Since 2017, the Indian government has been using the Employees Provident Fund (EPF) scheme’s data as a measure of payroll employment and formal job creation in the country. The monthly data released as part of this initiative has generally shown net increases in the number of contributors and this has been portrayed as evidence of employment creation in the country. However, this is in stark variance with ground reports of unemployment and a dearth of jobs from various parts of the country. So, how does one square these divergent narratives and understand what’s happening to formal jobs in the country? If we move past the basic scheme enrolment numbers, the EPF data, in fact, provide important insights into what’s happening to formal employment in the country. It also reveals why official claims of job creation based on EPF enrolment numbers can be misleading.
Unlike the EPF monthly enrolment data, which generally depicts increases in contributors, the EPF Organisation’s (EPFO) annual reports reveal that the number of regular contributors to the scheme has remained relatively stagnant or even declined in recent years, as shown in Chart 1. Regular contributors to the EPF scheme are those enrolled employees whose PF contributions are made on a regular basis during the year. This is in contrast to those employees who are merely enrolled into the scheme at some point, but whose contributions are irregular or stop shortly after.
