The creation of jobs in the formal sector was quite muted in 2023. Based on net payroll addition on the EPFO portal, formal sector jobs increased just 2 per cent last year, compared to the year age. Job creation was uneven across the country.

On the one hand, States such as Uttar Pradesh, Uttarakhand and Jharkhand recorded a healthy increase in jobs compared to 2022. And then there are States such as Andhra Pradesh and Karnataka, where the 2023 numbers were lower than 2022. This is based on businessline’s data analysis from the EPFO portal.

The EPFO data capture the number of employees in the formal sector since organisations employing more than 20 people are required to register and contribute to the EPFO. The EPFO administers the mandatory provident fund, a basic pension scheme, and a disability/death insurance scheme, where the employee and the employer contribute a certain amount of money every month.

In monthly payroll data, the count of members joining EPFO for the first time through a validated Universal Account Number (UAN), existing members exiting from coverage of EPFO, and those who exited but re-joined as members are taken to arrive at the net payroll numbers.

What’s up, North?

A closer look at the numbers shows a net addition of 2.26 lakh people in Uttarakhand in 2023. This is a 17 per cent increase compared to 2022. In Jharkhand, the increase is 15 per cent. Uttar Pradesh witnessed a 14.4 per cent rise between 2022 and 2023. The net payroll addition in UP was 8.63 lakh in 2023.

On the other hand, Andhra Pradesh and Karnataka saw declines of 9.68 per cent and 7.47 per cent, respectively. Tamil Nadu, too, is part of the list despite being the State that employed the second-highest number of people in the formal sector in 2023. While the net payroll addition in Tamil Nadu was 14.28 lakh in 2023, it was 14.67 lakh in 2022.

However, experts believe it isn’t fair to go by numbers alone. Madan Sabnavis, Chief Economist, Bank of Baroda, says the increase in formal sector jobs in States, including Uttar Pradesh and Jharkhand, could be because of the formalisation of the economy, with more employees getting registered. “This doesn’t necessarily mean that there are more jobs created in these States,” he said.

Job creation flat

Sabnavis also added that the growth of the Indian economy is quite stable. “This means, there won’t be a lot of job creation,” he said. Also, the number of new additions to the formal workforce in 2023 was lower than in 2022. While 1.07 crore people entered the workforce for the first time in 2023, in 2022, the number was 1.19 crore.