Formal jobs in India may be more than estimated

Latest official numbers reveal that the EPFO subscriber base rose 26% in the last six months from 38 million to 48.1 million

Prashant K. Nanda
Updated9 Jul 2017, 11:42 PM IST
The jump in EPFO subscriber base is being attributed to an amnesty scheme allowing firms to come clean on their actual staff strength without being penalized. Graphic: Subrata Jana/Mint
The jump in EPFO subscriber base is being attributed to an amnesty scheme allowing firms to come clean on their actual staff strength without being penalized. Graphic: Subrata Jana/Mint

New Delhi: Is India underestimating its formal employment? New data seems to suggest there is a strong likelihood of this indeed being true.

The latest official numbers reveal that the subscriber base of the Employees Provident Fund Organization (EPFO) rose 26% in the last six months from 38 million to 48.1 million.

The jump is being attributed to an amnesty scheme allowing firms to come clean on their actual staff strength without being penalized.

Not only does it question the employment data—already being scrutinized by a high-level panel headed by NITI Aayog head Arvind Panagariya—it also holds public policy implications, especially on government spending on social welfare programmes.

India, according to Census 2011, estimates its workforce at 402 million. According to the labour ministry, as of 2016, India’s labour market comprises more than 475 million people. Of this, it is estimated that less than 10% are in formal employment.

The inability to create formal economy jobs haunted the United Progressive Alliance government and is now a growing cause for worry for the Bharatiya Janata Party-led National Democratic Alliance.

As of 30 June, when the scheme deadline expired, firms across India came forward to enrol under EPFO 10.1 million employees who were earlier working with them but were not formally reported.

“It has surpassed our estimation and expectations. Our amnesty scheme has turned out to be a huge hit and good for the formal economy,” said central provident fund commissioner V.P. Joy. He added that they had kept a target of 10 million, but the actual enrolment has exceeded it.

A fallout of the development is that more employees get access to social security benefits provided in the formal economy. Since the additions are now part of the formal workforce, they are entitled to the prevailing minimum wages, leave encashment benefits and termination benefits in case they are let go, said Sonal Arora, vice-president of Teamlease Services, a staffing and training company.

“In a way, they will now be covered under the bigger social security net,” she added.

EPFO’s amnesty scheme encouraged companies to enrol workers who had joined them between 1 April 2009 and 31 December 2016. Employees’ contributions, if not collected during the period, were waived. The employers’ contribution will be required to be remitted but unpaid dues will not attract any penalty. Every month an organized sector employee contributes 12% to EPF and a matching contribution is given by the employer.

The amnesty scheme started on 1 January and ended on 30 June. Overall, EPFO added 10.13 million employees as part of this initiative, said a spokesperson of the retirement fund manager. As on 31 May, the organization had added 8.2 million subscribers, Mint reported on 13 June.

It means, in June alone, it added over 1.9 million new employees to its subscriber pool, as employers rushed to meet the deadline.

The spokesperson said that the greater than expected enrolment has happened because of the strong response from industrial states such as Gujarat, Rajasthan, Tamil Nadu, Maharashtra, Haryana, Delhi and Uttarakhand. States such as Madhya Pradesh and Uttar Pradesh too reported more than 100% success rate.

“It certainly highlights that the country has underestimated its formal employment for several years. It tells us now that how hundreds of companies under reported their employee strength to deny social security to these millions of workers,” said D.L. Sachdeva, national secretary of the All India Trade Union Congress, a central labour union.

According to K.R. Shyam Sundar, a labour economist and professor at XLRI Jamshedpur, the underestimation is deliberate as it helps firms keep their labour costs down.

“I believe the job creation figures over years are at least 15 to 20% more than what is generally reported because companies under report them to avoid statutory requirements,” said Shyam Sundar.

State-wise data shows Gujarat enrolled 918,000 employees under the amnesty scheme as against an internal estimate of 690,700—a 133% success rate, highest among all states; the Mumbai zone and Maharashtra followed, with 121% and 120%, respectively. EPFO computes data for Mumbai separately.

Catch all the Politics News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.

MoreLess
First Published:9 Jul 2017, 11:42 PM IST
Business NewsPoliticsPolicyFormal jobs in India may be more than estimated

Get Instant Loan up to ₹10 Lakh!

  • Employment Type

    Most Active Stocks

    Tata Steel share price

    150.90
    03:56 PM | 7 NOV 2024
    -2.7 (-1.76%)

    Bharat Electronics share price

    300.20
    03:58 PM | 7 NOV 2024
    -1.65 (-0.55%)

    Bank Of Baroda share price

    262.90
    03:29 PM | 7 NOV 2024
    0.3 (0.11%)

    Indian Oil Corporation share price

    144.20
    03:59 PM | 7 NOV 2024
    -0.45 (-0.31%)
    More Active Stocks

    Market Snapshot

    • Top Gainers
    • Top Losers
    • 52 Week High

    Apollo Hospitals Enterprise share price

    7,424.60
    03:40 PM | 7 NOV 2024
    454.75 (6.52%)

    Welspun Corp share price

    798.00
    03:29 PM | 7 NOV 2024
    24.55 (3.17%)

    City Union Bank share price

    181.50
    03:29 PM | 7 NOV 2024
    2 (1.11%)

    Federal Bank share price

    206.00
    03:57 PM | 7 NOV 2024
    1.2 (0.59%)
    More from 52 Week High

    Hindalco Industries share price

    648.35
    03:51 PM | 7 NOV 2024
    -59.9 (-8.46%)

    Trent share price

    6,498.45
    03:59 PM | 7 NOV 2024
    -454.6 (-6.54%)

    Glenmark Pharmaceuticals share price

    1,658.00
    03:29 PM | 7 NOV 2024
    -110.95 (-6.27%)

    Blue Star share price

    1,776.95
    03:56 PM | 7 NOV 2024
    -101.8 (-5.42%)
    More from Top Losers

    Swan Energy share price

    535.60
    03:29 PM | 7 NOV 2024
    39.05 (7.86%)

    KEC International share price

    1,050.30
    03:40 PM | 7 NOV 2024
    74.8 (7.67%)

    Apollo Hospitals Enterprise share price

    7,424.60
    03:40 PM | 7 NOV 2024
    454.75 (6.52%)

    FSN E-Commerce Ventures share price

    192.90
    03:29 PM | 7 NOV 2024
    11.45 (6.31%)
    More from Top Gainers

    Recommended For You

      More Recommendations

      Gold Prices

      • 24K
      • 22K
      Bangalore
      78,575.00-1,790.00
      Chennai
      78,581.00-1,790.00
      Delhi
      78,733.00-1,790.00
      Kolkata
      78,585.00-1,790.00

      Fuel Price

      • Petrol
      • Diesel
      Bangalore
      102.92/L0.00
      Chennai
      100.80/L0.00
      Kolkata
      104.95/L0.00
      New Delhi
      94.77/L0.00

      Popular in Politics

        HomeMarketsPremiumInstant LoanMint Shorts