Formal Job Creation in India Declines for Two Years

Formal job creation under the Employees' Provident Fund Organisation (EPFO) has declined for two consecutive years, from 13.8 million in FY23 to 13.1 million in FY24 and 12.9 million in FY25. The number of establishments remitting first Electronic Challan cum Return (ECR) also fell by 6.6% in FY25. Officials attribute the low job creation to the high base of FY23, which saw additional enrolment under the Atmanirbhar Bharat Rojgar Yojana (ABRY) scheme. Experts say the slowdown in formal job creation does not align with India's high economic growth in the last two years.

Formal job creation under the Employees' Provident Fund Organisation (EPFO) has shown a decline over the past two years. According to the latest data, the number of new formal jobs created fell from 13.8 million in FY23 to 13.1 million in FY24 and further to 12.9 million in FY25 [1]. This trend is particularly notable given India's robust economic growth in the last two years.

The decline in formal job creation can be attributed to several factors. One significant reason is the high base set in FY23, which saw additional enrolment under the Atmanirbhar Bharat Rojgar Yojana (ABRY) scheme. This initial spike in enrolment created a high benchmark that has been difficult to maintain [1].

Moreover, the slowdown in formal job creation does not align with India's high economic growth. This discrepancy suggests that the job market is not fully capturing the benefits of economic growth, potentially indicating a need for more targeted interventions to boost job creation.

In response to the declining formal job creation, the Ministry of Labour and Employment has called for collaboration with the Ministry of Statistics and Programme Implementation (MoSPI) to assess the impact of the newly launched Pradhan Mantri Viksit Bharat Rojgar Yojana (PM VBRY) on job creation [1]. This initiative aims to create 35 million jobs in two years, with benefits applicable to jobs created between August 1, 2025, and July 31, 2027.

The Employment Linked Incentive (ELI) Scheme, also known as PM-VBRY, is designed to support businesses in hiring more people and encourage formal employment. The scheme provides incentives to employers who hire new employees, including support for the Employees’ Provident Fund (EPF) share up to ₹15,000 in two instalments [2]. This initiative is intended to make formal employment more affordable for companies and boost job creation, particularly in manufacturing sectors.

As the ELI Scheme enters its second year, it is crucial to monitor its impact on formal job creation. The collaboration between the Ministry of Labour and Employment and MoSPI will be instrumental in understanding the scheme's effectiveness and making necessary adjustments to enhance its impact on the job market.

References:
[1] https://www.business-standard.com/industry/news/labour-ministry-mospi-collaboration-job-creation-scheme-tracking-125082801175_1.html
[2] https://www.cashe.co.in/our-blog/employment-linked-incentive-scheme/