BackEPF subsidy pumps up FY21 net payroll additions as staff who exited firms rejoin
Economists said the wage subsidy has allowed employers to take back workers with a monthly salary cap of ₹15,000
PremiumA wage subsidy announced in November through the Employees’ Provident Fund (EPF) appears to have helped generate jobs, with 56% of the net payroll additions of 7.7 million in the whole of FY21 coming in the last four months of the fiscal.
This may have largely been due to the rejoining of exited employees amid a rebound in economic activity.
A detailed analysis of payroll data showed that while new subscriber additions were falling in the last four months of the previous fiscal, net payroll additions was much higher, primarily due to the rejoining of previously exited members.
For example, while the number of new EPF subscribers in January or the people who joined the formal workforce for the first time was 883,392, the net payroll addition that month was over 1.11 million. Net payroll additions are arrived at by clubbing new subscribers, number of fresh exits, and those who rejoined after exiting earlier.
In January, for instance, at least 910,922 exited members rejoined EPFO (Employees’ Provident Fund Organisation) while 681,234 exited formal work.
Economists said the bump-up in net payroll additions is ‘subsidy induced’ as it lowered employee cost and allowed employers to take back workers hit by covid-19 with a salary cap of ₹15,000 per month.
“The rejoining data conveys two key messages—the subsidy has worked at least partially from December, and more than fresh additions, it’s helping workers rejoin. Second, the rejoining must have been predominantly at the bottom of the salary structure," said K.R. Shyam Sundar, a labour economist.
Job additions in services support, e-commerce, courier service and logistics indicate the quality of jobs being created, he added.
“Now the question is, after June, when the enrolment period under the scheme ends, will these jobs sustain and will rejoining of exited members continue? I believe many of these jobs will perish because employers must have rehired people they let go earlier as the employee cost is low due to the subsidy and the targeted workers are more casual and contractual," Sundar said.
Under the Atmanirbhar Bharat Rozgar Yojana announced in November, EPFO-registered establishments with up to 1,000 workers will get 24% EPF subsidy — that is 12% of the employers’ share and 12% of the employees share. And if the company has more than 1,000 employees, then the government will reimburse the 12% share of the new employees added. The scheme covers fresh hiring and hiring of those who lost or left their jobs between 1 March and 30 September 2020. It applies to workers who join work between 1 October 2020 and 30 June 2021 on a monthly wage of less than ₹15,000.
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