Manufacturing states see dip in net new EPF subscriptions in August

Seven states saw a fall in net new Employees’ Provident Fund (EPF) subscriptions in the month of August (from July levels), reveals the payroll data released last week by the Employees’ Provident Fund Organisation (EPFO).

Of the 21 states, for which data was analysed by Business Standard, seven states saw a cumulative fall of 43,993 net new subscriptions in August. This comes in the wake of fresh formal jobs created in August also dropping below the 1-million mark for the first time in five months as EPFO new subscriptions declined around 12 per cent, from 1,119,698 in July to 986,850 in August.

Net payroll additions – taking into account new additions, number of exits, and return of old subscribers – have grown only marginally, from 1,652,818 in July to 1,694,211 in August. This fall in new subscribers and sluggish growth in net payroll in August could be on account of slow job creation in the manufacturing sector.

Sachchidanand Shukla, chief economist, Mahindra Group, explains there is a high correlation between EPFO growth on a net basis and the Index of Industrial Production (IIP). A fall in IIP impacts the EPFO numbers as well.

“In the case of industrial states, this (correlation) is likely to be more pronounced. Since IIP contracted 0.8 per cent in August, this is likely to have exacerbated job creation in some key states amidst slowdown in exports as well,” said Shukla.

Major industrialised states like Gujarat (13,395), Andhra Pradesh (9,460), Tamil Nadu (8,383) and Madhya Pradesh (4,432) saw decrease in net new subscriptions across age categories.

Maharashtra, which has the highest net EPF subscriber base, and Telangana are the other two major industrial states registering 4,390 and 2,607 fewer net new EPF subscriptions, respectively, in August, as they saw a fall in subscriptions in the 18-25 age group – often considered crucial to reflect the robustness of the job market.

While Rajasthan (786) only saw a minimal decline in net new subscriptions, except for Karnataka (3,876), no other major industrial state reported growth in net new subscriptions.

Earlier, the data, released by the Centre for Monitoring Indian Economy (CMIE), which conducts its own survey, showed India’s labour force had grown 4 million to reach 430 million in August, whereas salaried jobs had fallen 4.6 million, from 80.8 million in July to 76.2 million in August, amid unemployment rate shooting up to 8.3 per cent — the highest in 12 months.

“In August, agriculture shed 11 million jobs. A little over half of these were farmers. The rest were farm labourers. However, most of them seem to have found jobs in the non-farm services sectors, principally in providing non-professional personal services,” CMIE had said in a statement.

Uttar Pradesh (22,962), Haryana (14,211), West Bengal (7,320), and Uttarakhand (6,300) are the major non-industrial states which reported an increase in net new subscriptions in August. However, Assam more than doubled its net subscriber base as it reported an addition of 7,767 subscribers.