EPFO base shrank a fifth in April, recovers a little in June

The significant drop in members cannot be explained by the temporary grace period provided by the EPFO in filing returns and making contributions.

Workers who contributed to the Employees’ Provident Fund Organisation (EPFO) in April were about a crore or a fifth less than those that did so in March.  The drop in the number of firms which deposited provident fund monies with the retirement fund body during the lockdown month was a steeper 36% or 1.9 lakh.

A deferment of the due date for EPF deposits for April wages to May 15 and later to June 15 may be part of the reason for the drop. But the steepness of the fall, coupled with the fact that even in June, “contributing members” of EPFO were 35 lakh less than in March and 50 lakh less than the January peak of five crore, demonstrates the extent of non-payment of wages and job losses during the lockdown period. It also lays bare the high vulnerability of the country’s workforce to the short-term vicissitudes of businesses.

Atul Gupta, partner, Trilegal, said: “The (EPFO) data clearly demonstrates the economic impact of the lockdown on the industry and workforce — establishments weren’t in a position to pay wages and make associated PF contributions and/or there were job losses, due to the halting of economic activity.

The significant drop in members cannot be explained by the temporary grace period provided by the EPFO in filing returns and making contributions, since although the numbers have increased from May-June, they are still significantly lower than pre-lockdown levels.”

During any given month over the past year, the number of ‘contributing members’ of EPFO used to hover roughly in the range of 4.85-4.95 crore. The number increased to five crore in January 2020. A section of the EPF contributors is not regular in contributing; while there are dropouts, a sizeable section of the workforce contribute between 1 and 11 months in a year, and including these people, the EPF base is 6.5 crore plus.
According to labour policy expert and XLRI professor KR Shyam Sundar, if, as the government maintains, payroll data indicate jobs created, in that case a decline in absolute number of contributing members to the EPF should automatically mean job losses.

“The decline in the contributing establishments during the Covid-19 period especially in April and a gradual pick-up in May and June clearly show non-compliance by employers and contractors. It is an indication of non-payment of wages and also loss of jobs especially for the precarious and casual and contract workers,”he said.

The Centre for Monitoring Indian Economy has estimated India’s unemployment rate spiked from 8.75% in March to 23.5% in April and May. The rate since fell to 8.5% in the week ended June 21 and then rose marginally to 8.6% in the week ended June 28. Also, as FE reported earlier, the net addition to the EPF subscriber base fell from 10.21 lakh in February 2020 to 5.73 lakh in March and then sharply to just 1.33 lakh in April.

A person familiar with the EPFO’s systems said that the decline in the number of contributing members indicates that 50 lakh people have lost their jobs between January and June. However, he added that it could also mean that their contribution have not come so far, but this may not be the case in most cases since EPFO had given employers the option to separate submission of electronic challan-cum-return from making actual payment for the troubled months.