The economy added 2.2 million formal jobs between September 2017 and February 2018, the payroll data released by the Employees' Provident Fund Organisation (EPFO) and the National Pension System (NPS) suggests. This is the first time that such data has been released by a government body.
According to The Economic Times, the EPFO data overall showed 3.1 million new additions across age groups over the six month time frame. Of this, those in the 18-25 age group - considered a proxy for new jobs - amount to 1.85 million. It could be more because according to EPFO, "the data for most recent months are provisional as updation of employees records is a continuous process and are likely to be updated in subsequent month/s".
In the case of NPS, the new accounts opened in the central and government sector stood at 350,000 during this period, corresponding to new jobs and taking the total to 2.2 million. This is welcome news indeed for the current government long criticised for jobless growth, especially after making it a key electoral promise back in 2014.
Excluding the 18-25 age band, additions in the higher age groups suggest greater formalisation of the economy, experts said. All new employees have been categorised in six age bands - less than 18 years of age, 18-21, 22-25, 26-28, 29-35 and above 35. Also, all the EPFO members' data above are linked to Aadhaar. "This data can be helpful in policy making, planning and research work as the planners may have an idea as to what is the estimate of employees in different age bands," EPFO said on Wednesday.
According to State Bank of India (SBI) Group Chief Economic Advisor Soumya Kanti Ghosh, the full-year payroll addition based on the EPFO and NPS numbers is estimated to be 5.8 million.
"It is not entirely true to say that these are all new jobs created," DK Pant of India Ratings told the daily. "Rather, I see it as greater formalisation of country's workforce wherein earlier casual workers are now being brought into the safety net following rollout of some job incentive schemes for employers in the budget."
To remind you, Ghosh had earlier co-authored a research report titled Towards a Payroll Reporting in India along with an IIM Bangalore professor that had estimated 7 million jobs would be created in FY18. But the report drew a lot of flak with notable economists pointing out that a new EPFO registration did not necessarily mean a new job. It could simply have been a fall-out of demonetisation, where hitherto informal workers were newly registered as formal employees. In any case, the study released in January had recommended the creation of a Payroll Report in India, and the government clearly paid heed.
The daily adds that the Employees' State Insurance Corp. (ESIC) also released payroll numbers on Wednesday, but there may be double counting here as these are not Aadhaar seeded. This data shows new registrations, after deducting those who ceased to pay contributions, at 520,000 over the six-month period to February. The net addition in the 18-25 age group is 830,000, which would take the total jobs generated in the period to over 3 million based on these numbers.
However, this payroll data comes with its own limitations since it is far from comprehensive. Only companies with 20 and more employees are registered under the Employees' Provident Funds and Miscellaneous Provisions Act, while the ESIC Act covers those with a minimum of 10 employees. Moreover, large entities, known as exempt organisations, can manage their retirement corpus in-house.
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