SBI economists bullish on labour market activity as second Covid-19 wave wanes

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India created 30.74 lakhs payrolls in Q1FY22, of which 16.3 lakhs jobs were new jobs or first time payroll, implying every one out of two payroll was first job in the June quarter, show findings of SBI Ecowrap released Friday.

The rate of formalisation now stands at 10%, while the ratio of first jobs or new payrolls to total payroll is at 50%. If the new payrolls increase at this rate then the new payroll may cross the 50 lakh mark in FY22, as against 44 lakhs in FY21, the report added.

Economists at the country’s largest lender are bullish that the labour market activity will improve in FY22 with the Covid-19 pandemic fading away.

As the companies continue with their hiring plans, SBI economists pointed at Employees Provident Fund Organisation’s (EPFO) payroll data, showing an uptick in new additions.

“We expect labour market activity to remain better in the current fiscal as companies will continue with their hiring plans to get ahead of the pandemic,” Soumya Kanti Ghosh, chief economist at SBI said in the note.

However, the concerns about the economy coming back to normalcy after the second wave of the Covid-19 pandemic still loom large.

Findings of the Centre for Monitoring Indian Economy (CMIE) are contrary to what payroll data shows. As per CMIE data, 15 lakh Indians, including 13 lakh in rural areas alone, lost their jobs in August alone.

Lack of credible employment data has been a major point of contention for the watchers. The payroll data has been critiqued for restricting to the formal sector, while the majority of economic activity happens in the informal sector.