Fresh formal job creation dips to 7-month low in October, shows EPFO data

But EPFO data shows share of youngsters and women as part of formal workforce marginally up

The fresh formal job creation slowed to a seven-month low in October, signalling a downturn in the labour market. The number of new monthly subscribers under the Employees’ Provident Fund (EPF) declined by 16.7 per cent to 772,084 in October from 926,934 in September, according to the latest payroll data released by the Employees’ Provident Fund Organisation (EPFO) on Wednesday.
 

Earlier in March this year, 757,792 subscribers had joined the EPF.
 

This data is crucial as only the formal workforce enjoys social security benefits and is protected by labour laws.
 

Of the 772,084 new EPF subscribers in October, the share of young people belonging to the 18-28 age group marginally increased to 68.7 per cent (530,884) in October from 68.5 per cent in the previous month. This is crucial because subscribers in this age group are usually first-timers in the labour market, thus reflecting its robustness. However, the share of subscribers belonging to 'more than 35' age group declined to 15.9 per cent from 16.1 per cent during the same time period.
 

Besides, the share of women also increased marginally to 26.4 per cent (204,408) in October as compared to 25.2 per cent in September.
 

Meanwhile, the net payroll additions — calculated by taking into account the number of new subscribers, the number of exits, and the return of old subscribers — increased by 1 per cent to 1.53 million in October from 1.51 million in September. 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 reliability than net additions.

 

The stagnation in net payroll additions was due to a decline in the number of people who exited the EPFO but rejoined it during the month. The data showed that nearly 1.11 million members exited and rejoined EPFO, as compared to 1.28 million in September. These members are the ones who opted to transfer their accumulations instead of applying for final settlement, thus extending their social security protection with the social security organisation.
 

Rituparna Chakraborty, co-founder of TeamLease Services says the big corporate houses and firms are trying to rationalise their workforce as they battle declining revenues, inefficiencies in workforce and muted demand.
 

“Hirings in the technology and knowledge sector have been muted this year and these sectors form a bulk of the formal workforce in India,” she added.
 

According to the Centre for Monitoring Indian Economy (CMIE), which conducts its own Consumer Pyramids Household Survey (CPHS), the labour markets fared poorly in October, as the unemployment rate rose to 10.09 per cent in October from 7.09 per cent in September, aided by a sharp jump in rural unemployment rate to 10.82 per cent from 6.2 per cent.
 

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 (NSO) has been bringing out employment-related statistics in the formal sector, sharing data from September 2017 onwards, using information on the number of subscribers under the EPF Scheme, Employees’ State Insurance Scheme, and the National Pension System.