Formal Sector Employment Trends: October Data Analysis

December 23, 2023

The latest official data released by the Ministry of Statistics and Programme Implementation (MoSPI) has revealed a decline in new additions to formal sector employment in the month of October. This decline is evident across three key data sets: Employees’ Provident Fund (EPF) Scheme, Employees’ State Insurance Corporation (ESIC), and National Pension Scheme (NPS). Here, we break down the numbers and explore the implications of this trend.

Economic Growth Outlook vs. Employment Trends

The decline in new subscriptions to formal schemes is occurring at a time when the Indian economy is anticipated to achieve rapid economic growth. The Reserve Bank of India estimates a GDP growth rate of 6.5 percent for the current financial year, ending in March 2024. Similarly, the International Monetary Fund (IMF) projects a growth rate of 6.3 percent for India, outpacing China’s estimated GDP growth rate of 5.4 percent.

Formal Sector Employment Statistics Since 2018

Since April 2018, the government has been publishing employment-related statistics in the formal sector, covering the period from September 2017 onwards. The data is sourced from three major schemes: Employees’ Provident Fund (EPF) Scheme, Employees’ State Insurance (ESI) Scheme, and National Pension Scheme (NPS). It’s important to note that there may be elements of overlap in the data, as highlighted by ministry officials.

Decline in New Subscribers

The comprehensive data for October reveals a concerning trend across the three schemes.

EPF Scheme: The number of new subscribers to the EPF declined for the third consecutive month, reaching just over 7.72 lakh additions in October, the lowest this year.
ESIC Scheme: New additions to the Employees’ State Insurance Corporation fell below 13 lakh in October, marking the lowest number in the last eight months. This decline signals weak demand in the formal employment sector.
NPS: The National Pension Scheme also witnessed a decline in new subscriptions, with October figures showing over a 3 percent drop compared to September.

Sector-wise Analysis

EPF Decline: The new additions to EPF saw a nearly 17 percent decline in October compared to the previous month.
ESIC Decline: New additions to the ESIC scheme experienced a 9 percent decline in October, indicating ongoing weakness in formal employment demand.
NPS Decline: NPS new additions hit a four-month low in October, reflecting a 3.2 percent decrease compared to September.

« Previous Post Next Post »