What is the issue?
- The Budget proposal to reduce the provident fund (PF) contribution of women employees is a welcome move.
- But the real need is addressing the employer's concerns in hiring women employees, to bring in gender balance in workplace.
What is the budget proposal?
- The Budget proposes to reduce the provident fund (PF) contribution of women employees to 8% from the standard 12%.
- This will be for the first three years.
- The move comes without any change in the employer’s contribution.
- In general, both the employer and the employee pay an equal contribution towards provident fund.
What are the shortfalls in the approach?
- As stated in the Budget speech, PF relief is targeted at improving women’s participation in the workforce.
- However, the reasons for the steady fall in female workforce participation rates are varied.
- So, how far will the move appreciably effect gender balance in workplace is uncertain.
- Workplace - Absence of a conducive workplace environment for women is a major reason for low participation.
- This ranges from providing the infrastructural facilities to protection from sexual harassment.
- This prime issue is little to be addressed by PF contribution.
- Maternity leave - Government recently expanded the provision for paid maternity leave from 12 weeks to 26 weeks.
- It also mandated the provision of crèche facilities in firms employing 50 or more employees.
- Multinational IT subsidiaries offer these facilities.
- State-owned entities also follow the mandates as they have the wherewithal to sustain such costs and are bound to follow the law.
- However, for many Indian companies, costs of meeting out these regulations may be burdensome.
- This acts as strong disincentive for hiring more women.
- MSME - This is particularly true with the medium and small scale (MSME) sectors.
- MSMEs remain the critical employment generators in India.
- Notably, many remain outside the formal employment arena.
- Embedding the incentive only in the organised sector would thus produce only a little change.
- As, this account only for a minuscule proportion of employment in India.
What should be done?
- Incentivising women to join the workforce addresses only a part of the problem.
- When it comes to gender balance in the workplace, the issue at stake is about incentivising companies.
- This is essential in the first place to encourage them to hire more women.
- The monetary and non-monetary costs on companies for the payment of maternity and childcare benefits must be recognised.
- The government can thus consider offering subsidies to minimise this burden.
- Offering tax breaks for the companies on maternity benefits and expenditure on crèche facilities is also another viable option.
Source: Business Standard
