Formal employment seems to have picked up pace with both the Employees Provident Fund Organisation (EPFO) and the National Pension System (NPS) registering a significant rise, reported Hindu Business Line.
The EPFO reported that despite a dip in new subscribers for 2023-24 compared to the previous fiscal, the number of new subscribers in FY24 had doubled compared to 2018- 19.
In 2018-19, there were 61.1 lakh new subscribers, which rose to over 1.31 crore in 2023-24. From September 2017 to March 2024, more than 6.2 crore new subscribers were added.
It is worth remembering that organisations with 20 or more employees are mandatorily required to enrol their workers under EPF. It is voluntary for organisations with fewer than 20 employees.
Besides, EPF account registration is mandatory for salaried employees with a minimum income of ₹15,000 per month.
The number of contributing members to provident fund had been growing at a CAGR of over 20 per cent since 2018 whereas the overall workforce had grown at about 2 per cent, says Balasubramanian A, Vice-President, TeamLease Services.
Clearly, there has been growing formalisation of the workforce. One of the key factors driving this trend is the need felt by large employers to have an organised, engaged and productive workforce with low attrition. Ensuring payment of statutory compliances for social security is a crucial contributor to stickiness.
“While this may cost more at the outset, it pays off by delivering greater business value overall. This wave of formalisation has picked up momentum post the pandemic and several industries such as FMCG, healthcare, retail, and industrial manufacturing, have prioritised this with alacrity,” he said.
“With the much-anticipated labour codes coming into effect hopefully in the near future, this pace could accelerate further,” he added.
The EPFO in April recorded its highest-ever monthly increase of 18.92 lakh net members, marking a 10 per cent year-on-year growth.
More than 55 per cent of the new subscribers are in the 18-25 age group, showing that a significant portion of new entrants into the organised workforce are youth and primarily first-time job seekers, a government official said.