The best way to wish away a crisis is to either deny it exists or scale down its magnitude. Unemployment, it is widely agreed, is a major challenge that no government can afford to ignore. But if those in power and the public do not know the extent of joblessness prevailing in the country, are we any closer to solving the problem?
Earlier this month, Minister of State for Labour and Employment, Santosh Kumar Gangwar, informed Parliament that the annual nationwide Unemployment Survey conducted by the Labour Bureau under his ministry from 2009 had been discontinued since 2016. Since then, no survey focussed on the jobless has been conducted by the government. This move, Gangwar said, was in keeping with “the recommendations of the Task Force on Employment” headed by former Niti Aayog Vice Chairman, Arvind Panagariya.
In short, the survey, which often ran counter to the claims made by governments on job creation and unemployment, was finally scrapped. The move not only saw to it that there would be no definite and independent data on unemployment, but it also ensured that the impact caused by two events that hit labour in the unorganised sector – demonetisation and Goods Services Tax (GST)– would not reflect negatively in official figures.
The annual survey, Gangwar pointed out, had been replaced by Quarterly Employment Survey (QES) covering establishments employing 10 or more workers. Crucially, it does not address unemployment. So, thanks to the new survey our policy makers know all about job creation but are kept in the dark about joblessness.
One such survey which made news and was showcased by the government covered January-March 2017 (the months that followed demonetisation). It estimated that 1.85 lakh new jobs were added across eight sectors – manufacturing, construction, trade, health, education, restaurants and accommodation, information technology/business process outsourcing, and transport.
Many experts are of the view that the QES can be misleading. For instance, the survey for January-March 2017, which was released in December of the same year, was extrapolated from a representative sample size of only 11,179 units covering the eight sectors. A rather small sample size, many would say, and more importantly a survey that ignored unemployment. Moreover, an analysis of the Sixth Economic Census and other official data by business daily Mint revealed that the average Indian establishment employed only 2.34 persons and about one-third of non-agricultural outfits do not employ even one worker. In effect, the scope of the QES is severely limited and its conclusions unauthentic.
The last annual Unemployment Survey by the government’s Labour Bureau before it was discontinued was in 2015-16. It indicated that unemployment had gone up by 5%. The survey also revealed that 77 % households have no member earning a regular wage. With casual employment limited to a few months in a year and a large workforce employed in the agriculture sector, it is indeed difficult to get a fix on the number of unemployed unless household surveys are undertaken.
The scrapping of the Unemployment Survey has opened the field for several job creation estimates tabulated from varied databases to mark their entry. The one much cited by Bharatiya Janata Party spokespersons and which has generated fair amount of criticism is the January 2018 study, `Towards Payroll Reporting in India’ by Pulak Ghosh of Indian Institute of Management (IIM) Bangalore and Soumya Kanti Ghosh of the State Bank of India.
The Ghosh duo tabulated the number of new jobs created based on data from the Employees' Provident Fund Organisation (EPFO), Employees' State Insurance Corporation (ESIC), General Provident Fund and National Pension System (NPS). The figure they arrived at was an astounding projection that 70 lakh jobs will be created in fiscal year 2017-18. If, to that figure, we add employment in the informal and farm sectors, then it would indeed be a congenial picture that emerges.
Former Finance Minister P Chidambaram in a critique of the Ghosh study had this to say in his weekly column in the Indian Express: “If industries/businesses in the organised sector that employed 20 or more persons can generate 55 lakh new jobs in a year that qualified for enrollment under the EPFO, then we can declare that India has, truly and comprehensively, slain the demon of unemployment!”
Praveen Chakravarty a Senior Fellow at the IDFC Institute, a Mumbai think tank, (also recently appointed chairman of the Congress Data Analytics Department) was equally critical. He pointed out that if the “payroll-based” estimates were accurate, then India was generating “three times more non-farm jobs than the US.” Also, India Inc was generating employment for 30,000 workers every day – a highly unlikely event given that investments are going down.
In fact, Chakravarty in a signed column in The Wire said that if the conclusions arrived at by Pulak Ghosh and Soumya Kanti Ghosh were to be relied upon, then it “would mean that with more jobs than job-seekers, wage growth would be skyrocketing, not falling to a three-year-low as reported by the Centre for Monitoring Indian Economy (CMIE)….and all those electoral surveys by respected organisations such as the Centre for the Study of Developing Societies (CSDS) that show jobs as being the most important issue for the average Indian voter is just plain bunkum.”
Very clearly, a better database is required to estimate employment- unemployment levels in this country. But that does not mean we employ statistics to paint a picture that distorts reality. Discontinuing established surveys and replacing them with government friendly modules is also not the solution.