MUMBAI:Job creation has once again emerged as the hottest debate featuring prominently on comment pages and studio sofas. So, is India coursing through a jobless growth phase? Unhelpfully, there are no easy answers.So far, we have little reliable data on employment, which is why politicians deploy this metric to bulldoze parties in power. This election season is no different, and considering the subdued economic growth and the botched rollout of demonetisation and GST, if a single data point could crown the four years of NDA government victorious, it’s job creation.
To clear the air, the government, for the first time, published half-yearly EPFO and NPS payroll data last month, besides vowing to share these numbers every month, as against publishing it annually.
The fresh data shows startling facts that six million new formal jobs were added on a net basis last fiscal, while the average subscriber base grew from six per cent in FY15 to over 15 per cent in FY18. In other words, the jobless growth narrative is nothing but a myth.
It’s also a pat on the back for Ghosh & Ghosh report — led by economists Pulak Ghosh of IIM Bangalore and Dr Sowmya Kanti Ghosh, Group Chief Economic Advisor, SBI research — which first estimated seven million payroll additions in FY18 based on EPFO, NPS and other high-frequency government data.
But critics wasted no time sharpening their pencils, arguing rightly, that it may at best represent the recognition of informal jobs and not necessarily new additions. Just recently, Mahesh Vyas, CEO, CMIE, and PM Economic Advisory Council member Surjit Bhalla too locked horns with the latter estimating 15 million job additions in FY17, and the former disputing the same. CMIE, like NSSO, undertakes sample surveys four times a year, which economists heavily rely on.
The EPFO data could also be misleading as the increase in subscriber base could be due to the amnesty scheme for EPF defaulting firms, which spiked the database by 4.9 million in FY17. Again, these could be old workers and not new recruits.In fact, as NITI Aayog Vice-Chairman Rajiv Kumar himself put it, “One has to be careful in estimating job additions. What happens is that companies start to contribute to the EPFO when their headcount increases from 19 to 20. So, all 20 workers come into EPF, while it’s not that all 20 were new jobs.”
Policy analysts also warned that the EPFO base may further increase, thanks to the government’s Pradhan Mantri Rojgar Protsahan Yojana, under which all employers will be encouraged to provide EPF cover, with the government contributing the employer’s entire 12 per cent of basic pay contribution to EPF for the first three years.
However, SBI’s Ghosh insist that job additions are indeed real. Why? Per EPFO data, new subscriber additions stood at 3.1 million between August 2017 and February 2018. Of this, 1.85 million comprise 18-25 year olds, or the new job market entrants. Together with the NPS data that showed 3.5 lakh additions within the government sector, net job creation is roughly about 2.2 million in six months. If you extrapolate it for annualised numbers, job creation could be in excess of 4.4 million.
But remember, this is only in the formal sector. We have a large informal sector, much of which goes uncounted. Then, there are farm sector jobs, and self-employment data, which need to be streamlined. Besides, net job additions from the three sources — EPFO, NPS, ESIC — has to deduplicated before the government can hit the bull’s eye on real-time job creation numbers.