The Indian government claims that the formal job market in the country is booming. It cites as proof payroll data from the Employees’ Provident Fund Organization (EPFO).
The Employees’ Provident Fund is a mandatory government-backed retirement savings scheme in India for salaried workers. The question, however, is: does a rising EPFO count really amount to more good jobs?
The official story goes as follows. The Economic Survey 2023-24 reported that net EPFO payroll additions more than doubled, from 6.11 million in FY2018-19 to 13.15 million. The survey called it “healthy growth in formal employment.” The Union Labor Ministry hailed it as a “growing formal employment landscape.”
The Indian government has now gone further and linked formalization of employment directly to “quality jobs.” In August 2026, it promoted the Pradhan Mantri Viksit Bharat Rozgar Yojana as a scheme to expand formal employment, designed to encourage first-time employment and to reward employers for creating new formal jobs through EPFO.
Formalization is valuable. A worker brought under EPF coverage gains access to an institutional mechanism for retirement savings and social security. An enterprise complying with labor regulations represents progress over one that does not.
However, these claims ignore reality. An EPFO “net subscriber addition” is not a net new job. It can include a person moving from one EPFO-covered employer to another; an existing worker newly brought into EPFO coverage; a worker previously outside formal coverage becoming covered; workers rejoining after an employment break; changes resulting from EPFO administrative coverage; and, importantly, formalization of an already existing informal job.
September 2026 EPFO data showed contributors in 12 traditionally labor-intensive sectors (garments, textiles, leather, jute, beedi, tea, brick-making, cashew, coir, cotton ginning, diamond cutting, and others) fell 1.3 percent, from 5,536,000 in 2023-24 to 5,464,000 in 2025-26. These are precisely the sectors India must expand to absorb workers leaving agriculture.
There is a further fundamental statistical problem.
EPFO payroll statistics measure movements into and out of the EPF system. The monthly payroll series records first-time subscribers, members exiting coverage, and earlier members who rejoin. The government itself cautions that the numbers are provisional because employee records are continuously updated.
The Economic Survey 2025-26 carried the government’s claims further: organized manufacturing added 5.7 million jobs. This is potentially more interesting because it is not based on EPFO figures.
The National Sample Survey or NSS Survey uses Annual Survey of Industries (ASI) data and says organized manufacturing employment increased by more than 5.7 million between FY2015 and FY2024; grew at about 4 percent compounded annual growth rate (CAGR); and increased by more than 1 million in FY2024 alone, a 6 percent year-on-year increase.
This is probably the strongest official evidence currently being cited for actual employment expansion in the organized sector, rather than simply formalization. But there is a major definitional qualification: The ASI’s “persons engaged” category includes working proprietors, family members, and unpaid workers, as well as employees. So it is not synonymous with regular wage/salaried formal jobs.
The government is also pointing to the rise in regular salaried employment. Regular wage/salaried employment increased from 22.4 percent of workers in 2024 to 23.6 percent in 2025. That is a meaningful movement toward wage employment, although it is still very far from the claim that most new employment is formal.
In fact, what takes the wind out of the government’s claims is that the increase in organized manufacturing has been accompanied by growing contractualization. According to ASI, contract workers accounted for only about 13 percent of the formal manufacturing workforce in 1993-94. However, this share rose sharply to 20 percent by 1999-2000 and further to 37.8 percent in 2018-19. As per the latest ASI data (2022-23), it has reached 40.7 percent. So much for the claim of formalization – the ILO defines it as work with social security, and contract work does not offer that.
The percentage share of contract labor in capital-intensive industries has increased from 19.5 percent in 1999-2000 to 46 percent in 2018-2019, whereas it has increased from 22 percent in 1999-2000 to 33 percent in 2018-2019 in labor-intensive enterprises.
As though that is not enough, if EPFO was really creating so many new jobs, how is it that India’s Periodic Labor Force Survey (PLFS) continues to show that India’s share of informal workers without social insurance (i.e. pensions, death/disability insurance, maternity benefits, etc.) was 90 percent in 2004-5, 90 percent in 2017-18, and still 90 percent in 2024.
Job quality also matters: duration, earnings, working conditions, social protection, security of tenure, and prospects for advancement. India’s employment challenge has historically been not only unemployment but also underemployment, low productivity, and poor-quality work.
The latest PLFS data illustrate this complexity. Even after the increase in regular wage employment, 56.2 percent of workers in 2025 remained self-employed (mostly own-account and unpaid family labor) and another 20.20 percent were casual wage laborers. Agriculture still accounted for 43 percent of employment in 2025 (42 percent in 2019). The largest addition to the workforce since 2020 has been in agriculture (rising from 200 million to 280 million in 2024).
This matters most for the young. A graduate in a low-paid, insecure job is technically employed but not upwardly mobile. As we estimate in our new book, “India Out of Work,” real wages for casual and regular workers, and for the 53 percent of workers who are self-employed, have stagnated for 12 years. If non-farm jobs have grown at half the required rate (12 million a year) for a dozen years the Modi government has been in power, leaving youth unemployment double its 2012 level, from 6 percent to 12 percent in 2024, how can real wages rise, however loudly the government touts its low inflation?
The real test of India’s labor market is not how many names enter an EPFO database but whether the economy creates enough stable, productive, and decently paid jobs. If it did, the youth (those aged 15-29 years) not in education, employment, and training, would not have jumped from 50 million in 2012 to 100 million in 2024. Clearly, many became “discouraged workers” who stopped looking for work.
Originally published under Creative Commons Attribution 4.0 by 360info™.