Edit: Jobless growth? Not quite. Reconcile data for accurate picture

By: | Updated: May 24, 2016 8:55 AM

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.

India GDP growth - UN reportWhile 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. (Reuters)

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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