EPF Payroll data signals jobs are returning, albeit slowly

However, the May data also indicate that the businesses and industries have still to cover a long way before returning to the pre-Covid employment levels.

Net addition to the Employees Provident Fund (EPF) subscriber base more than trebled in May to 3.19 lakh from just a little over 1 lakh in the previous month.

However, the May data also indicate that the businesses and industries have still to cover a long way before returning to the pre-Covid employment levels. The pandemic has had a material adverse impact on new job creation, if not jobs themselves.

For the year 2019-20 (April-March) as a whole, the EPF subscriber base saw an average monthly net addition of 6.54 lakh, higher than 5.1 lakh in 2018-19 and far above 2.21 lakh during the last seven months of 2017-18.

The Centre for Monitoring of Indian Economy (CMIE) had earlier said that India’s unemployment rate, which peaked at 29.2% in May, fell subsequently to 7.4% for the week ended July 12.

Going by the latest EPF payroll data, net addition to the EPF subscriber base fell sharply from 9.99 lakh in January and 10.21 lakh in February, to 5.73 lakh in March and further to just a little over a lakh in April.

Of course, the jump in EPFO payroll numbers isn’t wholly attributable to ‘new jobs’; the accelerated expansion of the subscription base is partly driven by policy support to formalisation of the economy, including Pradhan Mantri Rojgar Protsahan Yojona (PMRPY), the window for which closed on March 31, 2019.

During May 2020, the maximum number of new addition was from the 29-35 years age bracket followed by those above 35 years’ of age, cumulatively contributing 45% of the net addition of the month. The least addition was from the less than the 18 years’ age bracket.

The highest addition of those beyond 29 years is in complete contrast with the trend of 2019-20 in which people in the 18-21 years age bracket followed by those of 22-25 years had the highest shares (32.31% and 28%, respectively) of net EPF subscribers’ addition.

While the 2019-20 numbers proved that new jobs were indeed got created during the year; the 29-35 years and above dominating the net addition in May 2020 shows they are perhaps in their second or third jobs and not in the newly created jobs.

The EPFO has started releasing the data for subscription since April 2018. Analysts caution that the data may not be robust enough to draw immediate conclusions from; by the government’s own admission “since the number of subscribers are from various sources, there are elements of overlap and the estimates are not additive”.

One curious aspect of the EPFO payroll data is the high frequency of subscribers stopping contributions. For instance, as many as 2.36 lakh people ceased subscriptions in May 2020, compared to 2.79 lakh new subscribers joining during the month. Of course, 2.75 lakh workers stopped contributing to the EPF rejoined in the period, resulting in net additions of 3.18 lakh.

The EPFO started releasing the data for subscription from April 2018, for the period from September 2017. The EPF subscriber base consists of over 6 crore people.