New formal job creation in February at 21-month low, shows EPFO data

Fresh formal job creation declined sequentially for a third straight month in February to fall to a 21-month low, signaling pressure in the employment market. These are the findings from the latest payroll data released by the Employee Provident Fund Organisation (EPFO) on Thursday.

The number of new monthly subscribers under the Employees’ Provident Fund (EPF) declined 10 per cent sequentially to 738,052 in February from 819,659 in January.

This is the lowest number of new subscribers joining the EPF, since May 2021, when only 649,618 new subscribers had subscribed to the fund.

In FY23, the number of new monthly subscribers had remained above 1 million for a six consecutive month from April to September, touching a high of 1.16 million in July, 2022.

The net payroll addition, which is calculated taking into account the number of new subscribers, the number of exits, and the return of old subscribers, however, increased by 7.5 per cent sequentially to 1.39 million in February from 1.29 million in January.

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

Of the new EPF subscribers added in February, 488,206 are in the 18-28 age group, down by 9.6 per cent from 540,021 in January. This is crucial because subscribers in the 18-28 age group are usually first-timers in the labour market, and this metric reflects its robustness.

According to the data released by the Centre for Monitoring Indian Economy (CMIE), which conducts its own surveys, India’s unemployment rate rose to a three-month high in March at 7.8 per cent from 7.45 per cent in February.

Both urban (8.4 per cent) and rural (7.5 per cent) unemployment rate increased in March from 7.9 per cent and 7.2 per cent in February.

On Wednesday, the United Nations Population Fund said India was set to become the most populous country in the world with 1.429 billion people by the middle of 2023, surpassing China at 1.426 billion. 

With close to 50 per cent of its population below the age of 25, India has a time-bound opportunity to benefit from the demographic dividend, Andrea Wojnar, representative of UNFPA India, said.

“As the national fertility rate falls below 2.1 (the replacement level), India is at a unique historical opportunity, witnessing a great demographic transition as a youthful nation, with a notable demographic diversity across states to convert the potential demographic dividend into economic benefits through additional investments in health, education, and quality jobs for young people — including targeted investments in women and girls,” she said.