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Ministry of Labour & Employment stated in a latest update that India’s economy is currently undergoing a transformative shift marked by an increasing trend toward formalization—a process that is redefining job structures, employment security, and social benefits for millions. This change is of profound importance for India’s workforce, as it ensures that a larger segment of the population is covered by social security systems, offering them greater economic stability and a more secure future.
The Employee’s Provident Fund Organisation (EPFO) stands as a vital institution in this journey, managing a long-term savings scheme and social security benefits for salaried workers across the country. By tracking and supporting the formalization process, the EPFO not only provides critical financial safety nets but also plays a pivotal role in transitioning the workforce toward a more organized and protected structure.
Formalization is when jobs move from the informal sector (small, unregistered businesses and daily wage workers) into the formal sector (where employees have contracts, job security, and access to benefits). In the formal economy, workers enjoy legal protections like a fixed salary, healthcare benefits, paid leave, and retirement savings. This change is crucial because it ensures that more people are covered by social security systems, making their lives more stable and secure.
According to the data provided by EPFO, since September 2017 to July 2024, over 6.91 crore members have joined EPFO. This means that nearly 7 crore people have transitioned to more secure, formal jobs. The trend reflects India's push towards formalizing its workforce, leading to better job security for employees. In the fiscal year 2022-23, 1.38 crore new members joined EPFO. From April to July 2024, the monthly registrations have been steadily increasing, with nearly 20 lakh new members added in July alone.
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