According to revised payroll data from the Employees’ Provident Fund Organisation (EPFO), India added 12.9 million net formal jobs in FY25, marking the second consecutive year of decline. This is marginally lower than 13.1 million in FY24 and a sharper drop from 13.8 million in FY23, when job creation was buoyed by the government’s Atmanirbhar Bharat Rojgar Yojana (ABRY).
Fall in New Registrations
In addition to slower payroll growth, the number of new businesses joining the EPFO also declined. Only 52,309 establishments filed their first Electronic Challan cum Return (ECR) in FY25, down 6.6% from 56,023 in FY24. FY23 had recorded 55,337 such filings. Analysts attribute the decline to a “high base effect”, as FY23 job creation was artificially elevated due to ABRY support.
Role of Atmanirbhar Bharat Rojgar Yojana
The ABRY scheme, launched in October 2020, subsidized provident fund contributions to encourage hiring during the post-COVID recovery. By March 31, 2024, the scheme had spent ₹10,188.5 crore, benefiting 6.05 million workers across 1.52 lakh establishments. However, the expenditure remained well below the originally allocated ₹23,000 crore, indicating limited uptake.
Growth vs. Employment Gap
Despite robust economic growth of 9.2% in FY24 and 6.5% in FY25, job creation has not kept pace. Economists note a widening gap between GDP growth and formal sector employment, fueling concerns over the sustainability of India’s labor market recovery.
Policy Response
To counter slowing job creation, the government has launched the Employment Linked Incentive (ELI) scheme, which aims to incentivize private-sector hiring and expand social security coverage under EPFO. Policymakers hope the new scheme will revive momentum in formal job creation and reduce the persistent mismatch between economic expansion and employment growth.
Summary
India’s formal job creation has slowed for the second straight year, slipping to 12.9 million in FY25. While schemes like ABRY provided temporary relief, the decline in EPFO enrollments and business registrations highlights deeper structural challenges. The government’s new ELI scheme will be closely watched to see if it can effectively bridge the gap between economic growth and employment generation.
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