Employing the Right Measures

Better employment data will have to rely on large and frequent surveys, not misleading proxies.

Prime Minister Narendra Modi, in a recent televised interview, misleadingly claimed that an “independent agency” found that 70 lakh Employees’ Provident Fund Organisation (EPFO) accounts were opened for persons aged 18–25 years. He said this without even bothering to indicate the period during which this additional employment was presumably generated. “Does not this show new employment?” he asked. It was clear that this claim came out of a study submitted to the Niti Aayog, which provides employment projections for this financial year, that is, till 31 March 2018. Most available evidence on employment creation (and associated economic indicators) contradicts the possibility of higher employment growth during 2017–18 over the previous year.

The study “Towards a Payroll Reporting in India” (a summary is available online), submitted to the Niti Aayog, is ostensibly a product of the government think tank’s larger push to change how employment is tracked in India. Its rationale for change, shared by some labour economists as well, is that the measurement of employment in India has certain weaknesses: small samples, infrequent surveys, and lagged data release. There has been a long-standing need to have larger surveys as well as quicker, “real-time” indicators. The “Report of the Task Force on Improving Employment Data” (2017) mentions, among other possible methods, the use of “administrative datasets” such as the EPFO, the Employees’ State Insurance Corporation (ESIC), the National Pension Scheme (NPS), and other similar schemes to gather information on the labour market. It uses these data sets to estimate employment generation and concludes that 5.9 lakh persons will be added to the “payroll” every month during the present financial year. It is clear that the study conflates new enrolment into these social security schemes with new employment. The set of workers covered by the administrative data sets used in the study in any case comprise a small proportion of all workers. Therefore, it is meaningless to make a claim of new employment without accounting for employment figures for the rest of the labour market. At best, this data represents the rate of enrolment into some social security schemes in the workforce—a kind of formalisation—and not employment creation.