The Indian authorities claims that the formal job market within the nation is booming. It cites as proof payroll information from the Workers’ Provident Fund Group (EPFO).
The Workers’ Provident Fund is a compulsory government-backed retirement financial savings scheme in India for salaried staff. The query, nonetheless, is: does a rising EPFO depend actually quantity to extra good jobs?
The official story goes as follows. The Financial Survey 2023-24 reported that web EPFO payroll additions greater than doubled, from 6.11 million in FY2018-19 to 13.15 million. The survey known as it “wholesome development in formal employment.” The Union Labor Ministry hailed it as a “rising formal employment panorama.”
The Indian authorities has now gone additional and linked formalization of employment on to “high quality jobs.” In August 2026, it promoted the Pradhan Mantri Viksit Bharat Rozgar Yojana as a scheme to broaden formal employment, designed to encourage first-time employment and to reward employers for creating new formal jobs by means of EPFO.
Formalization is effective. A employee introduced underneath EPF protection positive factors entry to an institutional mechanism for retirement financial savings and social safety. An enterprise complying with labor laws represents progress over one that doesn’t.
Nonetheless, these claims ignore actuality. An EPFO “web subscriber addition” is just not a web new job. It could embody an individual transferring from one EPFO-covered employer to a different; an present employee newly introduced into EPFO protection; a employee beforehand exterior formal protection changing into coated; staff rejoining after an employment break; adjustments ensuing from EPFO administrative protection; and, importantly, formalization of an already present casual job.
September 2026 EPFO information confirmed contributors in 12 historically labor-intensive sectors (clothes, textiles, leather-based, jute, beedi, tea, brick-making, cashew, coir, cotton ginning, diamond slicing, and others) fell 1.3 p.c, from 5,536,000 in 2023-24 to five,464,000 in 2025-26. These are exactly the sectors India should broaden to soak up staff leaving agriculture.
There’s a additional basic statistical downside.
EPFO payroll statistics measure actions into and out of the EPF system. The month-to-month payroll sequence information first-time subscribers, members exiting protection, and earlier members who rejoin. The federal government itself cautions that the numbers are provisional as a result of worker information are constantly up to date.
The Financial Survey 2025-26 carried the federal government’s claims additional: organized manufacturing added 5.7 million jobs. That is probably extra fascinating as a result of it’s not primarily based on EPFO figures.
The Nationwide Pattern Survey or NSS Survey makes use of Annual Survey of Industries (ASI) information and says organized manufacturing employment elevated by greater than 5.7 million between FY2015 and FY2024; grew at about 4 p.c compounded annual development charge (CAGR); and elevated by greater than 1 million in FY2024 alone, a 6 p.c year-on-year improve.
That is in all probability the strongest official proof presently being cited for precise employment growth within the organized sector, relatively than merely formalization. However there’s a main definitional qualification: The ASI’s “individuals engaged” class contains working proprietors, relations, and unpaid staff, in addition to workers. So it’s not synonymous with common wage/salaried formal jobs.
The federal government can also be pointing to the rise in common salaried employment. Common wage/salaried employment elevated from 22.4 p.c of staff in 2024 to 23.6 p.c in 2025. That may be a significant motion towards wage employment, though it’s nonetheless very removed from the declare that almost all new employment is formal.
Actually, what takes the wind out of the federal government’s claims is that the rise in organized manufacturing has been accompanied by rising contractualization. In line with ASI, contract staff accounted for under about 13 p.c of the formal manufacturing workforce in 1993-94. Nonetheless, this share rose sharply to twenty p.c by 1999-2000 and additional to 37.8 p.c in 2018-19. As per the newest ASI information (2022-23), it has reached 40.7 p.c. A lot for the declare of formalization – the ILO defines it as work with social safety, and contract work doesn’t provide that.
The share share of contract labor in capital-intensive industries has elevated from 19.5 p.c in 1999-2000 to 46 p.c in 2018-2019, whereas it has elevated from 22 p.c in 1999-2000 to 33 p.c in 2018-2019 in labor-intensive enterprises.
As if that isn’t sufficient, if EPFO was actually creating so many new jobs, how is it that India’s Periodic Labor Drive Survey (PLFS) continues to point out that India’s share of casual staff with out social insurance coverage (i.e. pensions, demise/incapacity insurance coverage, maternity advantages, and so on.) was 90 p.c in 2004-5, 90 p.c in 2017-18, and nonetheless 90 p.c in 2024.
Job high quality additionally issues: period, earnings, working circumstances, social safety, safety of tenure, and prospects for development. India’s employment problem has traditionally been not solely unemployment but additionally underemployment, low productiveness, and poor-quality work.
The newest PLFS information illustrate this complexity. Even after the rise in common wage employment, 56.2 p.c of staff in 2025 remained self-employed (principally own-account and unpaid household labor) and one other 20.20 p.c had been informal wage laborers. Agriculture nonetheless accounted for 43 p.c of employment in 2025 (42 p.c in 2019). The most important addition to the workforce since 2020 has been in agriculture (rising from 200 million to 280 million in 2024).
This issues most for the younger. A graduate in a low-paid, insecure job is technically employed however not upwardly cellular. As we estimate in our new ebook, “India Out of Work,” actual wages for informal and common staff, and for the 53 p.c of staff who’re self-employed, have stagnated for 12 years. If non-farm jobs have grown at half the required charge (12 million a 12 months) for a dozen years the Modi authorities has been in energy, leaving youth unemployment double its 2012 stage, from 6 p.c to 12 p.c in 2024, how can actual wages rise, nonetheless loudly the federal government touts its low inflation?
The true take a look at of India’s labor market is just not what number of names enter an EPFO database however whether or not the economic system creates sufficient secure, productive, and decently paid jobs. If it did, the youth (these aged 15-29 years) not in schooling, employment, and coaching, wouldn’t have jumped from 50 million in 2012 to 100 million in 2024. Clearly, many grew to become “discouraged staff” who stopped searching for work.
Initially revealed underneath Inventive Commons Attribution 4.0 by 360info.
