Definition:

• Employment Linked Incentive (ELI) is a proposed policy framework aimed at directly incentivizing companies based on the number of new jobs they create. 
• Unlike traditional incentive schemes like Production Linked Incentives (PLI), which reward companies based on their production output, ELI focuses purely on employment. 
• The idea is to provide financial incentives to companies for each new payroll job they add, irrespective of the industry they belong to or the nature of their production. 

Benefits of ELI:

• Direct Focus on Job Creation: ELI directly targets the creation of new jobs, encouraging companies to hire more employees. This ensures that the benefits of the incentives are felt immediately in terms of employment numbers.
• Sector independent: Unlike PLI, which can be specific to certain industries, ELI does not discriminate between sectors. This flexibility ensures that job creation incentives are available across all industries, avoiding the pitfalls of misallocation or cronyism associated with picking specific sectors for incentives.
• Adaptation to Modern Economic Realities: ELI recognizes the changing nature of work and the economy, particularly in light of automation and technology-driven productivity gains. By focusing on job creation rather than production, it adapts to an economic environment where higher productivity does not necessarily mean more jobs.
• Prevention of Wage Manipulation: The incentives under ELI are proposed to be standard per new employee, not tied to the wage level. This design prevents companies from manipulating employee wages to maximise their incentives and ensures fair treatment across different pay levels.
• Utilisation of Existing Infrastructure: ELI can be implemented using India’s existing Aadhaar-based payroll and bank-account infrastructure. This setup helps prevent issues like duplicate entries or the reporting of non-existent employees (ghost employees) to claim incentives.
• Potential for Social Stability: By creating more jobs, ELI helps address the critical issue of unemployment, which is essential for social harmony and stability. It can mitigate the social and economic impacts of jobless growth, such as increased inequality and social unrest.
• International Precedents: Similar programs in countries like the US, UK, Germany, and Australia provide a precedent for the effectiveness of employment incentives. These programs have been used to support job creation and reduce unemployment, suggesting that ELI could be a viable policy tool in India.

Conclusion:

• ELI represents a shift from traditional growth metrics to prioritising employment. It aims to address the limitations of policies like PLI by directly targeting job creation, ensuring a broader distribution of economic benefits across the workforce.

Source: 

https://indianexpress.com/article/opinion/columns/to-measure-economic-growth-india-must-look-at-jobs-not-products-9469461/