EPFO data confounding – Data suggests 10-12.5% of subscribers added in last one year

If one assumes the EPF (Employees Provident Fund) scheme subscriber data is a reliable proxy for employment, the addition of 6.9 lakh members in April is more than encouraging. But, drawing conclusions from this database is fraught with risk. For one, there are several one-offs and in the absence of a complete Aadhaar-seeding, it is to tell whether the addition is a new worker. Some data points are particularly puzzling. A good chunk of the addition to the subscriber base over the past eight months is in the age groups of 29-35 years and above 35 years, while you would normally expect people to enter the workforce when they are much younger. However, in April, more than a third of the new members were from these older age groups while in February too, the share was close to 30%. It is somewhat curious that as many as 2.27 lakh people, all over the age of 29, would have found formal employment in a single month, even if the economy has bounced back over the last six months; assuming the numbers are accurate, this suggests the economy is becoming more formal post the rollout of the GST. If indeed the new additions are new employees, as government economists like the NITI Aayog chairman have claimed in the past, it is baffling as to why consumption and investment aren Private final consumption expenditure growth has actually clocked in at sub-7% growth for five straight quarters to Q3FY18; the Q4 FY18 growth of 6.7% y-o-y came off an anaemic 3.4% y-o-y rise in Q4FY17. Also, export-oriented sectors that employ large numbers have been performing poorly, especially the labour-intensive segments. To be sure, the government too would have created jobs in sectors such as education and administration; there would be lots of construction jobs created, but, these are mostly in the informal sector. Which is why the data put out by the labour bureau2 lakh new jobs in 2016-17 But, the EPFO data also appears somewhat contrived. If you assume an annualised 6.2 million new subscribers on a base of 60 million If one uses the 5 million, this would mean a higher 12.5% addition. Since at least 80% of the country Even if one assumes that this ratio has shifted sharply in favour of the formal economy, the numbers don


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