Job creation fell by 71.8% in Q1FY21: A close look at EPFO data

Job creation fell by 71.8% in Q1FY21: A close look at EPFO data

The first three months in this fiscal saw 8,47,649 new jobs compared to 30,02,975 jobs in the same period previous fiscal.

Mudit Kapoor | August 21, 2020 | Updated 17:58 IST
Job creation fell by 71.8% in Q1 FY21

Net employment generation has seen a drastic fall of 71.8% in the first three months of the current fiscal compared to the same period a year ago. The first three months in this fiscal saw 8,47,649 new jobs compared to 30,02,975 jobs in the same period previous fiscal.

According to EPFO data, 20,164 jobs were created in April, 1.7 lakh in May 20 and 6.55 lakh in June this year.

Last year, 9.2 lakh jobs were created in April, 8.57 lakh in May and 12.24 lakh in June.

Coronavirus hits job creation

India implemented five lockdowns to control the spread of coronavirus, which hampered economic activity as all businesses except emergency services were shut.

As a result, companies that were running thin on cash, were left with no option but to resort to cost cutting measures such as laying-off employees and cutting their salaries. The fear of living in a crowded city amid lockdown with no or less income led to an exodus of labour towards their hometowns and villages. As per CMIE, unemployment rate was more than 23 per cent consecutively for two straight months of April and May.

Now as the labour is coming back to cities in search of jobs, the employment numbers are showing an uptick. In June 2020, 6.5 lakh jobs were created which shows a 4 fold increase in job creation when compared to the preceding month of May.

But, to sustain their livelihood, many opted to withdraw money from their EPF account to make ends meet.

According to a statement released by Labour Ministry in June, the Employees' Provident Fund Organisation (EPFO) has settled 36.02 lakh claims during coronavirus lockdown, disbursing an amount of Rs 11,540 crore under the EPF scheme. Out of this, 15.54 lakh claims amounting to Rs 4,580 crore were related to the recently introduced COVID-19 advance under Pradhan Mantri Garib Kalyan Yojana (PMGKY).

In terms of wage slab, nearly two-third of total claimants during the lockdown period belonged to less than Rs 15,000 wage bracket. The high income category with wages more than Rs 50,000 accounted for a mere 2% of the claimants. A quarter of claims were made by the members with wages falling between Rs 15,000 and Rs 50,000, the ministry said.

In March, the labour ministry had announced that about 4.8 crore EPF beneficiaries can withdraw 75% of the amount standing to their credit, not exceeding their three months' basic pay, to tide over the COVID-19 pandemic. The ministry had issued a notification in this regard to amend the Employees' Provident Fund Scheme 1952, so that organised sector workers can withdraw the non-refundable advance.