· The recent downward revision in the Employees’ Provident Fund Organisation data does not imply a decrease in formal sector employment, according to labour economists, who add that there are several problems with the EPFO data and caution against its use as a gauge of formal sector employment in the country.
· The EPFO revised down the net enrolment numbers for the period from September 2017 to May 2018 by 5.54 lakh (12.4%) to 39.2 lakh from its earlier estimate of 44.74 lakh made last month.
· EPFO data is a very complicated piece of work and there is a lack of clarity about the methodology being followed for this dataset.
· Changes in EPFO numbers are not always indicative of a change in employment levels since there are several reasons why EPFO numbers might change without a corresponding change in employment.
· The people at the bottom of the pyramid get low wages, so they are not enthusiastic about their salaries getting cut for the Provident Fund (PF). Neither are their employers eager to pay PF.
· The new Goods and Services Tax regime created a certain incentive for many small enterprises to register themselves on the GST network, and so they may have registered under EPFO as well. Thus, these are not new jobs being created; it is simply that they are newly registered under EPFO.
· Other reasons for change in employment level can be a worker quitting their job to start their own company, a worker being transferred to a foreign branch of an Indian company, employees retiring, and employees quitting once they get married.
· Also a company employing 19 people may not be in EPFO, but as soon as it adds one more employee, all 20 are added to EPFO. But the actual increase in employment has only been a single person.
· The estimates may include temporary employees whose contributions may not be continuous for the entire year, a point noted by the EPFO as well in its data release.
· Another major lacuna in the EPFO numbers was that it does not make clear whether the additions are to the total number of members (about 150 million) or to the number of active members who actually make payments and who number only about 60 million.
Source : The Hindu