The fluctuation in the number of new subscribers to the Employees’ Provident Fund Organisation (EPFO) over the last three years gives a significant insight into job creation in the organised sector. Variations notwithstanding, new members who came under the EPFO ambit totalled a massive 7.5 crore in the last three years. The very fact that such a large number of employees became EPFO subscribers counters the opposition charge that the BJP-led NDA at the centre failed to create new jobs. The Narendra Modi government has been fighting a perception battle that job creation has been much lower than the promised 10 million in the BJP manifesto of 2014.
However, there’s no escape from the fact that new additions to EPFO subscription base peaked at 4.06 crore in 2015 and moderated to 2.19 crore in 2017. The NDA leadership has reason to be happy that the job market expanded even in the aftermath of demonetisation and the introduction of the Goods and Services Tax (GST). What should be of concern for policymakers and critics alike is that EPFO subscribers’ addition limited the insight only to the organised sector. If one were to consider the small and medium enterprises (SMEs) employment data, the scenario may change drastically.
Credible data on both contractual and long-term jobs creation in SMEs, and the informal sector especially in rural areas is unavailable in the public domain. Finance minister Arun Jaitley will have to come up with credible numbers on the jobs created in the last three years when he presents the budget on February 1 next year. Secondly, the government must put its best brains behind improving the number of contributing members to the EPFO subscribers’ base. Given that less than 10 per cent out of a workforce of 47.5 crore contributes to the employees pension fund, the government will have to come up with a credible plan to increase these numbers. Unless social security covers a larger number of working members, the government cannot claim success in its socio-economic policy matrix. Thirdly, subscription to EPF per employee or contributing member has to go up substantially. Only then will the subscribers’ families meet any untoward contingency or post-retirement of the employee member. That will require the EPFO members’ earnings to go up substantially. Besides, the Indian workforce has to move up the industry value chain.
The minimum monthly pay threshold of Rs 15,000, which was set for EPFO membership, has had a bearing on the numbers. Earlier, the threshold was much lower at Rs 8,000 per month. After implementation of the eighth pay commission recommendations, wages, perks and retirement benefits of most government, semi-government and public sector companies’ personnel have gone up by a big margin. Consequently, pay and perks in state governments, private sector services and manufacturing have had gone northwards. Interestingly enough, new subscribers continued to be added to the EPFO notwithstanding proliferation of private pension players, trusts and insurance companies managing pension monies.
Going forward, the focus should not only be on expanding the social security benefits for the existing workforce in the organised sector, these facilities should extend to personnel in the informal sector and to contractual employees. Providing social security cover to farmers and farm workers will be the biggest challenge. Recognising agriculture as a huge production sector that contributes handsomely to the economy will be the starting point. Also, the fact that over 660 million people depend on farming must propel the government to put together a policy to provide social security cover that includes insurance, pension and other benefits for the farmers, rural bread earners and their families.