The current economy slowdown is impacting employment generation significantly as payroll creation, a proxy for employment generation, could be at least 15.8 lakh lower in the current financial year than the previous year.
In the previous financial year, the country had created 89.7 lakh new payrolls, as per EPFO data.
“The slow growth is now having a visible impact on payroll creation. In FY19, India had created 89.7 lakh new payrolls, as per EPFO data. In FY20, as per current projections, this number could be at least 15.8 lakh lower,” State Bank of India’s (SBI) group chief economic adviser Soumya Kanti Ghosh said in a report.
The EPFO data primarily covers low-paid jobs as the salary is capped at ₹15,000 per month. Government jobs and private jobs are not within its ambit as such data had moved to the NPS beginning 2004.
“Interestingly, even in the NPS category, State and central governments are [expected] to create close to 39,000 jobs less in FY20, as per current trends. Hence, the number of new payrolls created in FY20 could be at least 16 lakh lower than in FY19,” the report said.
The country’s growth rate is expected to fall to an 11-year low of 5% for the current financial year, the government said last week.
The SBI report noted that the extent of formalisation had declined steadily and is now currently at 9.5% of overall payroll creation versus 11% in FY19. Hence Goods and Services Tax (GST) collections may stay below the ₹1.1 lakh crore per month mark the Centre is hoping to exceed. The prospect of lower payroll creation in government shows it was not recruiting afresh in lieu of retiring staff, it added.
