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Maharashtra, Gujarat, Tamil Nadu churn out over half of formal jobs

Business Standard:  May 22, 2018

New Delhi: More than half of the formal jobs created in India or informal jobs formalised in India are in three leading industrialised states of Maharashtra, Tamil Nadu and Gujarat, latest Employees' Provident Fund Organisation (EPFO) data for seven months show.

However, job creation in the National Capital Region, which includes Gurugram and Noida in addition to Delhi, would possibly be comparable to the top three. Job creation in these regions has been included in the respective states in which they fall, namely Haryana and Uttar Pradesh.

The data was released for the first time for 20 states and two Union territories, namely Delhi and Chandigarh. Data for Telangana was subsumed under Andhra Pradesh. The first set of data released last month did not have state-wise and industry-wise data.

According to experts, while it was a known fact that few states provided the most jobs in India, this data substantiated it. “It seems logical since these top three states are progressive and among the fastest growing as well. They are there in every sector, be it manufacturing, services or construction,” said Madan Sabnavis, chief economist at CARE Ratings.

As many as 3.93 million jobs were added in the formal sector from September 2017 to March 2018.

However, while the number of jobs added was higher in March when compared to February, it was lower than those added in January and November.

There was net addition of 613,134 jobs in March, some four per cent higher than 589,034 in February. However, 614,369 jobs were generated in January and 632,280 in November.

Of the 3.93 million formal jobs, about 817,000 were generated in Maharashtra, 465,000 in Tamil Nadu and 393,000 in Gujarat. The remaining were created in 17 states, Delhi and Chandigarh.

Bucking the trend where Maharashtra was the top job creator in all age brackets, the highest formalisation in the ‘less than 18’ age group happened in Tamil Nadu.

The payroll count is essentially the difference between the number of workers who joined and exited from the EPFO’s fold.

On a pro-rata basis, this would mean that 6.74 million jobs were created in 2017-18. This would, however, be a bit of a generalisation since the job data is very erratic.

For instance, 579,089 jobs were generated in September, but just 371,692 were added in the next month.

The highest number of jobs were created in the age group of 18-21 at 1.29 million, followed by 22-25 years of age at 1.12 million during these seven months.

The payroll database by the EPFO covers firms employing more than 20 workers, which are required to mandatorily make provident fund contributions, at present. In India, 99.35 per cent of the firms employ less than 20 workers, according to the Sixth Economic Census of 2013-14.

The government’s payroll estimates follow a study titled ‘Towards a Payroll Reporting in India’ conducted by State Bank of India Chief Economic Advisor Soumya Kanti Ghosh and Indian Institute of Management-Bangalore professor Pulak Ghosh in January, which had estimated that around seven million jobs were generated in 2017-18.

In fact, the task force on employment data, led by former NITI Aayog vice-chairman Arvind Panagariya, had pointed out a few “serious limitations” to gauging job creation based on administrative data from the EPFO.

Another set of seven-month payroll data released by the Employees' State Insurance Corporation was unclear on the job formalisation front, similar to the previous six-month data.

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