If formalisation of employment – jobs with essential social security cover – gathered pace for a few years till 2020-21, the process has since taken a big hit due to the pandemic.
New enrollment under the two prominent social security organisations – EPFO and ESIC – fell nearly a quarter on year in 2020-21, according to official data. Clearly, not just job creation, but even formalisation, which has been incentivised by the Narendra Modi government with a significant fiscal cost, has suffered as the pandemic ravaged the economy.
Of course, a gradual saturation of the formalisation process due to the focused drive in recent years may be in part a reason for the fall in number of new subscribers, but the effect of the pandemic and the economic slowdown cannot be gainsaid.
The number of new subscribers who joined in the retirement scheme run by the Employees’ Provident Fund Organisation (EPFO) fell by 22.56% in 2020-21; as for the Employees’ State Insurance Corporation (ESIC), the decline was 24% (see chart). In the case of EPFO, there was a 21% fall new subscriptions even in 2019-20.
While EPF contribution is mandatory for workers earning up to Rs 15,000 a month in establishments having more than 20 workers, the ESIC benefits are available to low -earners in specified industrial and commercial establishments employing more than 10 workers; ESIC is tasked with giving insurance cover and free medical care to those earning monthly wages of up to Rs 21,000.
According to CMIE, the cumulative loss of salaried jobs since the pandemic broke out was 12.6 million at last count. During 2019-20, there were 85.9 million salaried jobs; as of April 2021, there were just 73.3 million of them.
As per data released by the National Statistical Office (NSO) on Tuesday, the total “number of newly registered employees & paying contribution during the month” in 2020-21 under the ESI scheme was the lowest in three years at 1.15 crore, down from 1.49 crore in 2018-19 and 1.51 crore in 2019-20.
Of course, cumulative net payroll addition to the EPFO’s subscribers’ base remained static at 77.08 lakh in 2020-21 (EPFO arrives at the net number after deducting the total of the subscribers who exited from the sum of new subscribers and those who left earlier but rejoined during the year).
The latest data, which is provisional and subject to change, showed that nearly 98 lakh exited from the EPFO in 2020-21 compared with around 110 lakh in the previous year. But the number of subscribers who exited earlier but rejoined was higher by around 11 lakh in 2020-21 compared with 2019-20.
In the case of ESIC also, the net addition to the subscriber base is much lower than what the number of new subscribers indicates as workers retire or lose their jobs or the units close down.
Since April 2018 the ministry of statistics and programme implementation (MosPI) has been bringing out the employment-related statistics in the formal sector covering the period September 2017 onwards, using information on the number of subscribers who have subscribed under major schemes, including EPFO and ESI scheme.