Fresh formal job creation slows to 5-month low in August, shows EPFO data

Formal job creation saw a slowdown in August, signalling a downturn in the labour markets.
 

The number of new monthly subscribers under the Employees’ Provident Fund (EPF) declined by 13.3 per cent to 925,984 in August from 1.06 million in July, shows the latest payroll data released by the Employees’ Provident Fund Organisation (EPFO) on Friday.
 

Of the 925,984, the share of women declined to 26.3 per cent (243,510) in August from 26.7 per cent (285,424) in July.

However, the share of young subscribers belonging to the 18-28 age group stood at 68.3 per cent (632,331) in August, slightly up from the 67.97 per cent (726,415) in July.
 

This is crucial because subscribers in this age group are usually first-timers in the labour market, thus reflecting its robustness.

Besides, the net payroll addition — calculated by taking into account the number of new subscribers, the number of exits, and the return of old subscribers — increased slightly by 0.8 per cent to 1.69 million in August from 1.68 million in July.
 

The net monthly payroll numbers are, however, provisional in nature and are often revised sharply the following month. That is why the new EPF subscriber figure has greater certitude than net additions.

 

Rituparna Chakraborty, co-founder of TeamLease Services, said the initial momentum generated in the labour markets at the beginning of the financial year when firms usually prepared a holistic view of their workforce requirements lost momentum as the monsoon took hold and more people found work in agriculture.
 

“As the long festival season is about to start, the labour markets are expected to see momentum generated again because there will be a huge demand in the retail and consumption sectors. This will surely generate more new formal jobs,” she added.
 

According to the Centre for Monitoring Indian Economy (CMIE), which conducts its own survey, the labour markets in August had seen deterioration as the unemployment rate in India climbed to 8.1 per cent in August from 7.9 per cent in July amid a sharp increase in labour force participation and the inability of the economy to generate jobs proportionately.
 

“(The labour) participation rate (LPR) among people aged 15 years and above increased to 41.2 per cent in August, compared to 39.3 per cent in the preceding month,” it said in a statement.
 

The monthly data released by the EPFO is part of the government’s effort to track formal-sector employment by using payrolls as an instrument.
 

Since April 2018, the National Statistical Office has been bringing out employment-related statistics in the formal sector, covering the period September 2017 onwards, using information on the number of subscribers under the Employees’ Provident Fund Scheme, Employees’ State Insurance Scheme, and the National Pension System.
 

An industry-wise analysis shows that the maximum membership is in trading-commercial establishments, building and construction, engineer-engineering contractors, textiles, etc.
 

“Of the total net membership, around 39.87 per cent addition is from expert services, [which] consists of manpower suppliers, normal contractors, security services, miscellaneous activities etc,” said the labour ministry in a statement.