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3.46 million people joined formal workforce in 6 months: Govt

Livemint:  April 26, 2018

New Delhi: India added some 3.46 million people to the formal workforce between September last year and February 2018, the government said on Wednesday, in a measure of jobs being created in the non-farm sector.

The numbers were released by extrapolating data from the Employees Provident Fund Organization (EPFO) and National Pension System (NPS), the state- run social security organizations. They however, do not give a clear picture on whether these are new jobs or a result of formalization of existing employment due to factors such as implementation of goods and services tax (GST).

Experts said that while the new data for the first time organizes the payroll system, it does not necessarily give a clean picture of the jobs scenario, and claimed that there may be huge duplication of data.

Their claim comes from the fact that during the same period Employees State Insurance Corporation (ESIC) saw a decrease in the total number of contributors from 29.26 million in September 2017 to 27 million in February 2018. This drop is ascribed to several reasons, including job losses.

As per the new data, EPFO registered some 3.11 million new contributors and NPS saw the addition of some 352,000 new tier one NPS accounts by central and state government employees indicating how jobs were being created in the non-farm sector.

Of the total 3.11 million additions under EPFO, 604,557 employees were added to the state-run social security fund in January and 472,075 in February. EPFO is considered as a key source of jobs data.

There has been a good growth of jobs over the last six months, said Soumya Kanti Ghosh, group chief economic adviser of State Bank of India (SBI), who had predicted through a survey earlier in January that the country will add 7 million jobs in 2017-18. He said a formal payroll system unveiled by the government is a requirement to understand the job market better.

However, some experts said that EPFO is an unreliable source of data for new jobs as it has several limitations. Its data has a potential duplication with ESIC data, and cannot be taken on face value. For instance, when a company has 19 employees it does not come under EPFO but as soon as it adds one workers, all 20 come under EPFO making such numbers unreliable.

Economist Himanshu, an associate professor at Jawaharlal Nehru University in New Delhi, said that data released on Wednesday is unreliable.

“EPFO data is a bit dicey, and ESIC gross contributors number has shown a sizable fall. The new numbers may simply be because organisations and establishments got formalized post GST implementation,” said Himanshu, who tracks the jobs space closely.

He said EPFO’s gross number of 3.11 million can not be construed as new jobs as it has considered addition of contributors from all age brackets from below 18 to above 35. He said only employees added between 18 and 25 should be the only criteria for calculating new jobs. “What about the perceived job loses in the informal sector, which cater to 90% of the labour market,” he asked.

Ghosh of SBI in a quick summary of the new jobs data too has taken 18-25 age bracket to show new payrolls, which he has calculated as 1.85 million not 3.11 million as shown in the EPFO data.

Manish Sabharwal, chairman of staffing company Teamlease Services said what the government has done is to move from survey data to admin data, allowing economists to interpret the numbers. “People may question whether these are new jobs or not, but these are certainly formal jobs. India right now does not have a job problem but a wage problem. Formalization of jobs that’s why is good news for the employees and the economy,” said Sabharwal, also a member of a government appointed employment task-force.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.