India has seen an ever fluctuating state of formal employment. Recent data from the Employees Provident Fund (EPF) suggests an increase in contributors, however, this seems contradictory given the widespread reports of unemployment and job scarcity. The government has been using EPF data as a metric for formal employment creation since 2017, which may not present the complete picture. To truly understand the situation, one must delve into the definitions and characteristics of formal employment, informal employment, and the role of EPF in India.
Understanding Formal Employment in India
Formal employment, by definition, is a type of work that is regulated by labor laws and employment contracts. Key characteristics of such employment include written contracts, entitlement to social security benefits such as health insurance and retirement funds, labor rights protection under law, and a regular payment schedule. These aspects separate it from other forms of employment, like informal or casual work.
EPF Data and Its Implications on Formal Jobs
While EPF data shows a stagnant or declining number of regular contributors in recent years, it doesn’t necessarily reflect the real status of employment. Between 2012 and 2022, the number of regular contributors increased from 30.9 million to 46.3 million, but between 2017 and 2022, there was only a minimal growth from 45.11 million to 46.33 million. This suggests that while overall EPF enrollments increased significantly, it did not translate into regular contributions indicating that many are in temporary or irregular jobs.
The Declining Number of Contributors to EPF
Several factors have led to a decline in EPF contributors, including the pandemic, and lack of monthly publication of data by the EPFO. Additionally, the Indian government has largely ignored other sources of formal employment data, such as the Directorate General of Employment and Training (DGET) which has not been published since 2013.
Job Crisis Scenario in India
Recent data from The National Statistical Office’s (NSO) Periodic Labour Force Survey (PLFS) report for 2021-22 reveals an unemployment rate of 4.1%. Furthermore, the Labor Force Participation Rates (LFPR) is at a record low of 39.5% in 2022-23, its lowest since 2016-17. LFPR, the share of the working-age population that is employed or looking for employment, further explains the depth of the job crisis.
Reasons behind Low Employment in India
Multiple factors can be attributed to India’s low employment rate. These include absence of regular, well-paid formal jobs, social factors like the caste system, dominance of underdeveloped agriculture sector, fall of small industries, and limitations in the education system delivering the right skills and specializations needed for today’s jobs.
Labour Rights Protection in India
In India, labour rights are protected through various mechanisms including the Constitutional framework, judicial interpretations of laws, and legislative frameworks like the four consolidated sets of labour codes introduced recently.
Government’s Steps to Alleviate Unemployment
The government has launched several initiatives to combat unemployment. These include measures like Support for Marginalized Individuals for Livelihood and Enterprise (SMILE), PM-DAKSH (Pradhan Mantri Dakshta Aur Kushalta Sampann Hitgrahi), Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), Pradhan Mantri Kaushal Vikas Yojana (PMKVY), Start Up India Scheme and Rozgar Mela.
Addressing the Job Crisis in India
Tackling the formal job crisis in India requires a multi-dimensional approach. There is a need for comprehensive labour statistics that provide an accurate picture of the situation which can guide policy interventions. Industries with higher labor intensity such as manufacturing and certain services should be encouraged. Skill development programs aligning with industry demands can enhance employability and lead to better quality formal jobs.
It’s evident that while globalization has been beneficial, it has led to a reduction in employment in the formal sector. It’s critical to address this issue since increased informalization could be detrimental in the long run to the country’s overall development.