First-time entrants into the Employees’ Provident Fund (EPF) scheme fell to its lowest level this fiscal in January, amidst continuing layoffs in the tech sector and caution over the domestic economic outlook in the backdrop of a global slowdown.
According to the payroll data released by the EPF Organisation (EPFO) on Monday, 0.77 million first-time members joined the EPFO in January this year, which was 7.5% lower than the 0.84 million such workers that joined the scheme in December 2022. Prior to this, October 2022 had recorded the lowest number of first-time entrants during the fiscal at 0.78 million.
January was the fourth consecutive month when the number of first-time members joining the social security scheme remained below the 1 million-mark. It is also lower than the average 1 million new workers that joined the scheme this fiscal. New members into the EPFO have been declining after hitting a high of 1.16 million in July 2022 although it recovered a partial recovery in November, when there was an increase in new entrants.
Overall, the EPFO added 1.48 million net members in January 2023, which is 16.6% higher than 1.28 million net members added in December 2022. In January, about 1.06 million members re-joined EPFO membership. “These members switched their jobs and re-joined the establishments covered under EPFO and opted to transfer their accumulations instead of applying for final settlement thus, extending their social security protection,” said the ministry.
The government uses the EPFO payroll data as a high frequency measure for formal sector job creation in the economy. The initial numbers are however, often revised upwards and even January’s data may see a similar increase.
Among the newly joined members, highest enrolment is registered in the age-group of 18-21 years with 0.22 million members, followed by the age-group of 22-25 years with 0.2 million members. The age-groups of 18-25 years constitutes 55.52% of total of new members during the month,” the labour ministry said in a statement, adding that this indicates that majority of the members are first-time job seekers joining organised sector workforce of the country.
It also highlighted that January had the lowest exit in the last four months with only 0.35 million members exiting the EPFO fold.
A new report by Motilal Oswal on the urban labour market has also noted that the quality of employment has deteriorated in the post-Covid period. Using the data from the periodic labour force survey, it noted that Using the PLFS data, the report has said that although the headline numbers show improvement, the details are concerning. Non farm employment growth has suffered significantly and the share of regular employees in urban workforce declined to 48.6% in Dec 2022, lower than about 50% in the pre-Covid period, it said.
The unemployment rate declined to 7.2% in the October – December 2022 for persons aged 15 years and above in urban areas, according to the PLFS, as against 8.7% in the same period in 2021.