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Job creation is one of the main concerns of politicians and policymakers around the world.

In a country
where an estimated 1.2 crore to 1.6 crore people come into the workforce each year, jobs remain a
cause for concern. India has a long way to go to touch the 9 percent growth that we saw a decade ago.

Days before the 72nd independence day, Prime minister boasted of another irrational claim of 70 lakh
jobs being created in formal sector alone last year. Point remains whether this claim will remain a boast
or will be regarded as another jumla in course of time.

Unfortunately, discussions on the relationship between economic growth and job creation in India have
been muddled by data gaps and inconsistencies. Population censuses, economic censuses, household
surveys, and labor force surveys may all define employment in different ways. Major challenges faced
when measuring employment data were unsatisfactory coverage of informal sector and infrequent
observations.

There has been no large scale NSSSO survey on employment, with last one being undertaken in 2011-12,
barring the labor bureau survey of 2014-15. There are several individual pieces of data suggesting a
healthy growth in employment in 2017/18, but veracity of the same cannot be tested.

Let’s have a look at start of this debate with the independent study by Ghosh et al.(Payroll in India-
detailed_0 ghosh & ghosh.pdf) in January, 2018 which suggested a rise 7 million jobs in 2017, with job
creation for 18-21Yrs old to be around 2 million per year. Government jumped on the figure not the flaw
in logic used to arrive at that figure. Finance Minister quoted the same facts during his budget speech
said that “the policy measures taken have started showing results and a recent study has shown that 70
lakh formal jobs will be created this year”.

The so called academic study was highlighting the need for a better payroll system in India to have a
better streamlined data on Employment along with parameters related to wages, distribution etc, on
lines of monthly payroll reports in USA. As research has revealed that the U.S. Nonfarm Payroll Numbers
have the most profound impact of all high frequency economic reports on not only the US but global
financial markets too.

Despite acknowledging lack of proper & direct source of data, they used a sort of indirect source to paint
a rosy picture on employment, providing an alibi to government for the mess created by policies of
demonetization and GST.

 According to statutory requirements, when an organization has 20 or more employees it comes


under EPFO’s ambit. So, if a firm has 19 employees and it adds one more to its payroll, then all
20 will have to be registered under EPFO.
This gives a false picture that 20 jobs were created instead of just one. In addition, the number
of organizations coming under EPFO ambit is growing. The body had 921,000 registered
organizations in 2015-16. That number grew to 1.02 million in 2016-17.
The Indian economy was subjected to massive blunders of formalization by the twin forces of
demonetization in FY-2017 and the GST in FY-2018.This resulted in thousands of employers
retrenching a large part of their informal workforce paid in cash and registering the remaining
employees as formal workers with benefits such as provident fund. This disorder will show up as
new formal jobs in the EPFO data set but it does not mean net new jobs were created.
 All EPFO subscribers have PF accounts, but that does not mean that all account holders are
currently employed. EPFO has a little over 170 million accounts but only about 50 million are
active subscribers.
It means the data cannot be a basis to conclude whether employees getting registered to EPFO
are gross additions to the country’s jobs pool.
It also indicates that PF number portability is still a distant dream for which both the retirement
body and employers have to share the responsibility, given the labor laws in the country.
 EPFO added 10.13 million subscribers to its pool between 1 January and 30 June 2017 through
an amnesty scheme. This is a clear case of under reporting of formal employment between 1
April 2009 and 31 December 2016 by companies and cannot be considered as new jobs created
in the period they were registered.
Above scheme called as Enrolment and Establishment Coverage campaign, 2017 was launched
in January, 2017.Clearly, an indication that government was making itself ready to artificially
makeup for the job losses that might be there in short term post demonetization.

In reply to the criticism, Ghosh et al. asserted that they had counted only first-time employees and had
taken care to delete a large number of EPFO account-holders who did not satisfy the strict criteria. The
only concession they were willing to make was that the number of 70 lakh was a gross figure that
included vacancies that were filled after the incumbent had retired.

It is evident that the Ghoshs were given privileged access to data that is not in the public domain. So,
firstly, the government must put all the EPFO subscriber data in the public domain. This is not a done
thing in the research circles. Believing an argument because you have data, I don’t would be quite
foolish.

Secondly, Ghosh et al. must apply the same methodology and compute the number of EPFO-enrolled
new jobs that were created in 2014-15 and 2015-16, the two NDA years before demonetization and the
GST. They should go further and compute the numbers for the UPA years (2004-2014) as well. This will
only give a clear picture whether Employment situation in the country has improved over the years.

Let’s look at the situation using data freely available in public domain, without any unnecessary
mathematical molding of data

NSSO Fifth Annual Unemployment Survey (2015-16)


Important terminology
M-Male, F-Female, T-Transgender, P-Overall

Usual Principal Status (UPS) Approach-A person found unemployed under this approach if he worked for
a major period (183 days or more) in reference period

Usual Principal and Subsidiary Status (UPSS) Approach-a person who has worked even for 30 days or
more in any economic activity during the reference period of last twelve months is considered as
employed under this approach.

LFPR based on UPS & UPSS approach for persons aged 15 years & above

Approach Rural Urban Rural + Urban


M F T P M F T P M F T P

UPS 77.3 25.7 51.1 53 69.1 16.2 41.2 43.5 75 23.7 48 50.3
UPSS 78 31.7 52.2 55.8 69.1 16.6 41.2 43.7 75.5 27.4 48.8 52.4

in rural sector the LFPR was estimated to be 53 per cent whereas in urban sector the same was 43.5 per
cent at the All India level. One of the reasons for lower LFPR in urban areas was perhaps the low female
participation rate of 16.2 per cent. In rural and urban sector, the male participation rate was at 77.3 per
cent and 69.1 per cent respectively. As compared to male LFPR, female LFPR was very low for both rural
and urban sectors(Also see Box 3.2).The LFPR based on UPS approach for transgender was 51.1 per cent
and 41.2 per cent in rural and urban areas respectively.

Unemployment Rate based on UPS & UPSS approaches for persons aged 15 years & above

Approach Rural Urban Rural + Urban


M F T P M F T P M F T P

UPS 4.2 7.8 2.1 5.1 3.3 12.1 10.3 4.9 4.0 8.7 4.3 5.0
UPSS 2.9 4.7 0.6 3.4 3.0 10.9 10.3 4.4 3.0 5.8 3.2 3.7

The Unemployment Rate based on Usual Principal Status approach was estimated to be 5 per cent at
the All India level or in other words about 5 per cent of the persons who were available for work during
the reference period could not get work and remained unemployed. In the rural sector, based on Usual
Principal Status approach unemployment rate was 5.1 per cent whereas in urban sector, the same was
4.9 per cent at the All India level. In case of urban females the UR was significantly high at 12.1 per cent
at the All India level as compared to 3.3 per cent for urban males and rural females (7.8 per cent).
Similarly, the unemployment rate among transgenders in urban areas was also high at 10.3 per cent as
compared to UR of 2.1 per cent for transgender in rural areas. The Unemployment Rate based on Usual
Principal & Subsidiary Status approach was estimated to be 3.7 per cent at the All India level. The
unemployment rate for males was 3 per cent whereas for females, the same was 5.8 per cent. The
unemployment rate for transgender based on UPSS approach was 3.2 per cent at the All India level. At
the sectoral level, the unemployment rate in rural sector was estimated to be 3.4 per cent whereas in
urban sector, it was 4.4 per cent at the All India level based on UPSS approach.

CMIE-BSE data for different quarters


Important definitions

Labor force consists of persons who are of 15 years of age or more and are either of the following two
categories:
1. Are employed
2. Are unemployed and are willing to work and are actively looking for a job
Labor Participation Rate (LPR) This is the ratio of the labor force to the population greater than 15 years
of age.
Greater labor force consists of persons who are of 15 years of age or more and are either of the
following three categories:
1. Are employed
2. Are unemployed and are willing to work and are actively looking for a job
3. Are unemployed and are willing to work and are not actively looking for a job

Unemployment Rate (UER)- This is the unemployed who are willing to work and are actively looking for
a job expressed as a per cent of the labor force.
Greater Unemployment Rate (GUER) This is the sum of the unemployed who are willing to work and are
actively looking for a job and the unemployed who are willing to work and are not actively looking for a
job, expressed as a per cent of the greater labor force.

Results for May-August, 2016 Quarter (UE_profile_May_Aug_2016.pdf)


Pre-Demonetization quarter

Parameter (%) Urban Rural Urban Urban Male Female Rural Rural At All
male Female Male Female India level
Greater 17.9 15.8 10.0 47.7 9.6 43.9 9.4 41.9 16.53
Unemployment
Rate
Unemployment 10.8 8.4 6.7 30.6 6.2 24.6 5.9 21.4 9.19
Rate
Greater 49.2 52.2 75.1 21.3 77.5 21.8 78.8 22.1 51.17
Labor
Participation
Rate
Labor 45.2 48 72.4 16 74.7 16.2 75.8 16.3 47.03
Participation
Rate

At state level, Rajasthan, Himachal Pradesh, Kerala had lowest labor participation rates & Telangana and
Tamil Nadu had the highest. In case of unemployment rate, Jharkhand & Uttar Pradesh had the highest
rate while, Gujarat & Uttrakhand had the lowest.
At monthly level over the period in consideration, the unemployment was higher in urban areas as
compared to All India average, while lower for rural areas. Unemployment was highest educational
group with qualification more than Graduation level. Unemployment rate increased with higher for the
people with more qualifications

Results for September-December, 2017 Quarter (Sep-Dec2017.pdf)


(Post GST rollout quarter)

Parameter (%) Urban Rural Urban Urban Male Female Rural Rural At All
male Female Male Female India level
Greater 8.5 7.1 5.5 26.7 5.1 22.1 5.0 19.8 7.55
Unemployment
Rate
Unemployment 5.7 4.5 4.1 16.2 3.9 11.6 3.8 9.3 4.92
Rate
Greater 43.5 46.0 71.7 13.0 73.6 13.6 74.5 13.9 45.16
Labor
Participation
Rate
Labor 42.2 44.8 70.7 11.4 72.7 12.0 73.7 12.3 43.91
Participation
Rate

At state level Uttrakhand, Chandigarh had lowest labor participation rates & Telangana and Goa had the
highest. In case of unemployment rate, Jharkhand & Haryana had the highest rate while, Karnataka &
Uttrakhand had the lowest.
Skilling problem still remains a challenge with unemployment rate increasing compared to last year for
May-August Quarter for people with qualifications more than graduation level.

Results for January-April, 2018 Quarter (Jan-Apr2018.pdf)


(Latest Quarterly report by BSE-CMIE)

Parameter (%) Urban Rural Urban Urban Male Female Rural Rural At All
male Female Male Female India level
Greater 9.1 7.3 6.0 28.5 5.5 23.0 5.3 20.1 7.94
Unemployment
Rate
Unemployment 6.2 5.3 4.6 17.0 4.4 13.4 4.3 11.6 5.56
Rate
Greater 42.9 45.3 70.9 12.6 73.1 12.8 74.3 12.9 44.50
Labor
Participation
Rate
Labor 41.6 44.3 69.9 10.8 72.3 11.4 73.5 11.7 43.38
Participation
Rate

At state level, Chandigarh, Uttrakhand had lowest labor participation rates while Meghalaya; Tripura &
Telangana had the highest. In case of unemployment rate, Tripura, Jharkhand, Haryana had the highest
rate while, Karnataka & Uttrakhand had the lowest.

Another Bluff

Ghosh et al. had informed government about how the EPFO data is being maintained which was not
included in their study on creation of 7 million jobs in 2017-18.( https://www.business-
standard.com/article/economy-policy/30-40-of-epfo-data-shoddily-maintained-ghosh-and-ghosh-told-
pmo-118021601423_1.html)

Out of around 80 million accounts that were analyzed, there were 10 million records with only names
and no other details about the subscribers, including their date of joining, date of birth and father’s
name, among others, in the EPFO’s records. Several records maintained by the EPFO had names such as
A, a, xxx, 9, z, with provident fund contribution against them.

Only 20 per cent of the members had Permanent Account Numbers (PANs) and there was “no
consistency in capturing the members’ data with some or the other details of the subscribers missing.
In some cases, members have received contribution even before their joining date, “probably due to
late registration”, and some members received multiple provident fund contributions for months.

It is only a time series of data which will tell whether this claim will remain a boast or will be regarded as
another jumla in course of time.

Note:- Source of claim of article


payroll_april18.pdf

The above statistics for EPFO, ESIC, and NPS were released in June 2018