‘EPFO data not the right gauge of employment level’

‘EPFO data not the right gauge of employment level’

News:

1. Recently, the EPFP revised down the net enrolment numbers for the period from Sep 2017 to May 2018.

Introduction:

2. EPFO is a good indicator for formal employment as well as changes in employment.

3. Recently, EPFO pointed out decline in net enrolment numbers.

4. However, decline does not imply a decrease in formal sector employment in the country.

5. The data provided by EPFO had certain drawbacks:

• According to a former member of the Planning Commission, there is lack of clarity in the methodology followed by EPFO.
• People atthe bottom of the pyramid get low wages and have been outside the EPFO net.
• It is not clear what happens when a person changes jobs .
• Enterprises may not have registered at all.
• The GST regime created a certain incentive for many small enterprises to register themselves on the GST network. No new job is being created.
• The estimate may include temporary employee whose contributions may not be continuous for the entire year.
• It does not make clear whether the additions are to the total number of members or to the number of active members.