcomes. India’s ELI scheme is a notable policy development in this direction.”

On Tuesday, the Union Cabinet cleared the Employment-Linked Incentive Scheme to boost job creation, enhance employability, and extend social security across sectors, with a special focus on manufacturing.
The ELI Scheme, announced in the Union Budget 2024–25 as part of the Prime Minister’s package of five employment and skilling initiatives, has a total budget outlay of ₹99,446 crore. It aims to create over 35 million jobs over two years, with 19.2 million expected to be first-time workforce entrants.

The scheme is divided into two parts. Part A targets first-time employees registered with EPFO. Eligible workers earning up to ₹1 lakh monthly will receive incentives equivalent to one month’s EPF wage (up to ₹15,000), paid in two installments after six and twelve months of service, along with completing a financial literacy programme. A portion of this incentive will be placed in a fixed deposit to encourage savings.

Part B incentivizes employers to generate additional sustained employment. Employers will receive up to ₹3,000 per month for two years for each additional employee earning up to ₹1 lakh, with extended benefits for three and four years in the manufacturing sector. Establishments registered with EPFO must hire at least two new employees (for firms with fewer than 50 workers) or five new employees (for larger firms) on a sustained basis of at least six months.

All payments to employees under Part A will be disbursed via Direct Benefit Transfer using the Aadhar Bridge Payment System. Employers’ payments will be credited directly to their PAN-linked accounts. The government hopes the ELI Scheme will catalyse large-scale job creation, particularly in manufacturing, incentivise youth employment, and significantly expand social security coverage for millions of young workers in India.

“The winners will be those who can successfully navigate uncertainty and ambiguity,” Mahindra concludes. He expresses confidence that both India and Mahindra Group are well positioned not just to survive this era of upheaval, but to transform it into an era of sustainable, inclusive growth.

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