EPFO data shows fall in jobs created, but experts say no need to worry

Employees' Provident Fund Organisation's latest payroll data showed that formal jobs created fell for the second consecutive month in September.

Even as job cuts make headlines across the world, it might be too early to call it doomsday in India. Data released by the government's Employees' Provident Fund Organisation (EPFO) showed a fall in the number of formal jobs created in September to 930,000, a decline for the second consecutive month.

In August, 10,26,274 new subscribers enrolled with the EPFO, down from 11,42,149 in July. The Centre for Monitoring Indian Economy (CMIE) data showed that unemployment in September dropped to a four-year low of 6.4 percent, while, in October, it shot up to 7.8 percent.

Experts, such as, DK Srivastava, Policy Advisor -EY India, Aditi Nayar, Chief Economist ICRA , NR Bhanumurthy, Vice Chancellor at DR BR Ambedkar School of Economics University contend that the EPFO data should be read with caution – considering the volatility it has displayed and also because it represents only a section of employment. They are optimistic than pessimistic on job creation in India.

Why EPFO data is not a cause for concern

The broad indicators show an upswing in recovery as far as the Indian economy is concerned. For instance, direct tax collections, up to September 8, 2022, showed a steady growth at Rs 6.48 lakh crore, 35.46 percent higher than the gross collections for the corresponding period last year.

The services sector showed a loss in growth momentum in September as the S&P Global India Services Purchasing Managers' Index fell to 54.3 -- the weakest rate of expansion since March, a fall from 57.2 in August. But

In October, the index showed a recovery as it edged up to 55.1.

"Job creation is highly correlated with the recovery process. The indicators do suggest there is a recovery. Jobs are getting created across sectors. There are some reservations on how to use the EPFO data," says Dr NR Bhanumurthy, Vice Chancellor, Dr BR Ambedkar School of Economics University.

Google mobility data

Google's mobility data also shows an uptick across a majority of states in India. Mobility data is an indicator of visits to restaurants, recreation centres, parks etc.

Air traffic data, too, has shown an uptick. Though still lower than the pre-pandemic levels, it shows a steady rise from the last two years.

Average daily air passenger traffic in October, the festival month, was around 360,000 against the pre-COVID level of nearly 400,000 passengers. But this festive season has been better than the last two years. Bank credit also rose by 17.94 percent year on year on the back of higher demand for credit by corporates and consumers.

Having said that, exports have plunged to a two-year low—declining 16.65 percent in October to $29.78 billion. There are mixed indicators of recovery that determines job growth in an economy. For now, there is more optimism than pessimism on jobs in India.