Economy

A job crisis, in figures

Dhyeya IAS | IAS, PCS, UPSC, Best Institute for IAS, PCS Exam Preparation

Jobs are an integral part of India’s political narrative today. This is unsurprising because the NDA came to power on the promise of creating a large number of jobs for India’s rapidly rising work force. However, much of the debate on employment performance over the last few years has been mired in ambiguity due to the absence of high-frequency employment statistics. The government has put in place a taskforce to revamp India’s employment data architecture, but new employment numbers are unlikely to come out anytime soon. Understanding employment trends in the interim period is, however, imperative. In a recent study, ‘Waiting for Jobs’, we attempt to do so by undertaking a detailed analysis of multiple data sources and surveys. Our study confirms the languid pace of job creation in India over the last few years. Here, I highlight a few statistics which underscore the severity of India’s job crisis.

First, data from the Labour Bureau’s Annual Household Employment survey (not to be confused with the Bureau’s quarterly employment surveys which are based only on enterprises employing 10 or more workers in select sectors) shows a decline in total employment from 480.4 million (2013-14) to 467.6 million (2015-16). The only sector to have witnessed a significant increase in employment was wholesale and retail trade where employment increased from 43.7 million to 48.1 million. In the manufacturing sector ( both organised and unorganised) employment declined from 51.4 million to 48.1 million over the same time period.

Second, we examine data from the Annual Survey of Industries (ASI), an enterprise survey which covers only the organised manufacturing sector. Here, we find employment to have increased from 12.94 million to 13.25 million between 2013-14 and 2014-15.What is particularly noteworthy here is that of the paltry 3.15 lakh jobs created over this period, 85.02 per cent were contractual jobs. Given that there is no ASI data beyond 2014-15, we attempt to generate an alternate employment series for this sector using data from the National Accounts Statistics (NAS). Although the NAS does not report employment data, we use the reported Gross Value Added (GVA) data to generate employment estimates. We construct estimates of the employment elasticity of GVA for each of the industry groups reported in the NAS. These elasticity estimates capture the responsiveness of employment to changes in GVA. Using the changes in GVA reported in the NAS and our elasticity estimates, we compute changes in employment. It is important to clarify here that due to the revision in India’s NAS, the manufacturing sector, earlier divided into the organised and unorganised sectors is now divided into the private corporate manufacturing sector (PCMS) and the household sector. While there are methodological differences, the two new groups loosely replace the earlier classification. The employment series we create in our study corresponds to the PCMS and serves as a proxy for employment in the organised manufacturing sector. Our calculations suggest that between 2014-15 and 2015-16, employment in the PCMS increased by approximately four lakh. In the following time period (2015-16 to 2016-17), a little over three lakh jobs were created in this sector. Given that this is the organised sector where the “good productive” jobs lie, the pace of job creation is far from adequate. It is important to note that while the methodology used in our study gives us an estimate of employment, it tells us nothing about the quality of jobs created. However, given the rapid rise in the share of contract workers in the organised manufacturing sector over the last two decades, it would not be unreasonable to assume that a large number of these jobs were in fact contractual jobs.

Third, we examine the NSSO’s recently-released report, “Unincorporated Non-Agricultural Enterprises” (73rd round), which provides data on unregistered/unorganised firms in the non-agricultural sector (excluding construction) for the year 2015-16. The previous such survey was conducted in 2010-11. Comparing data from these two rounds, we find that the total number of workers engaged in unorganised manufacturing enterprises increased from 34.88 million to 36.04 million between 2010-11 and 2015-16. Importantly, it was household enterprise (which operate without any hired worker) that accounted for much of this increase (1.82 million). On the other hand, the total number of workers engaged in non-household establishments (which employ at least one hired labourer) declined by 0.67 million. Household enterprises pay lower wages and have lower productivity as compared to non-household establishments. Thus, there are significant welfare gains to be made from transitioning from household to non-household enterprises establishments. The increasing employment in household enterprises is thus a disturbing phenomenon. It seems to be a consequence of the lack of alternative decent employment opportunities.

Fourth, we examine statistics from various administrative data sets. A noteworthy source in this context is the government’s recently launched National Career Services (NCS), which attempts to provide a nation-wide online platform for jobseekers and employers. As of March 2016, 36.25 million job seekers were registered on the NCS portal. By October 2017, this had increased to 39.92 million against a mere 7.73 lakh vacancies posted on the exchange. An analysis of the NCS data is fraught with several challenges such as limited coverage and the fact that job seekers registered on the exchange are often already employed in low paying establishments and are in search of better paying jobs in the organised sectors of the economy. Despite the caveats, these numbers reinforce the enormous gap between the pace of job creation and demand for productive jobs.

An examination of multiple datasets reaffirm the acuteness of India’s jobs crisis. It is time we stop citing the lack of reliable and timely data as an excuse for having a meaningful debate on job creation.