PUNE: Maharashtra has emerged as the top state in terms of providing formal employment to its people, revealed the Employee Provident Fund (EPF) data.

Formal employment refers to the type of jobs in which social security parameters — such as provident fund, pension and insurance — are present.

Currently, it is mandatory for employers to deduct 12% of an employee’s basic salary if it is up to Rs 15,000 and also contribute an equal amount in the staffer’s name. However, a lot of enterprises do not do so for their contractual labourers as it adds to the cost. A law that pushes for a fixed-term contract, with all the concomitant social benefits to all sectors of the economy, was notified last week.

Overall, only about 10-12% of the country’s estimated total workforce of about 45 crore actually make contributions every year — a pointer to the formal sector employment. The 2016-17 financial year saw 4.12 crore contributing members in the country. Combined, they made a total contribution of Rs 1,14,826.51 crore in the fiscal — of which Rs 81,289.37 crore was towards provident fund and the rest towards pension and insurance.

Maharashtra alone accounted for over 24% of the country’s total contribution at Rs 27,579.70 crore. The contribution from the state was over two times more than the contribution from the second-ranked Tamil Nadu.

The Union government has made a push for the formalisation of the workforce by luring organisations with some enticements. In the last two Union budgets, it announced schemes for certain labour-intensive sectors – where it has said that it will make the 12% employer contribution for the first three years.

Data obtained from EPFO reveals that the move has met with a tepid response. Between April 2016 and March 2017, the total contributing members increased by 3.6 million and between April 2017 and February 2018, the number rose by over 4.4 million.

This is contrary to the government’s claim — quoting an independent study — that 7 million new accounts (and, therefore, jobs) were added in just the first nine months of FY18 ending December 2017.

“Not all new accounts mean that new jobs are created. More than half of them are on account of the conversion of an inoperative account or a move from informal employment to formal employment,” a senior provident fund officer said.

