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The number of fresh formal jobs created fell by 10 per cent in 2023 compared to the previous year, reflecting slowdown in the pace of formal job creation, a Business Standard analysis of the latest payroll data shows.
This is crucial as only the formal workforce enjoys social security benefits and is protected by labour laws.
Released by the Employees’ Provident Fund Organisation (EPFO), the latest data available till October 2023 shows that 9.06 million new subscribers joined the Employees’ Provident Fund (EPF) between January and October. The figure was 10.1 million in the corresponding period of the previous year.
The data also shows that the number of new young subscribers belonging to the 18-28 age group declined by 11 per cent to 5.97 million this year from 6.71 million in the corresponding period last year. This is crucial because subscribers in this age group are usually first-timers in the labour market, thus reflecting its robustness.
Rituparna Chakraborty, co-founder, TeamLease Services, said the services sector, which is technology and knowledge based, forms the bulk of the formal workforce. Companies in the sector tried to rationalise their workforce, leading to a slowdown in hirings this year as revenues declined and demand was muted.
“The current trend among firms to bring their employees back to office after the pandemic means a large number of women prefer to stay at home and engage in household chores. This is leading to a decline in their participation in the workforce,” added Chakraborty.
Besides this, the EPFO data also showed that the number of new women subscribers declined by 12 per cent to 2.35 million from 2.68 million last year.
Besides this, the EPFO data also showed that the number of new women subscribers declined by 12 per cent to 2.35 million from 2.68 million last year.
This deterioration in the quality of employment comes in the wake of the lowest unemployment rate recorded in the country in the past six years.
The recently released annual periodic labour force survey (PLFS) showed that the unemployment rate had dropped to a six-year low of 3.2 per cent in July-June 2022-23 from 4.1 per cent in July-June 2021-22.
Labour economist KR Shyam Sundar said the EPFO payroll data does not reflect a clear picture of employment generation in the country as it forms only a minuscule proportion of the labour force in the country.
“EPFO data only shows the extent of formalisation of the workforce, which in turn means as many people (under the EPFO) will be getting social security benefits. If there is a slowdown (in this) as well, that is a matter of concern. The PLFS data also shows that people categorising themselves as self-employed, which basically consists of agricultural labourers and unpaid household help, has gone up in recent years,” Sundar added.
The PLFS survey has shown that the share of people engaged in agriculture has increased sharply to 45.8 per cent in 2022-23 from 45.5 per cent in 2021-22. Also, the share of people engaged in manufacturing has gone down to 11.4 per cent from 11.6 per cent during the same period.
Meanwhile, a recent report by State Bank of India (SBI) claimed that India’s labour market, including female employment, is undergoing a structural transformation. It said there is self-entrepreneurship in “all echelons” with higher educational attainment and access to formal credit with MUDRA Yojana and PMSVANidhi emerging as key enablers.
