Poorer states drove formal job creation in January-June period: EPFO data

The growth in formal job creation in the first six months of 2023 was led by poorer states such as Assam (33 per cent), Uttarakhand (28.6 per cent), Bihar (21.1 per cent), and Jharkhand (20.5 per cent). The trend also suggests a more rapid transition of the informal workforce towards formal employment.

The rate of net payroll addition increased in 21 of 24 major states and Union Territories, leading to higher job creation and formalisation of the workforce in the first six months of 2023, compared to the corresponding period last year, according to an analysis of the Employee Provident Fund Organisation (EPFO) payroll data. 
 

 

Net payroll addition is calculated by taking into account the number of new subscribers, the number of exits and the return of old subscribers. EPFO doesn’t release separate data for new subscribers for individual states.
 

At  the national level, the total net payroll grew by 9.5 per cent to 8.31million in 2023 from 7.6 million in the same period last year. Among Union Territories, Chandigarh saw the highest increase (23 per cent) in net payroll additions, followed by Delhi (21.5 per cent). The increase in net payroll addition implied that apart from the new jobs being created in the economy, existing informal jobs were also turning formal, said Rituparna Chakraborty, co-founder, Teamlease Services. 
 

“With initiatives like Aatmanirbhar Bharat Rojgar Yojana, the government has also put increased focus on bringing informal workers under the social security organisation’s fold. As a result, traditionally less industrial states in central and eastern India are showing higher growth,” she added.
 

KR Shyam Sundar, visiting professor, Impact and Policy Research Institute says that the net payroll addition is not an accurate metric to gauge job creation and is more of an indicator of formalisation of the workforce. “Fresh formal employment is only one part of net payroll addition,” said Sundar.
 

“The [9.5 per cent] increase in the net payroll basically implies that so many more people are now part of the EPFO and it cannot be taken to simply mean that this many new jobs were created in the economy. Also, the government is undertaking special drives in central and eastern India to bring informal workers under the EPFO’s fold, which might be the reason for [this] increase,” he added.
 

Besides, Assam also saw the highest increase (28 per cent) in net payroll addition of youth subscribers (18-28 age group), who are usually first timers in the job market, followed by Bihar (25.8 per cent), and Uttarakhand (22.4 per cent).
 

Meanwhile, Karnataka (-8.3 per cent), Andhra Pradesh (-0.9 per cent), and Jammu & Kashmir (-2.4 per cent) saw net payroll addition decline in the same time period. However, in absolute terms, Maharashtra added the highest members (130,439) under net payroll additions, followed by Delhi (118,076), Gujarat (86,402), and Tamil Nadu (71,779).  \