India’s formal job creation has declined for the second consecutive year, according to revised payroll data released by the Employees’ Provident Fund Organisation (EPFO).
In FY25, the EPFO added 12.9 million net new subscribers, down from 13.1 million in FY24 and 13.8 million in FY23.
The trend marks a notable retreat from the FY23 peak, which was significantly boosted by government-backed hiring incentives under the Atmanirbhar Bharat Rojgar Yojana (ABRY).
The 1.3% year-on-year dip in FY25 follows a 5.1% decline in FY24, raising concerns about the sustainability of formal employment growth despite India’s strong economic performance.
Fewer New Establishments Join EPFO
In addition to slower payroll growth, the number of new establishments registering with EPFO also fell.
Only 52,309 businesses filed their first Electronic Challan cum Return (ECR) in FY25, a 6.6% drop from 56,023 in FY24.
This reverses the marginal increase seen in FY24 over FY23, when 55,337 establishments had joined the EPFO network.
Officials attributed the slowdown to a “high base effect” from FY23.
During that period, job creation was artificially elevated due to support from the Atmanirbhar Bharat Rozgar Yojana (ABRY).
The scheme, launched in October 2020 to incentivize hiring during the post-COVID recovery, had disbursed ₹10,188.5 crore to 6.05 million workers across 1.52 lakh establishments by March 2024—well below its original ₹23,000 crore allocation.
Economic Growth Outpaces Job Creation
The decline in formal job creation stands in contrast to India’s robust GDP growth. The economy expanded by 7.6% in FY23, 9.2% in FY24, and 6.5% in FY25.
However, the pace of employment generation has not kept up, suggesting a widening gap between output growth and workforce absorption.
Industry experts have flagged this mismatch as a structural concern.
“Creation of formal jobs in the country is not keeping pace with economic growth, as the private sector remains cautious amid geopolitical uncertainty,” one analyst noted.
Government Response: New Incentive Scheme in Focus
To address the economic slowdown, the government has launched the Employment Linked Incentive (ELI) scheme.
The initiative is designed to boost private-sector hiring and widen social security coverage for workers.
The scheme is expected to offer targeted benefits to employers who create new jobs and register workers under EPFO.
Policymakers hope the ELI scheme will revive momentum in formal job creation.
They also aim to bridge the persistent gap between economic expansion and employment growth through targeted incentives.
However, its impact remains to be seen, especially as businesses continue to navigate global headwinds and domestic regulatory shifts.
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