Declining Formal Job Market Enrollments: Implications for Investors and Industries

UK job placements fall amid labour shortages

Recently, the formal job market has seen a dip in new enrolments, most notably in the Employees’ Provident Fund (EPF) Scheme and the Employees’ State Insurance Corporation (ESIC). This decline, reported in September, reflects certain shifts in the employment landscape that could have far-reaching implications. This analysis aims to explore these implications, their potential impact on various stakeholders, and future outcomes.

Original Analysis:
The decline in new enrolments in these formal job schemes is indicative of broader shifts in the job market. Several factors, such as economic conditions, industrial growth, and employment policies, could be influencing these changes. Interestingly, while the EPF and ESIC have seen declines, the National Pension Scheme has seen a rise of 2.9% in new enrolments. This could suggest a more complex picture of job market dynamics than a mere decline.

Impact on Retail Investors:
For retail investors, this trend could signal potential volatility in the sectors that heavily rely on formal employment. The decline in the formal job market enrolments could reflect broader economic slowdowns or shifts towards more informal or gig-based employment. However, the rise in National Pension Scheme enrolments could indicate a growing stability in the sectors it encompasses, offering potentially safer investment avenues.

Impact on Industries:
The trend could significantly impact industries dependent on formal employment, such as IT, manufacturing, and professional services. A reduction in formal job enrolments could imply a shift towards more flexible, part-time, or contract-based roles. Conversely, industries that offer more informal or flexible employment options might see a growth in their workforce.

Long Term Benefits & Negatives:
In the long term, this shift could lead to a more flexible and dynamic job market, potentially benefiting industries that can adapt to these changes. However, sectors reliant on formal employment may face challenges related to employee stability and benefits management. For investors, a more flexible job market could mean a higher risk-reward ratio.

Short Term Benefits & Negatives:
In the short term, companies might face challenges in filling formal roles, impacting their productivity and, consequently, their stock prices. However, sectors that can quickly adapt to these changes and offer more flexible roles may see an increase in their workforce and potentially their stock values.

Companies that might gain from this:
Companies in the gig economy or those offering flexible employment options, such as Ola, Zomato, and Swiggy, could benefit from this trend. As the formal job market sees a dip in new enrolments, these companies could see a rise in their workforce, potentially boosting their market value.

Companies which might lose from this:
Companies that heavily rely on formal employment, such as Infosys, TCS, and Wipro, might face challenges due to this trend. These companies could see a decline in available talent, potentially impacting their productivity and thereby their stock prices.

Companies that could be impacted by the declining new enrolments in India’s formal job market:

Companies Affected Negatively:

IT/ITES Services Firms

  • Possibility of slowing business if clients cut IT budgets
  • TCS, Infosys, HCL Tech, Wipro


  • Weaker demand outlook for autos amid consumption slowdown
  • Maruti Suzuki, M&M, Tata Motors

Consumer Durables

  • Purchases may be postponed for discretionary products
  • Voltas, Havells India

Infrastructure & Construction

  • Investment decisions linked to economic growth outlook
  • L&T, UltraTech Cement, Shapoorji Pallonji

Banking & Financial Services

  • Retail loan growth could weaken with lower jobs and income
  • HDFC Bank, ICICI Bank, Axis Bank

Companies That Could Benefit:

Information Technology

  • Resilient sector, lesser impact expected from business cycles
  • TCS, Infosys, Tech Mahindra


  • Essential healthcare spending unlikely to be affected
  • Sun Pharma, Dr Reddy’s Labs

Fast Moving Consumer Goods

  • Staples consumption may hold up better than discretionary
  • HUL, ITC, Dabur

In summary, slowing formal job creation signals risks of softening consumer demand, warranting caution for automakers, lending institutions and consumer discretionary. Investors may be better off tilting towards pharmaceutical, FMCG and technology

Additional Insights:
Despite the recent decline, the EPF recorded a higher number of net enrolments in the first half of the year compared with the previous fiscal year. This shows that while recent trends point towards a decline, the overall picture might still be positive.

The decline in formal job market enrolments is a significant trend that stakeholders across the board should be aware of. It points towards a changing employment landscape that offers both challenges and opportunities. Understanding and adapting to these changes will be key to navigating this dynamic landscape.

ET Bureau. “New Enrolments in Formal Job Mkt Dip Further”, November 25, 2023,

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