As FE reported earlier, net addition to the EPF subscriber base fell sharply from 10.21 lakh in February 2020 to 5.73 lakh in March and then sharply to just 1.33 lakh in April.
While the lockdown has indeed destroyed lakhs of jobs all of a sudden, new (first-time) decent jobs, as reflected in EPF and New Pension System (NPS) payroll data, had shown a significant decline on year in FY20 itself, according to an analysis by SBI Ecowrap. Also, the speed of ‘formalisation’ of jobs — read social security cover – slowed in FY20, after exhibiting an impressive pace in FY19 aided by solid policy support.
New EPF payroll or ‘first jobs’ in FY20 were 60.8 lakh, down 28.9 lakh from the previous year. Formalisation, as measured by EPF additions by businesses filing electronic challan-cum-return (ECR) on EPF contributions for the first time, also declined by 1.6 lakh on year to 10.5 lakh in FY20.
SBI Research which analysed the data following the IMF alarm also noted that first jobs fell headlong from 5.86 lakh in April 2019 to just less than 53,000 in the lockdown month of April 2020.
Net EPF subscribers (those who newly joined plus exited members who rejoined minus those exited) in FY20 stood at 94.7 lakh, down 17.8 lakh from FY19 level.
A similar trend is seen in the case of NPS subscriber base. New NPS subscribers – including the Central government/state governments and non-government – declined from 7.5 lakh in FY19 to 7.33 lakh in FY20.
Clearly, the formalisation drive is reaching a saturation point and fresh additions to EPF base will now depend more on first-time jobs.
As FE reported earlier, net addition to the EPF subscriber base fell sharply from 10.21 lakh in February 2020 to 5.73 lakh in March and then sharply to just 1.33 lakh in April. It is believed the job scene has improved with the easing of lockdown since early May and also the thrust being given to rural jobs scheme. After reaching a peak to 27.1% in the first week of May due to the lockdown, unemployment rate in the country dropped sharply to pre-lockdown level at 8.5% in the third week of June, according to the Centre for Monitoring Indian Economy (CMIE).
“The unemployment rate fell to its pre-lockdown level of 8.5% in the week ended June 21. The rate had spiked from 8.75% in March to 23.5% in April and May. It had peaked at 27.1% in the week ended May 3. It began to fall thereafter – initially hesitatingly and then precipitously in June. The rate had fallen to 20% in the last week of May,” CMIE said.