The government enforced the nationwide lockdown on March 25. As companies faced difficulties in filing the ECR, the EPFO allowed them to file the returns for the month of March by May 15, instead of April 15.
“The lockdown period saw a sudden surge in applications for settling (or closing) the EPF accounts by workers,” a senior EPFO official explained.
The official pointed out that in February, the EPFO had allowed formal sector workers to update their date of exit directly through an online portal, rather than routing it through their previous or current employers.
This shows that minor tweaking or certain relaxations in the norms by the EPFO can have a direct bearing on the payroll data.
Coming back to the April data, there was 4x increase in formal sector workers who exited in that month from when the data was first reported in June. Against this, the newly joined workers increased by about 73 per cent, leading to a contraction in the payroll data.
Even for May, there was a net decline in payroll by 35,336, the data released on Tuesday showed, against net enrolment of 318,789 reported in July — a major difference of 354,125.
But this doesn’t take away the fact that there were more job losses than gains in April and May, which were reported in the subsequent months to the EPFO.
“It gives a myopic view of the entire labour force. We do need to know the trends in the formal sector, but this dataset is constantly fluctuating making it difficult to track on a monthly basis,” said Indian Council for Research on International Economic Relations Senior Fellow Radhicka Kapoor.
She pointed out how much of the addition to the EPFO numbers in 2017-2018 was attributed to the Pradhan Mantri Rojgar Protsahan Yojana — a scheme effective from 2016-19 through which the government funded the EPF contribution of new employment
for the first three years.
When the Code on Social Security, 2020, will get implemented from the next fiscal year, the EPFO payroll data will get distorted further.
The new law will cover all establishments hiring at least 20 workers under the EPFO, against only specific set of sectors notified by the government.
The EPFO data released on Tuesday showed net enrolment of 1 million in August, compared to 748,784 in the previous month.