More jobless, but accurate data must for corrective policies
India’s unemployment data is in the spotlight yet again. Last December, it touched a 16-month high at 8.3%, as per Centre for Monitoring Indian Economy (CMIE). Although total employment reached the pre-pandemic level of 410 million in December, the urban unemployment rate shot up to 10.1%. Before the pandemic, it stood at 6–7%. The Centre dismissed the data as not much chop, citing the under-representation of poorer households. But its own NSSO quarterly reading for the September quarter also showed a moderate unemployment rate decline at 7.2% from 7.6% during the June quarter. Even if you overlook the divergence in official and private estimates, the need for faster job creation is undeniable.
More so because India is likely to overtake China as the world’s most populous country this year, and the lack of adequate jobs could turn into a nightmare and can spark nation-wide unrest. The number of people entering the workforce is increasing at an alarming speed, and the government estimates India’s working-age population to cross one billion by the next decade. If providing enough employment opportunities is one aspect, another equally important area is ensuring decent wages. The government cannot sit on its hands on either. Above all, the need to improve the country’s labour force participation rate, which is the number of the active workforce and people looking for work, is also critical. It stood at 46%, the lowest across Asia, according to the World Bank’s 2021 estimates.
The government began with good intentions to reform data compiling methods and scrapped the archaic annual Employment-Unemployment surveys and the quarterly enterprise surveys in 2017 and 2018, respectively. But ahead of the 2019 general elections, it courted controversy for withholding the NSSO’s FY18 jobs report that pegged the unemployment rate at a four-decade-high of 6.1%. Subsequently, it began publishing monthly data sourcing from the EPFO database, but that’s criticised for capturing limited formal sector employment. Various economists, including Jean Drèze and Anmol Somanchi, called out CMIE’s data for methodological flaws. This brings us to the bottom line: there’s an urgent need for reliable, official statistics on jobs and all other key indicators. The absence of reliable socio-economic data makes it difficult to determine the potential and the extent of underlying problems. It’s time the government faces the home truth that flawed data often leads to bad policy.