Fresh formal job creation surges to three-month high in December 2023

The labour market recovered slightly in December as fresh formal job creation touched a three-month high, latest payroll data released by the Employee Provident Fund Organisation (EPFO) on Tuesday shows.

In December 2023, the number of new monthly subscribers under the Employees’ Provident Fund (EPF) increased by nearly 10 per cent to 840,584. It was 762,513 in November, the data shows. 

Earlier in September 2023, 950,527 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 total 840,584 new EPF subscribers in December, the share of young people belonging to the 18-28 age group slightly increased to 67.17 per cent (564,630) from 67.02 per cent (511,093) 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 women among the total new subscribers fell to 24.8 per cent (208,685) during the month compared to 26.3 per cent (200,603) in the previous month.

Meanwhile, net payroll additions — calculated by taking into account the number of new subscribers, the number of subscribers that exited, and the return of old subscribers — increased 41 per cent to 1.56 million in December from 1.1 million in November.

Net monthly payroll numbers are, however, provisional in nature and often revised sharply the following month. That is why new EPF subscribers have greater reliability than net additions.

“The payroll data highlights that approximately 1.2 million members exited and subsequently rejoined EPFO. This figure is the highest recorded in the past five months. These members switched their jobs and re-joined establishments covered under the ambit of EPFO. They opted to transfer their accumulations instead of applying for final settlement, thus safeguarding long-term financial well-being and extending their social security protection,” the labour ministry said in a statement. 

According to the Centre for Monitoring Indian Economy (CMIE), which conducts its own Consumer Pyramids Household Survey (CPHS), the labour markets fared slightly better in December. This comes as the unemployment rate fell during the month to 8.7 per cent from 8.9 per cent in November. It is on the back of decline in joblessness in rural areas.  

During December, the rural unemployment rate fell to 7.97 per cent from 8.68 per cent in November. Urban unemployment rate increased to 10.08 per cent from 9.31 per cent in the previous month.