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India needs high-frequency data for jobs policy, labour ministry’s new survey a good step

Labour ministry has started quarterly survey of employment data from firms’ perspective, which can be a critical input for macroeconomic policymaking.

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The Ministry of Labour has recently released a survey of firm employment data for nine non-farm sectors. The survey will be conducted quarterly and will provide much-needed high-frequency employment data for the economy. The data will be collected from firms, and over time, will become a critical input for macroeconomic policymaking in the country.

In recent months, employment data collected by the Centre for Monitoring Indian Economy (CMIE) or from the Periodic Labour Force Survey (PLFS) have been making news, especially in the light of job losses during the Covid pandemic. Data such as this, or any other data collected from households, approaches the question of employment from a different angle. It is collected from the suppliers of labour.

So, for example, when a household is asked whether a person belonging to the household has a job and the household responds ‘yes’ in one wave of the household survey (CMIE conducts three waves a year) followed by ‘no’ in the next wave, the survey concludes a job has been lost. Sometimes, the person responds that she is no longer looking for a job. This does not inform us about whether a firm is hiring or not, or has paid salaries or not.

Thus the two datasets are not comparable. One looks at the data from the demand side, or side of the employer, and the other from the side of the supplier of labour.

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Importance and types of employment data

Macroeconomic policymaking and analysis in other countries, especially in developed countries, is based on employment as one of the most important variables that government, monetary policy committees and observers of the economy and business cycles in the country watch. Policymaking in India has suffered from lack of high frequency employment data.

The labour ministry report of the Quarterly Employment Survey for April-June 2021 presents the status of employment in nine non-farm sectors — Manufacturing, Construction, Trade, Transport, Education, Health, Accommodation and Restaurant, IT/ BPO, and Financial Services — employing 10 or more workers. The survey gives a picture of the state of employment in the organised sector. The government plans to conduct a similar survey for the unorganised sector as well. The two surveys taken together would give a holistic picture of the state of employment in the economy.

Most mature economies have official monthly statistics on employment. India had to rely on low frequency official surveys which, at best, give an outdated picture of employment. High-frequency data on the labour market bridges a critical gap in the Indian statistical framework. It would enable timely monitoring of the labour market, which is essential for devising policies for employment creation and skill development in the country. Such a survey would also give insights on the relative contribution of different sectors in employment generation over time.

The employment surveys such as the PLFS by the Ministry of Statistics and Programme Implementation is a household-based survey and provides an assessment of employment from the supply side. PLFS brings out quarterly data that covers only urban India. The annual data from PLFS covers both urban and rural areas. The Quarterly Employment Survey released by the Ministry of Labour is an establishment-based survey and provides a picture of employment from the demand side.

The previous quarterly surveys on jobs conducted by the Ministry of Labour were discontinued due to coverage and quality issues. A committee set up by the government found unexplained variations between the findings of the quarterly surveys and the monthly payroll data by the Employees Provident Fund Organisation (EPFO). The government has now released a revamped survey with wider coverage.

Since this is a first-of-its-kind exercise, the comparable numbers for last year are not available. The latest numbers reported prior to the present survey are from the Sixth Economic Census of 2013-14. Economic Censuses are establishment-based surveys conducted at irregular intervals. While the latest Economic Census was conducted in 2020, its results are not available in public domain. Hence, the establishments covered in the Sixth Economic Census are used as the reference for the recently released quarterly employment survey.

Most of the sectors covered in the survey reported an increase in employment as compared to the Economic Census of 2013-14. Expectedly, the most impressive growth of 152 per cent was seen in the IT/BPO sector. Sectors like health, financial services, manufacturing and construction also reported significant increase in employment. However, two sectors — trade, and accommodation and restaurants — reported a decline in employment since 2013-14. These are the sectors that have suffered the most due to the pandemic-induced slowdown. The percentage of female workers declined to 29 per cent, compared to 31 per cent reported in the Economic Census of 2013-14.

Out of the 3.08 crore workers employed across the nine sectors, almost 41 per cent were employed in the manufacturing sector. The education sector accounted for another 22 per cent. The sectors that reported the least share of workers were restaurants (2.9 per cent) and construction (2.4 per cent). The low share of estimated employment in these two sectors could be on account of the second wave of Covid-19, and the restrictions imposed due to it.

The next quarterly survey would be able to give a better picture of the trend over the last decade, only after Covid-related restrictions have been removed.

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Granular details on nature of employment

In addition to giving information about the headline employment numbers, the survey also gives granular details on the nature of employment, such as regular, contract or casual basis, gender-wise employment and details of skill development programmes undertaken by the establishment.

The survey reports that 88 per cent of the estimated workforce in the nine sectors is comprised of regular workers. However, the construction sector has a higher share of contractual and casual workers.

It is worthwhile to note that even among the formal sectors, a significant proportion of the enterprises are small across sectors. Almost 62 per cent of the establishments in the sample employ 10-39 workers.

While 27 per cent of the establishments reported a decline in employment during the Covid-19 induced nation-wide lockdown, on the positive side, 81 per cent of the workers employed in the nine non-farm sectors received full wages. However, in the construction sector, a greater proportion of workers had to accept lower wages.

The government has made a good start by releasing the quarterly employment survey. Over time, this will no doubt evolve and will prove useful both for research and policymaking.

Ila Patnaik is an economist and a professor at National Institute of Public Finance and Policy.

Radhika Pandey is a consultant at NIPFP.

Views are personal.

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