Fresh formal jobs created last year fell nearly 10%
EPFO data shows 10.78 mn new users joined compared to 11.93 mn in 2022
Nearly 10 per cent fewer fresh formal jobs were created in 2023 compared to the previous year, reflecting a sharp slump in the pace of formal job creation, according to a Business Standard analysis of the latest payroll data.
The data released by the Employees’ Provident Fund Organisation (EPFO) indicates that 10.78 million new subscribers joined the Employees’ Provident Fund (EPF) between January and December 2023. This figure stood at 11.93 million in the corresponding period of the preceding year.
This is crucial, as only the formal workforce enjoys social security benefits and is protected by labour laws.
The monthly payroll data released by the EPFO is part of the government’s effort to track formal sector employment using payroll as an instrument.
The data also reveals that the number of new young subscribers belonging to the 18-28 age group declined by 9.2 per cent to 7.2 million in 2023 from 7.93 million in the corresponding period of the preceding year. This is crucial because subscribers in this age group are usually firsttimers in the labour market, reflecting its robustness.
Ramesh Alluri Reddy, chief executive officer of Teamlease, says that the dip in job creation in 2023, stemming from the economic slowdown, indicates a market correction after the pandemic, as the earlier surge in hirings represented a temporary uptick.
“Although there is a slight recovery in the job market in December 2023, with new formal job creation reaching a three-month high, the overall decline is a market correction. Navigating these challenges of economic uncertainties and shifts in market demands requires a comprehensive strategy that embraces innovation, fosters skill development, and creates an enabling environment for job creation,” he added.
Furthermore, the data shows that the number of new female subscribers declined by nearly 11 per cent to 2.8 million in 2023 from 3.14 million in 2022.
This deterioration in the quality of employment comes in the wake of the lowest unemployment rate recorded in the country in the past six years.
The recently released annual periodic labour force survey (PLFS) showed that the unemployment rate had dropped to a six-year low of 3.2 per cent in July–june 2022–23 from 4.1 per cent in July–june 2021–22.
Labour economist Santosh Mehrotra says the EPFO payroll data does not reflect a clear picture of employment generation in the country, as it forms only a minuscule proportion of the labour force in the country.