Once you correct for inaccuracies, jobs grew 7.4% p.a. in the last decade?not 1.6% as the govt claims

TV Mohandas Pai & Rajesh K Moorti

India?s GDP in 2002-03 was R23.38 lakh crore and increased to R100 lakh crore in 2012-13, with an average 7.9% real growth over the last 10 years. The Economic Survey of 2012-13 states that ?the last decade, i.e. 1999-2000 to 2009-10, witnessed an employment growth of 1.6 per cent per annum. Employment growth in second half of the decade was relatively modest.? It is inconceivable that such a massive increase in GDP (over four times) can take place without commensurate growth in employment, yet the government of India persists with this myth. This has been accentuated by incomplete and inconsistent data published by various government departments.

Table 1 shows the data on employment in the organised sector. Surprisingly, employment data in public sector units like Coal India, BSNL, BHEL, etc, is not given.

This data is sourced from the director general of employment and training, ministry of labour and employment. It further states that private sector employment relates to non-agriculture establishments employing 10 or more persons. The key point to note is that the private sector does not file returns regularly with the department of labour making the data unreliable and antiquated.

Globally, payroll data is used to track new employment, unemployment percentage, etc. While India doesn?t have a robust payroll database, the information published by the Employees? Provident Fund Organisation (EPFO) is the nearest proxy to the payroll data. All private sector establishments employing more than 20 employees have to deduct provident fund from employees? salary and make matching contribution. Such organisations also file detailed employee-wise returns with the EPFO at regular intervals to report payroll deductions.

Even if the EPFO data is discounted by 25% due to likely duplicate accounts of the same employee in different organisations or unclaimed balances, etc, the derived employment number is significantly different from what the Economic Survey has published. The EPFO data would translate into a 12% compounded annual growth rate (CAGR) in private sector employment from 2002 to 2012. The EPFO data is only for private sector as the government manages its own provident fund.

The employment in private and public sector put together, as shown in table 2, reflects a 7.4% CAGR as against 7.9% CAGR in GDP in the last 10 years. The difference can possibly be explained by an increase in productivity.

Even the data on annual contribution made to the EPFO and corpus of the EPFO, as shown in table 3, substantiates employment numbers in the organised private sector.

Ironically, the EPFO is also a statutory body under the ministry of labour and employment and unfortunately this data is not used to validate employment statistics.

Data inconsistencies in various reports also make it difficult to draw proper conclusions. The Economic Survey has quoted employment data in organised manufacturing from the ministry of statistics and programme implementation in 2010-11 at 12.7 million, while the ministry of labour data for the same period, also quoted in the Economic Survey, is 6.4 million. The bad data given by the labour department is very evident when one looks at the employment in construction industry in the private sector, which is shown as 1 lakh.

In order to present a balanced view on economy and employment, the government should ensure integrity of data and get the Planning Commission to do a thorough review at the earliest to stop the charade of jobless growth. Liberalisation has worked for India and has created new employment. Further employment is constrained by lack of availability of skilled manpower and that?s why the salary cost has gone up significantly over the years. We have done well and there is no need to deride liberalisation by calling it a period of jobless growth.

The authors are with Aarin Capital Partners