The case of missing jobs
Has the number of jobs in Indian companies employing 10 or more people increased since 1947? This is what we call “obvious”. The answer is yes. Change the baseline year to 2013-14. The answer will always be yes, unless the economy has been devastated by war, famine or natural calamities. A vessel on a course, even without a firm hand at the helm, will, under normal circumstances, sail forward.
The real question is not whether total employment has increased since 2013-14, the last year of the UPA government. The BJP has pledged to create 2 million jobs per year. In seven years, their “skillful” management of the economy should have created 14 million new jobs in the formal and informal sectors, but this is not the case.
How many jobs?
A few days ago, the Ministry of Labor and Employment released a report on a survey of companies employing 10 or more workers in nine sectors that account for 85 percent of total employment (the formal sector). The report concluded that total employment was 3.08 crore compared to 2.37 crore in 2013-14 (sixth economic census), an increase of 71 lakh jobs in seven years. Extrapolating the number to cover other sectors, the increase would be, at most, 84 lakh jobs. The report does not appear to have covered the informal sector or the agricultural sector. The report claims the “most impressive growth” ranging from 22% (manufacturing) to 68% (transportation) to 152% (IT / BPO) – but, remember, all of that only adds up to 71 lakh jobs!
Since the government ended the periodic labor survey, we are forced to look for other sources. Data is important for, in the government’s words, “evidence-based policy making and statistic-based execution.”
Other credible data
The most credible are the employment and unemployment data collected and published by the Center for Monitoring Indian Economy (CMIE). In a short note, Mr. Mahesh Vyas summarized the key findings from the data at the end of the third week of September 2021. I tried to capture them in a table:
The CMIE is right when it says that “India’s recovery after the Covid-19 blockages has been rapid, partial, exhausted …”. Mark the word exhausted. Bragging about any kind of recovery – V or whatever alphabet-shaped – misses the crux that unless you reach the full employment level achieved in 2019-2020 and surpass that level, the self – saying “recovery” is illusory.
People have to have jobs and the income that goes with them. Any economic “recovery” which does not restore the old level of employment, and does not exceed this level, is meaningless for the population. Technology, new machines, new processes, and artificial intelligence can bring growth, but if that growth doesn’t restore old jobs or create new jobs, we have a huge problem at hand. The government has stubbornly refused to acknowledge that India does indeed have such a problem; it is even less willing to take action to address this problem.
Shrinkage force, slip rate
Another serious problem is the shrinking workforce. Both the labor force participation rate (LFPR) and the employment rate in August 2021 are significantly lower than the corresponding rates in February 2020 (see table). The logical conclusion is that a significant number of people have withdrawn from the labor market (i.e. they have stopped looking for a job) and the number of people working (employed) has also decreased. Unless these two ratios are reversed, there is no way to quickly double the size of GDP or outperform larger economies like Germany or Japan.
The CMIE also calculated the net cumulative increase in total employment between September 2020 and September 2021: this is a meager 44,483. Jobs have been and are being lost; new jobs are created; but if the net increase over 12 months is only 44,483, what does it say about the management of the economy and the pompous claims of ministers and economic advisers? Mr. Vyas observes, correctly, that this “indicates a premature exhaustion of the collection process. This is serious because while the creation of additional jobs has stalled, the flow of additions to the stock of working-age population continues ”.
There are more depressing conclusions if we subject the data to a gender-based analysis; or look at the numbers through a rural vs urban lens; or examine the “quality” of jobs. The agricultural sector was the savior. It absorbed an additional labor force of around 46 lakhs between March 2020 and August 2021, but rural India lost 65 lakhs of non-farm jobs during the same period. People have moved from non-farm jobs to farm jobs, but it may just be disguised unemployment.
I want the Prime Minister to address the issues of unemployment and employment in his next Mann ki baat. Let him throw away the sanitized and summary reports from the Department of Finance and talk to real people who have lost their jobs and to young people who are desperate for jobs. They can tell him bitter truths.