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Where are the jobs? PDF Print E-mail
Friday, 17 November 2017 04:51
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Shobhana'sedit

 Just over 3 lakh new jobs in corporate manufacturing in FY17

 

With CMIE chief Mahesh Vyas estimating around 1.5 million jobs were lost to demonetisation in Jan-April 2017 over Sept-Dec 2016 and economist Surjit Bhalla arguing jobs grew by 4.2 million in Jan-April 2017 over a year ago, the debate over jobs is both heating up and getting curiouser. HRD minister Prakash Javadekar has, for instance, interpreted provident fund data from EPFO to claim 10 million new jobs were created in FY17. Adding to the confusion is the fact that India has several sources for labour data, almost none of which match—there is the NSS, the Labour Bureau, the ASI and even an Economic Census. In the absence of real time data, Radhicka Kapoor of ICRIER has estimated employment trends in the manufacturing sector by computing elasticity estimates from ASI data and applying this to the national accounts or GVA data—this shows that only 4.08 lakh jobs were created in the private corporate manufacturing sector in FY16 and an even fewer 3.15 lakh in FY17—in FY16, total employment in the unorganised and organised manufacturing sector was just under 50 million. In other words, the pace of job creation is woefully short of the required 1-2 million a month.

Kapoor argues the Mudra loans—the government claims these created at least 70 million jobs over the past few years—were probably given to those who were already employed and chose to strike out on their own; also, given the average loan size of `44,000 in FY17, it is unlikely they are creating sustainable businesses. As for provident fund data, Kapoor looks at the number of accounts in both exempted and unexempted funds and finds these rose dramatically, from 88.8 million in March 2013 to 117.8 million in March 2014, 158.5 million in March 2015, 171.4 million in March 2016 and 193.4 million in March 2017—the increase, she points out, is due to employees having multiple accounts and increased drives by the EPFO to ensure greater compliance; the fact that only 22% of these accounts received any contribution in 2015-16 lends credence to the multiple accounts theory.

Fixing India’s jobs famine requires creating a better environment for companies to hire people—the recent changes proposed in the Maharashtra law which makes retrenchment easier is a good step in this context, as are some of the sector-specific packages like the one put in place for apparel exports. Moreover, the operating environment must be made easier so that SMEs are able to run their businesses without any stress—apart from the usual ease-of-doing-business parameters, this means costs of electricity, rentals, etc, also have to come down sharply. An additional factor that has come into the picture now is demonetisation and GST, both of which make it more difficult for firms to survive in the unorganised sector—if this is not taken care of, employment will show an even bigger hit when the next set of data are in.

 

 

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