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Jobless growth? Not quite PDF Print E-mail
Tuesday, 24 May 2016 04:51
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EPFO data 7 times more than what Eco Survey says

 

Enough has been written on the jobless growth that India has been witnessing for years, largely due to the capital intensive nature of production—analysis by Crisil of NSS data showed that while 52 million non-agriculture jobs got created between FY05 and FY12, less than 38 million will be created between FY12 and FY19. Much of this has to do with the capital-intensity of production—both in manufacturing and services—rising steadily. So, according to Crisil, even in the case of services, while 5.9 workers were required to create Rs 10 lakh of real output in hotels and restaurants in FY12, the number was a mere 1.4 for financial services. A similar analysis of jobless growth gets thrown up from the data put out in the Economic Survey. While employment in the government, both at the central and the state levels has fallen by around 5 lakh between FY06 and FY12, total private sector employment has risen by just 3 million during this period—since that number reflects just the organised sector, the Crisil number seems correct. In which case, the solution to creating more non-agriculture jobs is to have more flexible labour laws and to ensure more construction jobs since these are the easiest to add—that’s what the government’s stepping up of the roads-construction programme will do.

The problem with the analysis, as our page one story today points out, is that India does not have any firm data on jobs created in even the formal sector, leave aside jobs in the informal sector. So while the latest Economic Survey talks of private sector organised employment rising from 92.7 lakh in FY07 to 119.7 lakh in FY12—it does not have data beyond that—data from the Employees Provident Fund Organisation (EPFO) depicts a very rosy picture. According to the EPFO data, the number of employees in organisations registered with it—anyone with over 20 employees has to register with EPFO and pay PF dues every month—rose from 44.4 million in FY07 to 85.5 million in FY12 and further to 158.5 million in FY15. While the EPFO is known to have problems with its data in the sense that people have more than one account, it is unlikely that the number will come down to the ones mentioned in the Economic Survey. For one, there has been considerable cleaning up of the EPFO’s accounts over the last few years and, two, the growth in the funds collected suggests there has been a healthy growth in the number of employees covered as well. While private sector employment as per the Economic Survey was just 12 million in FY12, it was nearly 86 million as per the EPFO—for the two to reflect the same reality, it would mean every person in the EPFO has to have seven accounts. For any meaningful analysis of India’s employment problem, the least we require is accurate data—the government needs to reconcile the two sets of data at the earliest.

 

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Saikat's story

 

Does India have jobless growth despite an economy doing reasonably well or does it have plentiful jobs? The answer depends on what data source you rely on, and the difference can be as much as sevenfold — and this is when all data sources are governmental.

Based on the Economic Survey, employment in the organised non-government sector rose by a low 5.2% per annum between FY06 and FY12. Add to this the fall in central government employment, from 28.6 lakh in FY06 to 25.2 lakh in FY12, and the employment picture is a dismal one. With state government employment also falling, from 73 lakh in FY06 to 71.8 lakh in FY12, the picture only gets worse.

Keep in mind, the economy grew at its fastest during some of these years. The economy grew at 9.5% in FY06, 9.3% in FY08, 8.9% in FY11 before falling to 6.7% in FY12.

The picture gets completely reversed, to one of plentiful jobs, when you look at data from the Employees’ Provident Fund Organisation (EPFO), which has as its members all private sector employees in organisations that have more than 20 workers. Between FY07 and FY12, non-government jobs in the organised sector grew from 4.4 crore to 15.8 crore, a number that is significantly higher than the 4.4% shown by the Economic Survey. Even for the period FY12 to FY15, for which there is no comparable data in the Economic Survey, growth has been a healthy 22.8%.

graph 1

Apart from the growth data itself, there is a huge discrepancy between the actual numbers themselves. According to the Economic Survey, there were 119.7 lakh people employed in the formal private sector in FY12. The number of those employed in the sector according to the EPFO is more than seven times this. Even if you assume a 50% overstatement due to an individual having two accounts, the difference is 3.5 times.

While we will know the actual number of employees covered by organisations covered by the EPFO only after all the duplicates are removed — that process is believed to be largely completed — keep in mind the EPFO contributions suggest that the jobs growth is far higher than the Economic Survey data that the government regularly brings out or even that brought out by the Labour Bureau on a total of eight industries. While the Labour Bureau shows jobs contracting 13.4% per annum between FY10 and FY15, annual contributions to the EPFO grew 20.6% per annum between FY07 and FY12 and 17.3% per annum between FY12 and FY15. While a part of the growth will be due to salary levels rising, it cannot be explained unless the number of fresh jobs being created is also high.

 

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