Hindu Editorial Analysis : 3-August-2023
The Employees Provident Fund (EPF) scheme’s data has been used by the Indian government since 2017 to gauge payroll employment and formal job creation in the country. While the monthly data released shows net increases in contributors, ground reports of unemployment contradict these findings. This essay delves into the EPF data and its significance in understanding the stagnation of formal employment in India.
Stagnancy in EPF Data
- Regular Contributors vs. Enrolments: EPF Organisation’s (EPFO) annual reports reveal that the number of regular contributors to the scheme has remained stagnant or even declined. Regular contributors are employees whose PF contributions are made regularly throughout the year, indicating stable formal employment.
Widening Gaps
- Disparity between Enrolments and Contributors: The increasing gap between the number of people enrolled in EPF and regular contributors raises concerns. This suggests that many enrolments are linked to temporary, subcontracted, or casual jobs, where PF contributions are irregular or cease shortly, reflecting the absence of formal, well-paid employment opportunities.
Insufficient Formal Employment
- Fewer New Entrants: The EPF data indicates a net creation of only 1.2 million formal jobs in the last five years, while an estimated 20-25 million new entrants joined the Indian labor market. This discrepancy highlights the lack of formal, regular, and well-paying jobs.
Challenges Hindering Formal Employment Growth
Role of Pandemic
- Impact of COVID-19: The pandemic partly contributed to the stagnation of formal employment in India, leading to a decline in EPF contributors. The economic disruptions caused by the pandemic affected job opportunities.
Neglect of Labor Data
- Absence of Alternative Data Sources: Over time, the Indian government neglected other sources of formal employment and labor data, like the Directorate General of Employment and Training (DGET), which has not been published since 2013. Utilized by the Reserve Bank of India, this data could have verified employment numbers and trends.
AI and Job Loss
- AI’s Influence: Experts predict that AI could replace over 7,800 human jobs in the next five years, leading to a potential loss of employment opportunities in certain sectors, especially in back-office functions and human resources.
Qualification-Mismatch Paradox
- Skill Shortages vs. Labor Surplus: India faces a paradox of skill shortages coexisting with a labor surplus. Certain industries experience a shortage of skilled workers, while there are numerous job seekers, indicating a mismatch between job opportunities and qualifications.
Sector-Specific Mismatch
- Services-led Growth: India’s economic growth has been services-led, resulting in a limited pool of skilled workers at the upper end. Simultaneously, capital intensity has increased in manufacturing despite a surplus labor force, leading to a sector-specific mismatch.
Low Participation of Women
- Inadequate Job Opportunities for Women: The working conditions in India, including safety concerns, limited public transportation, and societal norms, discourage women from seeking employment. Consequently, many women opt for home-based roles, limiting their participation in the formal job market.
Why In News
A detailed look at the Employees Provident Fund data reveals alarming stagnation in formal employment in the country, highlighting the urgent need for robust policies to stimulate job creation and economic growth. The persistent trend of stagnating formal employment poses significant challenges to the overall well-being of the workforce and the nation’s economic stability.
MCQs about EPF Data
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What does the EPF data reveal about formal employment in India?
A. The number of regular contributors to the EPF scheme has been steadily increasing.
B. The EPF data indicates a net creation of over 20 million formal jobs in the past five years.
C. The majority of EPF enrolments are linked to temporary or casual jobs with irregular PF contributions.
D. The EPF data is not a reliable measure of formal employment in the country.
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What is one of the challenges hindering formal employment growth in India?
A. Absence of artificial intelligence and data analytics in the job market.
B. AI is expected to create over 7,800 new human jobs in the next five years.
C. A surplus of skilled workers leading to a mismatch in job opportunities.
D. Lack of formal, well-paid, and regular employment opportunities.
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How did the COVID-19 pandemic impact formal employment in India?
A. The pandemic led to a surge in formal job creation in the country.
B. The number of EPF contributors increased significantly during the pandemic.
C. Formal employment saw a steady growth despite the economic disruptions caused by the pandemic.
D. The number of EPF contributors declined during the pandemic.
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What is the significance of the widening gap between EPF enrolments and regular contributors?
A. It indicates a decline in overall EPF enrolments in recent years.
B. It reflects the successful creation of formal, regular well-paid jobs in the country.
C. It highlights that the EPF data may not accurately represent formal employment growth.
D. It shows that more people are opting for part-time jobs with regular PF contributions.
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