There has been a sharp drop in the creation of formal jobs for those aged between 18 and 21 years, with the share of this age group falling in the overall net Employees' Provident Fund (EPF) accounts over the last four years.
It is a trend that economists and researchers say is likely to continue, the Business Standard has reported. Data shows the share of this age group in the net EPF accounts created fell from 37.9 percent in 2018-19 to 24.1 percent in 2021-22, the report said.
“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,” Radhicka Kapoor, senior fellow at the Indian Council for Research on International Economic Relations (ICRIER), told the business daily.
EPF is a welfare scheme aimed to secure a better future for employees. The employee and the employer contribute to it on monthly basis in equal proportions of 12 percent of the basic salary.
The Employees Provident Fund Organisation data shows that net jobs created for the 18-21 age group have not declined in absolute numbers.
Net new EPF accounts opened for the age group saw a healthy increase of nearly 26 percent between 2018-19 and 2021-22.
But, during the same period, the net jobs created for all age groups increased at a far rapid pace of almost 98 percent, nearly doubling their number and leaving the 18-21 age group way behind.
Unemployment remains a concern and it was reflected in the fiery protests that greeted the government’s Agnipath scheme that aims to overhaul the recruitment of soldiers in the armed forces.
The recruitment age for Agniveers, as those recruited through the new plan would be called, has been lowered to 17.5-21 years but faced with protests, the government raised the upper limit to 23 years as an exception this year.
The Indian Air Force, which started Agnipath recruitments on June 24, reportedly received 2.7 lakh applications in the first seven days. A total of 46,000 soldiers will be recruited on a four-year contract under the scheme in the first year.
The Covid effect
As the economy began to pick up with the easing of coronavirus situation, 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, the report said.
The 18-21 age group and the group below 18, however, were the two categories that saw more people exiting than re-joining.
Net exits, calculated by subtracting the people who joined the workforce from those 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 said the EPF data only covered formal job creation and that, too, not all of it, the report said.
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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