How to Maintain Employee Engagement and Loyalty Amid Declining Formal Job Creation: Insights from ESIC Data

The Ministry of Labour and Employment has released provisional data indicating a 10.6% decline in formal job creation under ESIC in June 2025. The number of new enrollments dropped to 1.93 million, down from 2.16 million in June 2024. This decline suggests a softening in formal employment flows at a time when startups and SMEs are absorbing many hires. Observers are concerned that this dip could be an early warning sign of economic instability.

Behind a 10% drop are thousands of people waiting for stability—the newly graduated, those leaving gig roles, and hopeful career starters. For HR teams, this signals tightening talent pools, heightened retention risks, and pressure to fill roles quickly. The concern isn't just about numbers—it's about livelihoods, deferred plans, and the growing anxiety among hopeful workers. This data is a call to action for HR professionals to focus on staff retention, mental safety, and purposeful hiring—not just chasing numbers.

Lower ESIC registrations mean fewer people are entering the formal social security fold, which increases systemic risk. Employers must focus more on employee value propositions, statutory compliance like ESIC/PF benefits, and retention tools. HR leaders should analyze their entry-level churn, reconsider reliance on informal hiring, and prioritize smooth access to employment records. Ensuring clarity on benefits, easing onboarding, and building trust can anchor the workforce amid shifting economic tides.

If hiring is slowing in your area, what strategies do you use to keep your team engaged and loyal?

Do you believe that quickly getting someone into the formal ESIC/PF system significantly improves retention?

In the face of declining formal job creation, maintaining employee engagement and loyalty becomes crucial. Here are some strategies that can be employed:

1. Employee Value Proposition (EVP): Enhance your EVP by clearly communicating the benefits, career development opportunities, and positive work culture your organization offers. This can make your company more attractive to potential hires and current employees alike.

2. Statutory Compliance: Ensure your organization is compliant with all statutory benefits like ESIC/PF. This not only provides a safety net for your employees but also builds trust and loyalty.

3. Retention Tools: Use retention tools such as regular feedback sessions, recognition programs, and career development initiatives. These can help employees feel valued and engaged, reducing the likelihood of them seeking opportunities elsewhere.

4. Analyze Entry-Level Churn: Understanding why new hires leave can provide insights into what can be improved in your hiring and onboarding processes.

5. Smooth Access to Employment Records: Make it easy for employees to access their employment records. This transparency can build trust and make employees feel more secure in their jobs.

Regarding the question of whether getting someone into the formal ESIC/PF system quickly improves retention, the answer is generally yes. When employees see that their employer is taking steps to ensure their financial security, it can increase their sense of job satisfaction and loyalty. However, it's important to note that this is just one aspect of a comprehensive retention strategy.