Though traditional employment data from official sources suggests India continues to be in a phase of jobless growth, data from EPFO suggests employment growth, and in the formal sector at that, is exceptionally robust—at least 4.5 million in FY17 and 5.5 million in FY18, based on data pro-rated from actuals from April to November 2017. While TV Mohandas Pai and Rajesh K Moorti of Aarin Capital Partners were the first to use EPFO data to show the official Labour Bureau data on jobs creation was incorrect—in articles in this newspaper—Pulak Ghosh of IIM and Soumya Kanti Ghosh of SBI have cleaned up the EPFO data considerably to arrive at their conclusions. While the EPFO’s raw data suggests there are 8.7 crore member accounts, the duo removed 2 crore accounts because the data was incomplete; another 1 crore were removed because they came in via various amnesty schemes given to firms which needed to be deducting EPFO contributions but didn’t. The names were also run through various de-duplication software to ensure their uniqueness.
Finally, they zeroed in only 18-25 year-olds, to ensure only new employees were captured; new employee accounts that didn’t have steady EPFO contributions were also dropped on grounds they may be fraud accounts. All data pertains to the formal sector as informal sector employees don’t contribute to EPFO. The data, however, doesn’t jell with most macro parameters. Investment growth, for instance, remains sluggish, as does consumption growth. If formal sector employment grew by at least 5 million, informal employment is likely to have exceeded that—India’s work force increases by around 15 million each year. Such high growth, logically, has to be the result of reasonably high investment growth and has to result in robust consumption growth, neither of which is true for several years now.
Even if an aberration, the data is a significant addition to that on Indian jobs and economists who argue jobless growth need to explain this. There is also considerable employment generated from other sectors like education; Ghosh & Ghosh use automobile sales, for instance, to argue this sector alone generated 2 million driver jobs in FY17. Even if the EPFO data looks exaggerated, the traditional labour data doesn’t look convincing either. Surely the spread of traditional and formal retail—and now, e-tail from the likes of Amazon and Flipkart—should have created millions of jobs? Arvind Singhal of consulting firm Technopak, for instance, estimates at least 2 million jobs were created in the retail sector over the past year, apart from 5 lakh each in tourism and apparel/footwear. At the end of the day, the government needs to work with industry to create more robust and timely data — indeed, getting pan-India payroll data, as in the US, has to be attempted at the earliest. Once GST stabilises, the good news is that, for the first time, India will have very robust data on consumption and across all cities/states — that will also help estimate GDP and jobs in a better manner.