Though the EPFO database may have its own limitations, the estimate obtained from it can be used as a safe and consistent approximation.
As Prime Minister Narendra Modi begins his march toward the 2019 elections, economists and political columnists have begun debating the employment situation in the country.
Any assessment should take into account two caveats: there is no reliable time series data for the state of employment in India, most statistics fail to capture it; and a major part of employment of Indian workers is in the informal sector, for which reliable and consistent data is simply not available.
A country cannot grow at 6-7% GDP rate without creating an adequate number of jobs to absorb sufficient number of labour market participants. The head of our Labour Bureau, B. N. Nanda, correctly argues that if productivity is constant, then the only way growth could occur is through increased employment.
While everyone is talking about the spectre of jobless growth in India, they are actually looking at jobs in the conventional wage labour-based employment. What is missing in their consideration is simply the fact that there’s a systematic transition in the nature of work as subcontracting and contract-based jobs are much more prominent in a globalized world. Neither is the data available for contract-based employment, nor is there any reliable data on the informal sector employment.
Further, there is a global trend that for every 1 percentage increase in GDP growth rate, there’s a reduction in the amount of job creation. This is largely due to greater productivity and shift towards more capital-intensive modes of production. This issue is not very relevant for India, we have not yet reached that high wage levels that would justify the use of more capital-intensive technologies in production. But indeed, our present labour statistic only captures a very narrow or restrictive kind of jobs.
Analysts have said that the EPFO database cannot be relied upon as firms with 19 workers may not be under the pension body. Only when a firm hires 20 workers will it fall under the EPFO. Also, the EPFO gives us only the formal sector employment situation, leading to an under-estimation.
This means that though the EPFO database may have its own limitations, the estimate obtained from it can be used as a safe and consistent approximation. Further, the CMIE mentions a fall in employment of about 7 million in the 15-24 age group. However, we must ascertain if this fall is due to higher enrollments in education institutions to enhance their skills. If that is the case, then the CMIE number loses significance.
The Labour Ministry’s data shows that India added 136,000 workers across 8 sectors in the quarter that started in July 2017 against 64,000 workers in the previous quarter. The Mudra Scheme which distributed debt fund to promote start-ups and small and medium scale enterprises to expand their scale of operation. The focus of the scheme was to promote self-employment and to ensure that there is adequate access to capital for firms to undertake expansion.
Under the Mudra scheme, the SKOCH group had presented a report that stated that over 5 million jobs were generated in just over two years out of which 3.7 million were direct jobs and 1.6 million were indirect jobs. This scheme along with EPFO payroll data suggests a promising ‘approximate’ number for the job growth in the country.
The only puzzle is why the jobs situation is not being captured or reflected in the data. The reason is our narrow understanding of jobs. If we capture the ‘source of livelihood’ creation as a measure, maybe we’d be able to map the missing number. The government has set up a task force to reform the existing labour statistics and its report is expected soon.
Karan Bhasin is a researcher associated with Public Policy Research Centre, New Delhi