The contours of India’s ‘formal jobs’ crisis

Source– The post is based on the article “The contours of India’s ‘formal jobs’ crisis” published in the “The Hindu” on 3rd August 2023.

Syllabus: GS3- Indian economy and employment

Relevance: Statistics on employment

News– The article explains the EPF numbers on employment in India. It also explains the issues related to employment and employment statistics in India.

What is the employment scenario in India as revealed by EPFO data?

The monthly enrolment data of the Employees’ Provident Fund (EPF) typically indicates a rise in contributors.

EPFO annual reports talk about the regular contributors. Regular contributors refer to employees who are enrolled in the EPF scheme and consistently make PF contributions throughout the year.

EPF Organization’s annual reports indicate that the number of regular contributors to the scheme has shown little to no growth. It has even declined in recent years in some stances.

Between 2012 and 2022, the count of regular contributors witnessed a substantial increase from 30.9 million to 46.3 million.

However, the growth in the number of regular contributors has significantly slowed down over the past five years. From 2017 to 2022, the count of regular contributors only marginally increased from 45.11 million to 46.33 million.

This growth occurred during a period when overall EPF enrolments escalated from 210.8 million to 277.4 million.

What can be inferred from EPFO data on employment?

The number of individuals enrolled in the EPF is generally expected to be higher than the count of regular contributors due to issues like duplication and outdated membership data.

However, it is concerning that in recent times, the gap between these two figures has been widening.

EPF data suggests that over the past five years, there has been a mere net creation of 1.2 million formal jobs.

The divergence between EPF enrolments and regular contributors implies that a significant portion of EPF enrolments is associated with jobs of a temporary, subcontracted, or casual nature.

What are challenges related to employment in India?

India is witnessing a growth in employment opportunities, but most of these jobs are not formal, stable, or well-paid.

Numerous highly qualified young individuals compete for a limited number of public or private sector job openings.

The stagnation in formal employment can partly be attributed to the impact of the pandemic. The COVID-19 crisis led to a decline in the number of EPF contributors,

What are issues related to employment statistics in India?

Earlier , the EPFO used to release monthly reports on regular contributors. However, when the media highlighted the decline in EPF contributors, the EPFO disputed its own data and ceased to publish the monthly data series.

The Indian government has shown neglect towards other potential sources of formal employment and labor data.

For instance, the Directorate General of Employment and Training (DGET) used to collect employment market information, but it hasn’t been published since 2013.

Historically, DGET data served as the original source of formal sector payroll employment data in India since the 1950s. The Reserve Bank of India relied on it for formal sector employment numbers and related calculations.