According to recent data from the Employees’ Provident Fund Organisation (EPFO), India experienced a notable decline in the creation of formal jobs in 2023. The data reveals a drop of nearly 10% in new formal job creation compared to the previous year. Specifically, 10.78 million new subscribers joined the EPF in 2023, down from 11.93 million in 2022. This downturn is a critical indicator of the challenges facing India's labour market and broader economic environment.

Impact on Young Workforce

The decline is particularly pronounced among young new subscribers, aged 18-28, who typically represent first-time entrants into the formal labour market. The number of new subscribers in this age group fell by 9.2%, from 7.93 million in 2022 to 7.2 million in 2023. This reduction highlights concerns about the robustness of the labour market and its capacity to absorb new entrants, which is crucial for sustaining economic growth.

Gender Disparities in Employment

The EPFO data also highlights a worrying trend regarding female employment, with new female subscribers decreasing by nearly 11% to 2.8 million in 2023 from 3.14 million in 2022. This gender disparity underscores ongoing challenges in achieving gender equity in the workforce, particularly in the formal sector, where access to social security and labour protections is critical.

Broader Economic Implications

This decline in formal job creation coincides with the lowest unemployment rate recorded in India over the past six years, as per the annual periodic labour force survey (PLFS). The unemployment rate fell to 3.2% in the July–June 2022–23 period from 4.1% in the previous year. However, the data also indicate a rise in self-employment, particularly in agriculture, reflecting a shift in the workforce composition that could be linked to economic distress and the aftermath of the pandemic.

Future Outlook and Policy Recommendations

The current trends in job creation and employment highlight the need for comprehensive policy interventions. Experts suggest that addressing these challenges requires a focus on innovation, skill development, and creating a conducive environment for job creation. Furthermore, policies that support entrepreneurship and provide access to formal credit can play a significant role in transforming the labour market and enhancing economic resilience.