Job creation in the formal sector slowed down in August, reveals the data with Employees Provident Fund Organisation (EPFO).

The data, tabulated as ‘Net Payroll Data’ showed that net addition was around 8.95 lakh in August as against the revised figure of 9.76 lakh in July. The net payroll data is arrived at after subtracting the number of members exited from number of new EPF subscribers and those who rejoined and resubscribed.

It covers establishments with 20 or more employees.Organisations that employ less than 20 persons each, is also subjected to certain conditions and exemptions. It is a mandatory savings scheme. The pay limit is ₹15,000 per month. Persons drawing pay above ₹15,000 are exempted or can be enrolled with some permission or on voluntary basis. The number of members subscribing to this scheme gives an idea of the level of employment in the formal sector. Structured data is being released on monthly basis with first data for the month of September 2017. However, not a single month has registered 10 lakh jobs on a net basis which is the informal target for job creation on a monthly basis.

State-wise performance

Barring two months (September 2017 and March 2018), data for all the month have been revised upwards. It also reveals which State and which sector has performed well in job creation. For example, among all the six age brackets (less than 18 years, 18-21 years, 22-25 years, 26-28 years, 29-35 years, and more than 35 years), Maharashtra is on top in all but one. Tamil Nadu pipped Maharashtra in sub-18 age group. Karnataka, Gujarat and Haryana are the other three in the top 5 list for all the age brackets.

Sector-wise performance

In terms of sectors, expert services lead the race in the age bracket of 22-25 years, followed by trading (commercial establishments), electrical mechanical and general engineering products, building and construction industry, and engineers-contractors.

The importance of payroll data to assess job creation in the formal sector came into limelight after a study advocated the need for monthly payroll reporting in India. The study had estimated that around 70 lakh jobs might be generated in 2017-18. It was criticised initially but later, based on enrolment under EPFO, National Pension Scheme (NPS) and Employee State Insurance Corporations (ESIC), the number was around 67 lakh which was close to the study. Research has revealed that the payroll data have the most profound impact on all high-frequency economic reports and major policy implications.

Now, every month the Ministry of Statistics & Programme Implementation releases employment-related data in the formal sector using information on the number of subscribers who have availed of benefits under EPFO, ESIC and NPS. The first such data was released in April covering the period from September 2017 to February 2018.