Union minister’s claim of 15-16 lakh jobs being created every month is fallacious

Ashwini Vaishnaw based his remarks on EPFO data, which experts say, does not present a true picture since the bulk of the employment in the country is informal

NT Correspondent

Bengaluru: On November 24, Ashwini Vaishnaw, Union Minister for Railways, Communications, Electronics and Information Technology used the Employees’ Provident Fund Organisation (EPFO) payroll statistics to claim that an average of about 15-16 lakh jobs are being generated by the union government each month.

However, the data used to make the claim does not represent an accurate scenario of employment generation in the country. While the EPFO is a statutory body under the Ministry of Labour and Employment, EPF is a social security scheme that enables employees in the organised sector to save a portion of their salaries for retirement.

Under the scheme, the employee and the employer must pay an equal contribution to the fund which will be paid out in total along with interest to the employee at the time of retirement. Registered establishments with more than 20 or more employees by the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 are required to deduct EPF.

Organisations with less than 20 employees can also join the scheme on a voluntary basis. There are limitations to the EPF payroll data being used to keep a count on the number of jobs produced. For example, if an establishment with only 18 employees hires three more workers bringing up their total staff to 21, crossing the threshold for EPF registration, it does not mean that 21 new jobs were created.

It means that 18 have now merely gotten registered with the system while only three jobs are new. To draw a clearer picture, according to various reports, in India nearly three-fourths of employment is in enterprises that have less than ten workers and close to 93% of India’s workforce is employed in the informal sector.

Thus, there is a possibility of overcounting jobs when these informal sector organisations cross the 20 employees threshold and register with the EPFO. EPFO data is also unreliable as re-subscription of EPF accounts of the same person, when they switch jobs or open a fresh PF account, can also occur. It is important to note that having an EPF account also does not necessarily mean that the account holder is employed at a particular period of time.