Reflecting a slowdown in the pace of formal job creation, new subscribers added by the Employees’ Provident Fund Organisation (EPFO) declined by 10.1 per cent to 5.86 million in the first half (April-September) of FY24, from 6.52 million during the same period last year, according to the latest payroll data released by the EPFO.

       This significant churn in the job market comes at a time when the share of self-employed has risen continuously over the past few years, leading labour economists to point out the informal nature of job creation in the economy. This is also crucial as only the formal workforce enjoys social security benefits and is protected by labour laws.

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       Besides, the number of young subscribers belonging to the 18-28 age group declined by 9.54 per cent to 3.93 million this year from 4.34 million in the corresponding period last year. This is crucial because subscribers in this age group are usually first-timers in the labour market, thus reflecting its robustness.

       Rituparna Chakraborty, co-founder of TeamLease Services, says the technology and knowledge sector, which forms the bulk of the formal workforce, try to rationalise their workforce and battle declining revenues amid muted demand, hirings have suffered a great deal this year.

       “In many cases, even the candidates who got placement offers are yet to officially join the firms,” she added.

       Also, the number of women subscribers also declined by 11.1 per cent to 1.53 million from 1.73 million last year, reflecting the difficulties being faced by women to access formal jobs as firms insist upon working from the office.

       However, Santosh Mehrotra, a visiting professor at the University of Bath, notes that the labour markets are yet to recover as the pace of formal job creation is quite low and not keeping pace with the rising labour force, leading to an increase in self-employment or engaging in agriculture, particularly for the young and women.

       Recently, the annual periodic labour force survey (PLFS) released by the National Statistical Office (NSO) showed that the unemployment rate had dropped to a six-year low of 3.2 per cent in the July-June 2022-23 period from 4.1 per cent in the July-June 2021-22 period. Similarly, the labour force participation rate had also increased to 57.9 per cent from 55.2 per cent in the corresponding period.

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       “The recent PLFS data shows an increase in the share of people engaged in agriculture and a fall in the people engaged in manufacturing. The decline in formal employment and the corresponding increase in labour force participation shows that more people are joining the labour markets and the economy isn't able to generate enough decent jobs for them," Mehrotra added.

       The PLFS survey has shown that the share of people engaged in agriculture has increased sharply to 45.8 per cent in the 2022-23 period from 45.5 per cent in the 2021-22 period while the share of people engaged in manufacturing has gone down to 11.4 per cent from 11.6 per cent in the same period.

       However, labour economist K R Shyam Sundar said that the EPFO data does not reflect a clear picture of employment generation as its subscribers are only a minuscule proportion of the labour force in the country.

       “EPFO data only shows the extent of formalisation of the workforce, which in turn means as many people will be getting social security benefits. If there is a slowdown [in this] as well, that is a matter of concern,” Sundar added.