Formal Sector Hiring Drops 20.8% in October; EPF Additions Hit 7-Month Low
Formal Sector Hiring Drops 20.8% in October; EPF Additions Hit 7-Month Low
Decline reflects slowdown in the formal labour market, despite progress in gender inclusivity.
The formal labour market experienced a sharp contraction in October, with fresh formal hiring seeing a significant drop. According to data released by the Employees’ Provident Fund Organisation (EPFO), the number of new monthly subscribers under the Employees’ Provident Fund (EPF) fell by 20.8% month-on-month (M-o-M) to 750,000. This marks a seven-month low compared to 947,000 in September.
The EPFO data serves as a barometer for the formal labour market, as it covers employees who are entitled to social security benefits and labour law protections. The latest figures indicate a decline in the share of young subscribers (18-25 age group), dropping to 58.5% (438,700) in October from 59.94% (567,700) in September. This is significant since this demographic typically represents first-time entrants to the labour market, a key indicator of its strength.
However, there was a silver lining in the form of increased female participation. The share of women among new subscribers rose to 27.9% (209,000) in October from 26.1% (247,000) in September. The labour ministry highlighted this as evidence of a shift towards a more inclusive and diverse workforce.
Net payroll additions, which account for new subscribers, exits, and re-entries, stood at 1.34 million in October, down by nearly 5% from 1.41 million in September. Despite being provisional and subject to revision, this decline aligns with broader labour market challenges.
The ministry noted that approximately 1.3 million members exited and later rejoined EPFO-covered establishments, reflecting job switches where employees opted to transfer their accumulations instead of withdrawing, thereby maintaining long-term financial stability and social security coverage.
Adding to the concerns, the Centre for Monitoring Indian Economy (CMIE) reported a sharp rise in unemployment to 8.7% in October from 7.8% in September, suggesting broader struggles in the labour market during the month.
Maharashtra led the state-wise contributions, accounting for 22.18% of net member additions in October. Other major contributors included Karnataka, Tamil Nadu, Delhi, Haryana, Telangana, and Gujarat, each adding over 5% of total net members during the month.
Industry-wise data showed notable growth in road motor transport, electronic media companies, and banks within the private sector. These sectors bucked the overall downward trend, demonstrating resilience and continued demand for skilled workers.
The decline in formal hiring reflects broader economic challenges, but the increased participation of women in the workforce points to ongoing progress in inclusivity. As states and industries adapt to these changes, stakeholders must monitor these trends closely to address the challenges facing the labour market while capitalizing on emerging opportunities.
