India Economy Added 52 million New Formal Jobs in FY20-23: Report

A recent report based on an in-depth analysis of data from the Employees Provident Fund Organisation (EPFO), National Pension Scheme (NPS), and Employees State Insurance Corporation (ESIC) reveals that India's economy has seen a remarkable surge in formal job creation between FY20 and FY23. The analysis offers insights into the country's evolving job market and its implications.

Substantial Growth in Formal Jobs:

The report highlights that India's economy has added approximately 52 million new formal jobs during the mentioned period. Notably, the net addition to formal jobs stands at an impressive 27 million, reflecting the robust growth in the formal employment sector.

Data Sources and Monthly Payroll Reporting:

The government began releasing monthly payroll data from key entities, including the EPFO, NPS, and ESIC, since April 2018. This practice was initiated based on recommendations from the Ghosh & Ghosh report, aimed at enhancing transparency and providing valuable insights into the labor market.

EPFO Payroll Data Insights:

Analysis of the EPFO payroll data for the past four years reveals that the net addition of EPF subscribers during FY20-23 amounted to 48.6 million. This figure encompasses new payrolls (first payroll), second payrolls (rejoined/resubscribed members), and formalized payrolls.

Upon further scrutiny, the report finds that the actual net new payroll, adjusted for re-joined/re-subscribed members and formalization (based on ECR data), stands at 22.7 million during FY20-23, as reported by SBI Research.

Formalization of Employment:

Within this period, first jobs accounted for 47 percent of the total net new payroll addition, while second jobs (representing exited members who re-joined and re-subscribed) amounted to 21.7 million over the four years. This signifies that the net increase in formalization during this period reached 4.2 million, indicating a positive trend in the labor market.

Encouraging Q1 FY24 Data:

The report also analyzes the Q1 EPFO payroll data for FY24, which paints an encouraging picture. The data reveals that 4.4 million net new EPF subscribers joined, with the first payroll contributing 1.92 million.

If this trend persists throughout FY24, the net new payroll is expected to surpass 16 million, a record high, with the first payroll estimated to fall within the range of 7-8 million.

Insights from NPS Data:

The NPS data adds further insights, indicating that in FY23, there were 8.24 lakh new subscribers. State government payrolls accounted for 4.64 lakh of these new subscribers, followed by non-government jobs at 2.3 lakh and central government jobs at 1.29 lakh.

Over the past four years, approximately 31 lakh new subscribers joined the NPS. Collectively, the EPFO and NPS contributed to a total payroll generation of over 52 million during FY20-23, as noted by Ghosh.

Decline in Rejoined or Resubscribed Members:

The report observes a notable decline in the number of members who rejoined or resubscribed in the first quarter of the current financial year. This suggests that more individuals may be opting to retain their current employment.

Empowering Women in the Workforce:

An interesting aspect highlighted in the report is the share of women in the payroll, which accounts for around 27 percent. This signifies a positive step towards empowering women in the workforce.

Some relevant and latest facts about the news article::

• The Indian economy added around 5.2 crore new formal jobs between FY20 and FY23, with the net addition being 2.7 crore.

• This is the highest number of formal jobs added in any four-year period since 1991-95.

• The growth in formal jobs was driven by the growth in the organized sector, which added around 2.5 crore jobs during this period.

• The services sector accounted for the bulk of the new jobs, adding around 1.8 crore jobs.

• The manufacturing sector added around 0.5 crore jobs, while the construction sector added around 0.2 crore jobs.

• The share of women in formal jobs increased to 27% in FY23, from 25% in FY20.

• The government's efforts to formalize the economy, such as the Pradhan Mantri Rojgar Protsahan Yojana (PMRPY), have played a role in the growth of formal jobs.

Here are some other relevant facts about the Indian economy:

• The Indian economy grew by 8.7% in FY23, the highest growth rate in 17 years.

• The unemployment rate in India fell to 7.8% in February 2023, the lowest level in over four years.

• The government has set a target of creating 20 million new jobs per year in the next five years.

The growth of formal jobs is a positive sign for the Indian economy. It suggests that the economy is becoming more productive and that the government's efforts to formalize the economy are working.

The growth of formal jobs is also good for the workers, as it provides them with better wages and benefits.

In summary, the report unveils a significant expansion of formal jobs in India's economy, supported by robust data from EPFO, NPS, and ESIC. The encouraging trends and increased formalization of employment underscore the positive trajectory of the country's job market.