The Covid-19 lockdown has had an immediate, material adverse impact on jobs creation if not jobs themselves, confirms the Employees Provident Fund (EPF) payroll data. Net addition to the EPF subscriber base fell sharply from 10.21 lakh in February to 5.73 lakh in March and then sharply to just 1.33 lakh in April, as per official data.
Of course, the data is still not compiled and made publicly available, EPF subscription base is seen to have recovered some lost ground in May and improved further in June, due to the easing of lockdown restrictions and resultant resumption of activities by a cross-section of firms.
The country’s unemployment rate, which saw a sharp increase to 23.5% in April-May due to the lockdown, dropped almost equally steeply in the first two weeks of June, according to the Centre for Monitoring Indian Economy. The rate first dropped to 17.5% in the first week of June and then it fell further to 11.6% in the second week of the month.
This signals a rather smart revival of the economic activities, corroborated by certain other data points including exports — which touched $4.94 billion in the first week of June, against $5.03 billion a year before — industrial power consumption and highway toll collections. The CMIE also highlighted that the fall in the unemployment rate came with an increase in the labour participation rate (LPR), which was recorded at 40.4% in the week ended June 14.
For the year 2019-20 (April-March) as a whole, the EPF subscriber base saw average monthly net addition of 6.54 lakh, higher than 5.1 lakh 2018-19 and far above 2.21 lakh during the last seven months of 2017-18.
Of course, the jump in EPFO payroll numbers isn’t wholly attributable to ‘new jobs’; the accelerated expansion of the subscription base is partly driven by policy support to formalisation of the economy, including Pradhan Mantri Rojgar Protsahan Yojona, the window for which closed on March 31, 2019.
But the fact that people in the 18-21 years age bracket followed by those of 22-25 years have the highest shares (32.31% and 28%, respectively) of net EPF subscribers added in FY20 is proof that new jobs indeed got created at a faster pace in the year, than the previous year, which saw a bigger annual rate of increase in EPF base. And with the lockdown, the job situation deteriorated, all of a sudden.
In the wake of the liquidity crunch faced by companies and other business units, the government gave them the option to defer their monthly statutory contributions to the retirement fund body to a later unspecified date; but they are still required to file the electronic challan-cum-return on time, which will reflect the payroll on time.
