EPFO Payroll Data Reveals Sharp Fall In Formal Job Creation

By Dr. Gyan Pathak

The provisional payroll data of EPFO released in October 2022 reveals that formal job creation in August sharply dropped by 7 per cent compared to a month earlier in July, though the government press release preferred to claim that the organisation added 16.94 lakh net members, which was an increase of 14.40 per cent as compared to the corresponding month during last year in 2021.

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Modi government’s claim was aimed shrewdly to veil the present ground realities in the labour market in which formal salaried jobs with certain level of social security is diminishing. The companies in organised sector have increasingly been cutting jobs and resorting to outsourcing, which is also reflected in the latest EPFO data. The government’s comparison show increase because of the low employment level last year when numerous workplaces were just closed or under strict containment measures imposed during second wave of the COVID-19 pandemic. August 2021 was the time when the market has just started recovering.

The EPFO data shows that net job addition in August 2022 declined to 16.94 lakh from 18.2 lakh in July, while it stood at 18.3 lakh in June. It means sharp fall in formal job creation in the third consecutive month since June. It is in contrast with Modi government’s claim that they are working hard for quality regular and formal job creation in the country. It was also the month of June when the PM Modi has announced that they would give job to 10 lakh people in government sector in 18 months. By October this month they have distributed 75,000 jobs in a “Rojgar Mela” recently while formal job creation declined sharply month after month.

Of the total 16.94 lakh members added during August 2022, the EPFO data shows, that around 9.87 lakh new members have come under the ambit of EPFO for the first time. Out of 9.87 lakh new members added, approximately only 58.32% are from the age-group of 18-25 years of age. This age-group signifies a crucial stage for an individual’s potential in terms of earning capacity and joining organized workforce in large numbers following their education.

The data shows that during the month, approximately 7.07 lakh net members exited but rejoined EPFO by changing their jobs within the establishments covered by EPFO and opted to transfer their funds from previous PF account to the current account instead of submitting claims for final settlement. This may be attributed to various e-initiatives taken by EPFO for seamless and uninterrupted service delivery. However, the exit of such a large number of regular employees is a matter of concern, since it underscores the continued volatility in the labour market.

Gender-wise analysis of payroll data indicates that enrolment of net female members has been only 3.63 lakh in August, 2022.Year-on-year comparison of enrolment data shows that net membership of females in organized workforce has increased by22.60% in August, 2022 comparing with the net female membership during previous year in August, 2021. However, the level of female participation is still very low in comparison to male participation in the workforce. Moreover, comparison with last year is misleading, since that was the time of the second wave of the pandemic.

State-wise payroll figures highlights that month-on-month growing trend in net member addition was observed in states of Uttar Pradesh, West Bengal, Odisha, Jharkhand, Bihar etc. During the month, the states of Maharashtra, Karnataka, Tamil Nadu, Haryana, Gujarat and Delhi continue to remain in lead by adding approximately 11.25 lakh net members during the month, which is 66.44% of total net payroll addition across all age groups. The data show that labour market recovery concentrated in only few states of the country while the majority are still waiting for formal sector jobs availability.

The classification of industry-wise payroll data indicates that mainly two categories i.e. ‘Expert services’ (consisting of manpower agencies, private security agencies and small contractors etc.) and ‘Trading-Commercial establishments’ constitute47.03% of total member addition during the month. Comparing industry-wise data with that of previous month, higher enrolments have been noticed in industries namely, ‘Electrical, Mechanical or General Engineering Products’, ‘Electronic Media Companies in Private Sector’, ‘University’, ‘Financing Establishment’ etc. It also indicates uneven sectorwise recovery, in which most of the sectors are lagging behind.

The data from Employees’ State Insurance Corporation (ESIC) also show similar falling trend in formal jobs. In August 2022, only 1.46 lakh subscribers were added under this scheme compared to 1.59 lakh in July. It was a decline of 8 per cent in a month. In June, there was an addition of 1.56 lakh and in May it was 1.51.

There was also decline in the new National Pension Scheme (NPS). In August new additions were 65,543 as against 66,014 in July.

The decline in formal sector job creation despite the economic recovery shows that the economic recovery is not working for the workforce, and the present conditions in the labour market is further pushing informalisation of jobs, which are mostly vulnerable. October is ending with an unemployment rate of about 8 per cent, as against 6.43 per cent in September according to CMIE data.

It indicates tough time ahead for job seekers in general, and formal job seekers in particular. Labour market metrics in October is significantly poorer than in September. LPR remains under 40 per cent and an employment rate in the range of 35-36 per cent. There is no sign of improvement in the labour market despite the RBI’s claim of accelerated economic recovery in coming months, since such a growth creates wealth but not enough jobs. India urgently needs a course correction. (IPA Service)

Related article:EPFO Payroll Data Reveals A Slow Pace Of Formalisation Of Labour

 

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Also published on Medium.