Entry-level jobs no more easy to come by in formal sector

The creation of formal jobs for those in the 18-21 age group in India has declined steadily, sharply eroding this cohort’s share of the net new Employees’ Provident Fund (EPF) accounts opened over the last four years.

It is a trend that economists and researchers say might continue.

The data shows the share of this age group in the net EPF accounts created — a proxy for net new formal jobs created — fell from 37.9 per cent in 2018-19 to 24.1 per cent in 2021-22.

This age group has been in the news. Last month saw violent protests in parts of the country against the government’s Agnipath scheme, which targets recruiting 46,000 people in the age group 17.5-21 each year for a four-year tenure in the armed forces.

A quarter would be retained for regular service. For this year, the upper age limit has been increased to 23.

The Indian Air Force started its Agnipath recruitment on June 24 and, according to reports, received 272,000 applications in the first seven days.

It is not that the net jobs created for the 18-21 age group have declined in absolute numbers.

In fact, net new EPF accounts opened for those between 18 and 21 saw a healthy increase of nearly 26 per cent between 2018-19 and 2021-22.

However, over the same period, the net jobs created for all age groups increased at a far more rapid pace of almost 98 per cent, nearly doubling their number and leaving way behind the net job creation for the 18-21 age group.

“It is a trend that has traditionally been there and is going to exacerbate after Covid.

“The preference is more for older people, who have more experience.

“If one wants to bear the burden of social security cost, one wants to do it with an experienced person,” said Radhicka Kapoor, senior fellow at the Indian Council for Research on International Economic Relations (Icrier).

As the country got back on track in the aftermath of Covid-19, the year 2021-22 saw more people joining the workforce than had exited — this may have happened if people who had exited the workforce in the previous years joined back the organised sector.

However, the 18-21 age group and the group below 18 were the two categories that saw more people exiting than re-joining.

Net exits, calculated by subtracting the people who joined the workforce from the people who left the organised sector, are the highest for the 18-21 category in males.

“There was a decline in growth rates in manufacturing, construction and retail and whenever there is a decline in these sectors, new employment suffers the most,” said Satyaki Roy, associate professor, Institute for Studies in Industrial Development.

Both Kapoor and Roy pointed out that the EPF data only covered formal job creation and that too not all of it.

Apart from the EPF, the National Pension Scheme accounts are also an indicator of formal jobs, but separate NPS data for the 18-21 age group is not available.

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