Rising EPFO and NPS Subscribers Point to Surge in Formal Jobs
- July 16, 2024
- Posted by: OptimizeIAS Team
- Category: DPN Topics
Rising EPFO and NPS Subscribers Point to Surge in Formal Jobs
Sub: Economy
Sec: Unemployment and Inflation
Context: Formal employment in India is increasing, as evidenced by the significant rise in new subscribers to both the Employees Provident Fund Organisation (EPFO) and the National Pension System (NPS).
- This trend indicates growing formalization of the workforce and highlights the importance of statutory compliance by large employers to maintain an organized and productive workforce.
EPFO Trends
- Subscriber Growth:
- New EPFO subscribers increased from 61.1 lakh in 2018-19 to over 1.31 crore in 2023-24.
- From September 2017 to March 2024, more than 6.2 crore new subscribers were added.
- Despite a dip in new subscribers for 2023-24 compared to the previous fiscal year, the long-term trend shows substantial growth.
- Mandatory Enrollment:
- Organizations with 20 or more employees are required to enroll their workers under EPF.
- EPF registration is mandatory for salaried employees earning at least ₹15,000 per month.
- Workforce Formalization:
- The number of contributing members to the provident fund has been growing at a CAGR of over 20% since 2018.
- The overall workforce has grown at about 2%, indicating significant formalization.
- Factors Driving Formalization:
- Large employers seek to maintain an engaged and productive workforce with low attrition rates.
- Payment of statutory compliances for social security is seen as a key factor in retaining employees.
- Industries such as FMCG, healthcare, retail, and industrial manufacturing have prioritized workforce formalization post-pandemic.
- Youth Employment:
- In April, the EPFO recorded its highest-ever monthly increase of 18.92 lakh net members, marking a 10% year-on-year growth.
- Over 55% of new subscribers are in the 18-25 age group, indicating a high number of first-time job seekers entering the organized workforce.
NPS Trends
- Subscriber Growth:
- In 2023-24, the NPS registered more than 75 lakh new subscribers, marking a 30% increase from the previous year.
Economic Implications
- Impact on Low-Income Jobs:
- EPFO data primarily capture low-income jobs. The declining share of low-income jobs suggests an increase in better-paid job opportunities in the economy.
- Future Prospects:
- The anticipated implementation of new labour codes could further accelerate the formalization of the workforce.
Conclusion
The significant rise in EPFO and NPS subscribers underscores the increasing formalization of employment in India. This trend is driven by large employers’ need for a stable and compliant workforce, along with government efforts to ensure timely payments and social security benefits for employees. The growth in formal employment, particularly among the youth, is a positive sign for the Indian economy, suggesting better job opportunities and improved workforce management