Fresh formal job creation declined for the second straight month in January, falling to a 20-month low, signalling pressure in the job market.
These are the findings of the latest payroll data released by the Employee Provident Fund Organisation (EPFO) on Monday.
The number of new monthly subscribers under the Employees’ Provident Fund (EPF) has declined by 7.5 per cent to 777,232 in January 2023 from 840,372 in December 2022.
This is the lowest number of new subscribers joining the EPF, since May 2021, when only 649,618 new members had subscribed to the fund.
Earlier in FY23, the number of new monthly subscribers had remained above the one-million mark for six consecutive months — that is, from April to September. It touched a high of 1,159,350 in July.
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 16 per cent to 1.48 million in January 2023. It was 1.28 million in December 2022.
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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 January, 515,710 are in the 18-28 age group, down by 7.2 per cent from 555,755 subscribers in December. 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.
Among the young subscribers, only 124,680 are women compared to 391,025 young males.
According to the data released by the Centre for Monitoring Indian Economy (CMIE), which conducts its own surveys, the unemployment rate fell in January 2023 from the December 2022 levels.
This is in both rural and urban areas but it didn’t translate into more people actually getting jobs.
“Past averages show that the unemployment rate usually falls in January because employment goes up. However, employment declined by 0.95 million in January. Interestingly, the number of unemployed persons declined sharply by 5.7 million in January which reflected in the lower unemployment rate. This is not because they found jobs. This is because the labour force shrank in January by 6.6 million. And, the fall in rate in January is a correction from the larger-than-normal increase (8.1 million) in jobs seen in December,” it said in a statement.
Rituparna Chakraborty, co-founder, TeamLease Services, said the continuing decline in employment since October is due to rationalisation of human resources by firms. This follows the culmination of the pent-up demand and the long festive season.
“Going forward, it is unlikely that firms will retain a large workforce for the remainder of the fiscal year. It is only in the next fiscal that they may again see an increase in their workforce,” she added.
The monthly data released by EPFO is part of the government’s efforts 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 of September 2017 onwards.
It is doing this by 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.