New formal job creation at 22-month low in March, shows EPFO data

Fresh monthly formal job creation declined sequentially for the fourth straight month in March to a 22-month low, thus signaling pressure in the employment market. These are the findings from the latest payroll data released by the Employee Provident Fund Organisation (EPFO) on Saturday.

The number of new monthly subscribers under the Employees’ Provident Fund (EPF) declined by 0.8 per cent to 757,792 in March from 764,106 in February. 

This is the lowest number of new subscribers joining the social security organization, since May 2021, when only 649,618 new subscribers had subscribed to it.

Earlier between April and September in FY23, the social security organisation has seen more than one million monthly new subscribers, touching a high of 1,159,350 in July. However, in the second half of the financial year, new monthly subscribers struggled to breach the million mark even once.  

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 9.1 per cent to 1.34 million in March from 1.21 million in February.

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 March, 508,690 subscribers are in the 18-28 age group, up by 0.96 per cent from 503,813 subscribers in February. 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.

Of new young subscribers, the share of women, however, fell by 2.7 per cent to 119,033 in March from 122,395 in February. 

According to the data released by the Centre for Monitoring Indian Economy (CMIE), which conducts its own surveys, the unemployment rate continued its upward trajectory in March to climb to 7.8 per cent from 7.5 per cent in February, as the unemployment rate in urban areas was at 8.4 per cent while in the rural areas it was at 7.5 per cent.

The CMIE survey also showed that the effect of an increased unemployment rate got compounded by the simultaneous fall in the labour force participation rate, which fell from 39.9 per cent to 39.8 per cent in March, showing distress in job markets. 

The monthly data released by 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 has been bringing out employment-related statistics in the formal sector, covering the period from September 2017 onwards, using information on the number of subscribers under three major schemes, namely the Employees’ Provident Fund Scheme, Employees’ State Insurance Scheme (ESIC), and the National Pension System.