Formal sector new hirings drops 20.8% in Oct, EPF additions hit 7-month low

The monthly fresh formal hiring saw a sharp decline in October, signalling a downturn in the formal labour market during the month.

 

In October, the number of new monthly subscribers under the Employees’ Provident Fund (EPF) decreased by 20.8 per cent month-on-month (M-o-M) to 750,000. This is a seven-month low from 947,000 in September, according to the latest monthly payroll data released by the Employees’ Provident Fund Organisation (EPFO) on Wednesday.

 

The EPFO data is considered crucial as it reflects the state of the formal labour market and only the formal workforce enjoys social security benefits and is protected by labour laws.

 

 

Of the 750,000 new EPF subscribers in October, the share of young people belonging to the 18-25 age group also declined to 58.5 per cent (438,700) from 59.94 per cent (567,700) in September.

 

This is crucial because subscribers in this age group are usually first-timers in the labour market, thus reflecting its robustness.

 

Meanwhile, the share of women among the new subscribers rose to 27.9 per cent (209,000) from 26.1 per cent (247,000) during the preceding month. 

 

“The increase in female member additions is indicative of a broader shift towards a more inclusive and diverse workforce,” said the labour ministry in a statement. 

 

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 to the social security organisation — stood at 1.34 million in October, down by nearly 5 per cent from 1.41 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 is considered more reliable than net additions. 

 

“The payroll data highlights that about 1.3 million members exited and subsequently rejoined the EPFO. These members switched their jobs and re-joined the 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 added. 

 

According to Centre for Monitoring Indian Economy (CMIE), which conducts its own Consumer Pyramids Household Survey (CPHS), labour markets had fared badly in October. This is because the unemployment rate shot up sharply to 8.7 per cent from 7.8 per cent in September.