Indian economy is not creating new employment opportunities: SBI Research

Net job creation in the economy fell by 16.9 lakh in FY21 over the previous fiscal, says SBI Research analysis of EPFO payroll data. But the FY21 numbers are better than the FY20 net job creation, which had declined by 28.9 lakh. This shows that the economy is not creating new employment opportunities.

The latest EPFO data, as per PTI, shows that net new EPF subscribers stood at 94.5 lakh in FY21 and NPS added 5.82 lakh, taking the cumulative net addition to 100.4 lakh, which is marginally down from 102.3 lakh in FY20.

Soumya Kanti Ghosh, SBI’s group chief economic adviser, said this does not represent the correct picture as the data include the number of exited members who re-joined and re-subscribed, and thus not fresh job creation. “An estimate of the actual net new payroll (first job) adjusted for re-joined/re-subscribed members and formalization (based on ECR data), shows the actual net new payroll is only 44 lakh in FY21, which is 16.9 lakh less than the net new payroll generated in FY20, when the new payroll declined by almost 28.9 lakh,” he said.

Ghosh pointed out that most of the 44 lakh additions are low quality jobs. “The number of new members who joined declined by 6.9 lakh in FY21 compared to an increase of 1.5 lakh in FY20. This indicates that lower number of people exited from the job market in search for better/new jobs which was obviously scarce during the pandemic-hit year,” he said. “A breakup of the 95.4 lakhs job created by the EFPO payrolls, 41.2 lakh were through second jobs, 44 lakh through first jobs and 9.3 lakh were through formalization.”

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Official numbers, Ghosh said did not capture that 16.9 lakh decline in first-time jobs in FY21, though the number of second time jobs or those members who rejoined the payroll rose by 17.9 lakh. “Cumulatively, total payroll generation of EPFO and NPS was almost 19 lakh less than the previous fiscal,” he said, adding that in the private sector, most job losses were in smaller companies. The ratio of women enrolment to total enrolment in the EPFO data was 23% in FY20 and has not changed significantly in FY21.