There has been a decline in annual as well as quarterly unemployment rates since the highs witnessed during the COVID-19 pandemic which has been accompanied by a rise in the share of employment in the organised sector of the Indian economy, according to the latest monthly economic review of the Finance Ministry.
The declining unemployment rates have been accompanied by a rising formalisation of employment. There is evidence of increasing net payroll additions under the Employee Provident Fund Organisation (EPFO), with more members rejoining than exiting the social security net, the report states.
The creation of digital identities like Aadhar, registration of unorganised workers on the e-shram portal and registration of MSMEs on the Udyam portal has played a significant role in promoting the formalisation of the economy. As of May 22, 2024, 4.4 crore MSMEs have been registered on the Udyam Portal (including informal enterprises registered on the Udyam Assistance Platform), more than 97 per cent being micro-enterprises.
The EPFO net payroll addition stood at 1.47 crore members during FY24, amounting to a year-on-year rise of 6.3 per cent from 1.39 crore members in the corresponding period of the previous year.
Around 1.08 crore new subscribers were enrolled in FY24, with 56.7 per cent of the newly joined subscribers being in the age group of 18-25 years, indicating healthy hiring for youth. The relatively high number of members rejoining EPFO signifies a churning labour market opting to extend its social security protection.
Across months, the number of subscribers rejoining EPFO has been higher than new subscribers or existing subscribers’ deletions. During FY24, 1.64 crore members rejoined after exiting previously.
According to EPFO, these members switched their jobs and joined the establishments covered under EPFO and opted to transfer their accumulations instead of applying for final settlement, thus extending their social security protection. The number of existing EPFO subscribers’ deletions has also been lower in FY24 compared to the previous year. 1.25 crore EPFO subscribers exited during FY24, compared to 1.34 crore in the previous year, the report adds.
It also states that at a broader level of the manufacturing and services sector as well, rising job creation is evident. The PMI Manufacturing employment sub-index suggests the generation of more employment opportunities in the manufacturing sector supported by improvement in operating conditions, buoyant demand, uptake in new business intakes and scaled-up production. Similarly, the PMI Services sub-index shows a step-up in employment generation in the services sector from a combination of buoyant domestic demand, new business gains and an upturn in international sales.
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