During the first wave of the pandemic in March-August 2020, the government enhanced the benefits for firms employing up to 100 people with 90% having wage below `15,000/month by footing their entire EPF bill (24% of pay, including the shares of both employers and employees).
Even as the economy recovers from the pandemic-induced deep slump, a process of formalisation of jobs is gaining traction again. New subscriptions to the two key social security funds — EPFO and ESIC — grew by 41% and 71%, respectively, in December over the lows seen in May 2021, when the second wave of the pandemic disrupted economic activities, according to provisional figures. The surge in these subscriptions bears out the fact that process of formalisation of jobs and the larger economy hasn’t plateaued yet.
Of course, the EPFO (Employees’ Provident Fund Organisation) numbers undergo sharp revisions. But it is clear that registrations under both the schemes gathered pace in 2021-22 after the decline witnessed in 2019-20.
The latest payroll report brought out by the ministry of statistics & programme implementation (MoSPI) showed as many as 9.11 lakh new subscribers joined the retirement benefit schemes in December 2021 run by the EPFO, compared with 8.73 lakh in the previous month. The numbers are even better for the ESIC (Employees’ State Insurance Corporation). As many as 15.26 lakh subscribers joined the ESIC in December, compared with 10.39 lakh in November.
New registration under the EPFO gathered unprecedented pace in 2016 as the government started bearing the cost of EPF contribution by employers (12% of basic pay) for employees earning up to Rs 15,000 per month. But new subscriptions reached a nadir at just 1.95 lakh in May 2020, compared with the monthly average of 11.62 lakh in 2018-19. During the first wave of the pandemic in March-August 2020, the government enhanced the benefits for firms employing up to 100 people with 90% having wage below Rs 15,000/month by footing their entire EPF bill (24% of pay, including the shares of both employers and employees).
Since then, under the Aatmanirbhar Bharat Rojgar Yojana (ABRY), the government has been bearing the entire EPF cost for employees recruited on or after October 1, 2020 and earning up to Rs 15,000 per month in firms employing up to 1,000 people. The terminal date for registration of beneficiaries under the scheme is March 31, 2022.
The EPFO added 14.60 lakh subscribers on a net basis during December 2021, up 20% over November, 2021. In the whole of 2020-21 fiscal, an average of 6.42 lakh subscribers joined the EPFO on a net basis. The number of net subscriptions is computed by taking into account new subscriptions, those who left the scheme and people who re-joined it in the relevant period.
The government flags sanguine EPF numbers as reflective of the pace of job creation, but noted labour economists have pointed out these are at best a distant proxy for the employment scenario; the rise in EPF subscriptions indicate formalisation of jobs rather than job creation, they noted.According to the Centre for Monitoring Indian Economy (CMIE), the country’s unemployment rate came in at a 10-month low of 6.57% in January 2022, against a four-month high of 7.91% in December.
The ESIC’s director-general MS Bhatia said the pace of new registration under its insurance scheme for factory workers and low-wage earners has been on the rise for several months, barring October-November last year when a technical glitch slowed it. ESIC benefits are available for workers in 595 districts of the country, with 60 more districts coming under its ambit in the last six months.
The ESIC is tasked with providing insurance cover and free medical care to those earning monthly wages of up to `21,000. The ESIC benefits are available to low-earners in specified industrial and commercial establishments employing more than 10 workers.
