India’s Formal Job Creation Sees Steady Growth in H1FY25, Slows in Q2

India's formal job creation maintained momentum in the first half of FY25, with new additions across major social security schemes surpassing the same period last year. However, September numbers revealed a dip, hinting at a slowdown in formal employment.  

According to official data, new enrollments under the Employees’ Provident Fund (EPF) scheme rose by 2.3% in H1FY25, adding 6.1 million employees compared to the same period last year. The EPF scheme primarily covers larger organizations and higher-paying roles.  

The Employees’ State Insurance Corporation (ESIC) scheme, which caters to smaller organizations and lower-income workers, recorded faster growth. It added 9.3 million employees in H1FY25, a 5.2% increase from 8.8 million in H1FY24. Subscriptions to the National Pension System (NPS) also grew by 6.8% during the period.  

Despite the strong showing in H1, the July-September quarter showed signs of weakening. EPF enrollments were flat in Q2FY25 compared to Q2FY24, with additions dipping to a five-month low of 0.95 million in September, down from 0.98 million in August. Similarly, ESIC enrollments fell to 1.5 million in September, the lowest in five months, compared to 1.52 million in August.  

This trend aligns with HSBC data released earlier, which reported slowing service and manufacturing activity and a cooling job market in Q2FY25. The Indian economy also grew at a slightly reduced pace of 6.5% in the second quarter, compared to 6.7% in Q1FY25.  

However, ESIC enrollments in Q2FY25 rose 6.8% compared to Q2FY24, suggesting improved prospects for low-paying jobs or increased formalization in this segment.  

Meanwhile, urban unemployment fell to 6.4% in Q2FY25, the lowest level in recent years, driven by a rise in wage and salaried employment, according to labor ministry data.  

The mixed signals from the job market indicate a resilient first half of the year, tempered by a cautious outlook for the quarters ahead.