BS analyses the great Indian employment debate

THE ABSENCE of reliable and regularly updated data is the Achilles heel of policy making in India. Take the case of employment.

Analysts have been grappling with a fundamental question — are enough jobs being created for the millions entering the labour force each year? And more recently, what has been the impact of demonetisation and the GST on employment? But in the absence of data, it is difficult to answer such questions.

The National Sample Survey Office (NSSO) usually conducts surveys to estimate the employment status of the country. But, the last such survey was carried out in 2011-12. And the quarterly surveys conducted by the labour bureau are limited in scope, also its annual surveys come with a considerable lag.

Now, IIM Bangalore Professor Pulak Ghosh and SBI Group Chief Economic Advisor Soumya Kanti Ghosh have put together a database to estimate employment. According to the recent NSSO survey (at the end of 2012), the workforce in the country was around 504 million (Chart 1). The authors said roughly 15 million were joining the labour force each year, of which only 6.6 million were qualified (Chart 2).

The authors drew on various data sets — the Employees Provident Fund Organisation (EPFO), the Employees State Insurance Scheme (ESIC), the National Pension Scheme (NPS) and the Government Provident Fund (GPF) — to arrive at their estimates.

As shown in Chart 3, the EPFO data spans 190 industries, with three sectors — establishments rendering expert services, electrical, machinery and general engineering, and trading and commercial establishments — accounting for 50 per cent. The data from the NPS shows, on average, around 50,000 subscribers join every month (Chart 4).

Based on this, the authors estimated that the payroll was roughly around 91.9 million as of March 2017 (Chart 5). If one is to include ‘zero’ contributions, then it rises up to 100 million, which is not very different from the organised sectors’ numbers in the Chart 1.

They further deduce that payrolls of 0.59 million are generated every month (roughly 7 million yearly). Even if one is to remove the ESIC numbers, the net addition to payrolls still works out to be 0.51 million (Chart 6), contradicting claims of jobless growth.