Uptick in PF enrolment, 1.38 cr net users joined EPFO scheme in 2021-22

There was an uptick in PF (Provident Fund) enrolment in India during 2021-22, with 1.38 crore net subscribers joining the Employees’ Provident Fund Organisation (EPFO) scheme, indicating a higher number of people joining the formal workforce, according to a report called the Karnataka Jobs Report 2022-23 by service provider Quess Corp and Federation of Indian Chambers of Commerce and Industry (FICCI). This trend is continuing in 2022-23, which suggests that formal employment is expected to increase further.

 The latest EPFO payroll figures from the past five years (2017-22) indicate that Maharashtra, Karnataka, Tamil Nadu, Gujarat, and Haryana have contributed significantly to the overall net EPFO new payrolls, accounting for 60.54 per cent of the total. These states also registered the highest number of new Employees’ State Insurance Corporation (ESIC) members as of March 2021, with steady growth in formal jobs observed in the top five states. Maharashtra, Karnataka, and Tamil Nadu are among the top-performing states in terms of GDP growth, which explains their consistent contribution to the EPFO database.

“Given the burgeoning growth of key sectors in India and the noticeable uptick in formal employment there is a sense of optimism regarding the future of the country’s economy,” said Lohit Bhatia, President of Workforce Management, Quess Corp. 

The report findings based on an analysis of EPFO, ESIC database and estimation of government employees showed that the state of Karnataka has about 24.7 per cent of its workforce employed in the formal sector, which is 4.74 per cent higher than the national average of 20 per cent, creating promising opportunities for the state’s industry and trade prospects. The report also highlights that Karnataka accounts for nearly 11 per cent of the net new formal job additions in India.

“The findings in the report indicate that Karnataka is a leader in formal job creation in India,” said K Ullas Kamath, Chairman, FICCI Karnataka State Council. “Undertaking skilling efforts at graduation level with a constructive partnership with industry, Government, and academia can fast-track the progress of formal job creation, especially in a large number of MSMEs, booming IT, and tech-driven sectors.”

According to the data, the expert services category, comprising manpower agencies, private security agencies, and small contractors, among others, has emerged as the primary formal job creator, responsible for approximately 38 per cent of the new formal jobs generated in the last five years. The demand for temporary or contract-based workers across various industries has fuelled this growth. Additionally, the government’s efforts to formalize the informal sector have resulted in a higher number of small contractors and other informal businesses registering with the EPFO and contributing to the creation of formal jobs.

The remaining eight major sectors, including building and construction, trading and commercial establishments, engineering, developing electronic, mechanical, and general engineering products, textiles, and garment making, together added around 1.56 crore jobs, which is around 62 per cent of the new formal jobs added. The Building and Construction sector is the second-largest job creator, with consistent growth in formal job creation. The growth is attributed to the government’s emphasis on creating smart cities and enhancing infrastructure, along with the rising demand for infrastructure and real estate projects. The textile industry has also shown signs of recovery with a significant increase in PF-linked employees in the last five years. This growth is attributed to the surge in demand for textile products both domestically and internationally, along with favourable government policies such as the Production Linked Incentive (PLI) scheme.

Agriculture dominates India’s informal job market with over half of e-Shram portal registrations. The report also delves into the analysis of India’s informal workforce and estimates that around 45.6 crore individuals are engaged in this sector. Out of India’s estimated working population of 57 crore, only 20 per cent (11.4 crore) are employed in the formal sector. While the e-Shram portal (the centralised database of unorganised workers) has seen a notable 28.55 crore individuals registering as of December 2022, approximately 17.05 crore informal sector workers are yet to register. Uttar Pradesh has the highest number of registrations on the e-Shram portal, with 8.3 crore workers registered, followed by Bihar, West Bengal, Madhya Pradesh, and Maharashtra.