While one would have accepted the unprecedented increase in use of dodgy statistics, a critical issue of jobs has been unduly politicized, and this has confused people with claims and counter claims being made by both the government and the opposition.
It is election season and this time around we have witnessed an unprecedented increase in the amount of fake-news that is being spread - especially on WhatsApp. While one would have accepted the unprecedented increase in use of dodgy statistics, a critical issue of jobs has been unduly politicized, and this has confused people with claims and counter claims being made by both the government and the opposition.
A recent article by Prof. Ila Patnaik categorically puts the record straight as it distinguishes between the formal and informal sector jobs and highlights how the government’s claim may be true since it’s looking at formal jobs while Centre for Monitoring Indian Economy (CMIE) may be looking at both formal and informal jobs. In another recent article one of the authors highlighted how there has been robust job growth across the economy over the last five years. The article was even discussed on a fact-checking show on NDTV where there was a sense of agreement that while there’s no official statistics, the article (and similar articles) can be taken to be a back of the envelope computation.
In a recent article, Mr. Yadav has restarted the debate around jobs as he discusses how unemployment may be a silent political killer. While usually we don’t agree with Mr. Yadav, however in his article he mentions how rather than the actual situation of jobs, what matters is how people perceive the issue. It is this fact that the opposition is trying to capitalize upon as they work relentlessly to construct an illusion of an aggravation of the job’s crisis in India under the current government.
Mr. Yadav has made three very strong conclusions and he has relied upon the leaked news story on Periodic Labour Force Survey (PLFS), CMIE’s job survey and the state of working report. The state of working report ultimately uses CMIE’s data for its conclusions so if the CMIE’s data is inconsistent then perhaps, one can safely assume that the report may have some errors and its conclusions may not entirely be true. First, we explore other indicators of jobs post which we will explore the issues and potential problems with the PLFS and CMIE data on jobs.
The EPFO data has demonstrated how there has been a real increase in formal sector employment. Now this should be a welcome sign as the crisis of jobs in India has been in the lack of well-paying formal sector jobs and if EPFO has shown a dramatic increase in employment then it should be regarded as a big achievement of India over the last four years. Critics have argued that the EPFO data has problems in the sense that it adds all 20 members into EPFO if one new person is hired (while the firm had 19 members before). This criticism is legitimate, but it has a potential solution as EPFO gives age wise segregation of employment data.
For those individuals who are below the age of 25, EPFO has shown a consistent increase of 4 million jobs between September 2017 to December 2018 while 72.32 lakh new subscribers were added to social security schemes of EPFO as formal sector jobs touch 16-month high at 7.16 lakh in December. It is important to note that a major chunk of the sub-25 subscribers’ would-be first-time employees and this suggests that a 4 million increase spanning over a little over 1 year represents that there must be robust job creation in the Indian Economy.
Dr. Bhalla and Dr. Das too came out with their estimates that suggested around 8.7 million net-annual jobs were added by the government. These estimates are based on the adjustments to the labour force participation rates based on the enrolment rates and are robust. SIAM’s report as used by Mr. Mohandas Pai and Mr. Vaid revealed that the automobile sector created 3.4 million jobs in FY18, with a further 2.8 million jobs created in the 9 months ended December 31, 2018. In another study by Mr. Arvind Gupta, it was shown how a little less than a million jobs were added annually in just the digital sector which tends to employ a diverse set of people with different levels of skill sets.
One of India’s big placement platform, Naukri.com also has its own jobs tracker which shows how there was a 3 per cent addition in hiring by companies in March 2018 compared to March 2017. All of these are well paying formal sector employment that comes with all the benefits of social security. A recent study by CII on the MSMEs based on a fairly decent sample size has revealed that a total of 13.5-14.9 million job additions per annum have occurred since 2014. It is interesting that they also mention that MSME sector has created 14% more jobs in last four years than before. This further illustrates that there is a definite acceleration in the rate of job creation under the current government and evidence for the same tallies with the fact that our growth rate has significantly accelerated over the last five years. Even if I take the argument that some jobs may have been lost due to structural changes in the economy, the fact remains that overall, the net job creation is not just positive, but it is significantly large in magnitude.
A good indicator of the labour market and its dynamism is to witness what is happening to wages or income. If there would have been unemployment, we should ideally witness near stagnant real wages. It must be stated that an Aon Hewitt survey indicates that the average salary hike in 2018 is 9.4%. Thus, there are definitely jobs that are being created in the economy and bulk of them are secure, formal sector jobs that come with social security. For the informal sector, rapid expansion of the infrastructure sector over the last five years (a bulk of informal workers work in the construction sector or the SMEs sector) and the acceleration in job creation by the MSMEs suggest that there has been expansion of jobs even in the informal sector.
Now let us try to address the issues associated with the use of PLFS and the CMIE data.
While we agree that household surveys tend to be a good measure of employment situation in the country, however, the survey design should reflect the change in employment contracts that the entire global economy is witnessing. The government initiated the Periodic Labour Force Survey to modify India’s labour statistics and capture them more frequently. However, because this was supposed to be the first of such report, it must be carefully vetted and reviewed before the report could be released as official statistic on employment. Mr. Kant has highlighted how the report was approved in a meeting that had only one member, clearly indicating that the report needs to be reviewed further before it can be consumed by the people.
First and most important this that one has to understand is that PLFS and the previous employment unemployment survey are not comparable as they both have a different sampling framework. This means that the findings for the year 2017-18 can not be compared with the estimates for 2016-17. Somehow, Mr. Yadav has claimed in his article that unemployment is at an all time high since 1972, but if the PLFS cannot be compared with the estimates from before, how is he or any of the journalists arriving at this conclusion? Mind you, PLFS is yet to be released and what we have witnessed is only a selective leak of the report so clearly there is an attempt to twist statistics and compare apples and oranges to construct an alternative reality.
PLFS has other sets of problems as it shows a dip in population levels in India. However, it is evident that population of India has definitely not declined so clearly the survey needs to be improved going forward. Similar inconsistency is found in the sense that we’ve seen a stagnant rate of urbanization according to the PLFS, but world bank’s nightlight data and all available indicators suggest an unprecedented rise in urbanization across the country.
PLFS has its own set of problems that need to be adequately addressed and we should not use a selective leak of the report that wasn’t reviewed extensively to base any conclusions about employment situation in the country.
A bulk of the discussion around jobs was initiated with the CMIE coming up with controversial findings of job losses in the economy. While CMIE also undertakes a household survey, the fact remains that their data has its own sets of problems. For instance, it is a true outlier in terms of the picture that it paints of the situation of job creation in the economy. The sample for their survey is very thin and they’ve not made much changes to their preliminary estimates.
Additionally, their calculations are based on a reduction in investment proposals and not in actual realized real investments in the economy. This is a major flaw in their report, and we believe it should be highlighted so that most economists are made aware of it. Most economists would agree that investment proposals are not a very robust and sound variable for such estimation. CMIE is the ONLY (capitalization is intentional) source that shows a pessimistic picture of job creation and most reports that have used CMIE are bound to have made potential errors while drawing their conclusions.
It is evident that CMIE is an outlier from all other sources of data and that the Indian Economy is undergoing a transition where we are moving from low productivity underemployment to better and formal jobs. With expansion in enrolment rates, the focus should now be towards expansion of highly skilled jobs to ensure that this dynamism is sustained over the next 5 years. While to answer the simple question of jobs, let’s just say that forget the total number of jobs, it could be 20 million or 15 million annual jobs or maybe 10 million jobs but the fact that most indicators are showing a positive picture of job creation in the economy illustrates that the entire issue of jobs is being politicized only for the purpose of election. Fact remains that there is robust job creation in the Indian Economy, be it the EPFO or studies by numerous agencies or even several back of the envelope estimates or even the ILO or the World Bank’s estimates- all seem to agree and stand in contrast what CMIE and others are trying to hypothesize. The performance of this government in terms of creating a conducive environment for jobs is significantly better than the previous government!
Suresh Nakhua is a Spokesperson for Mumbai Pradesh of BJP, having various research interests such as economics, media, social media. He tweets at @SureshNakhua.
Karan Bhasin is a young economist with GYAN Foundation who has diversified research interests in the field of economics. He tweets at @karanbhasin95.
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