EPFO numbers up, but social-security measures remain stuck in the past

The data released this week showed that the Employees’ Provident Fund Organisation (EPFO) marked a significant milestone in May 2025, recording the highest net addition of members in any month since the launch of its data tracking. Of the two million new net subscribers, around 0.94 million were first-time ones, an increase of 11.04 per cent over April 2025. The increase indicates formalisation in the job market. Further, a major driver behind this surge was the pronounced participation of young workers. The 18-25 age group accounted for 59 per cent of all new EPFO members in May. This demographic indicator suggests expanding formal-sector opportunities for first-time job seekers. Equally notable was the uptick in female participation. The continued rise in female EPFO membership shows a broader shift towards a more inclusive and diverse workforce. Another encouraging sign stemming from the data was the significant number of “rejoined” members. These are employees who, having exited the EPFO system (often due to job changes or career breaks), have returned to the fold. Their return not only signals increasing job mobility in the economy but also underscores a growing awareness of the importance of retaining social-security benefits across career transitions. It suggests that workers are now better informed and more proactive in securing their financial futures. 

While the absolute increase in formal-sector employment looks encouraging, the additions are not on a scale that would make any significant change in overall employment conditions. The data, for example, shows that about 80 per cent of Indian workers toil in the informal sector, where EPFO coverage is scant. In terms of social-security coverage, although there are government initiatives such as the Pradhan Mantri Shram Yogi Maan-Dhan (PM-SYM), a voluntary pension scheme targeting unorganised workers, there has recently been a decline in government contribution. Also, a significant portion of the workforce has irregular earnings and insufficient documentation, and finds it difficult to navigate the formal processes required for enrolment. These challenges have been highlighted in the 2025 Impact and Policy Research Institute policy update. 

Even in the formal sector, shortcomings continue to hamper the reach and effectiveness of the EPFO. The wage threshold for compulsory EPFO and Employees’ Pension Scheme (EPS-95) coverage has remained fixed at ₹15,000 per month since 2014, which limits contributions and pension calculations to this ceiling. This wage cap excludes an increasing number of workers earning above this limit from receiving full pension benefits, thus limiting its scope. For many pensioners, the minimum EPFO pension remains ₹1,000 per month, an amount that is grossly inadequate to meet basic living expenses. Thus, while the addition of EPFO subscribers in May 2025 is a positive sign of formalisation and the expansion of the social-security net, addressing coverage gaps, updating wage ceilings, ensuring pension adequacy, and simplifying administration are essential to improve outcomes for the Indian workforce. At a broader policy level, India must begin preparing for its demographic transition by implementing effective social-security schemes, and the EPFO can play a crucial part in this effort.