The promise of creating new jobs helped Narendra Modi and his Bharatiya Janata Party (BJP) win a historic victory in the 2014 general elections. With a year left for the next general elections, Modi and his government find themselves under fire from opponents for what they perceive to be a failure to live up to that promise.

The debate on job creation in the country has been handicapped because of lack of regular and credible data. While several new job surveys are currently underway, and their results will likely be known a few months down the line, they are not likely to be comparable to previous surveys because of methodological differences.

One way to examine trends in job growth is to look at corporate and industrial data to figure out how many employees companies and industrial units are recruiting. A Mint analysis of corporate data sourced from the ProwessIQ database of the Centre for Monitoring Indian Economy (CMIE) suggests that while corporations have been creating new jobs, the pace of job creation has been lacklustre over the past few years.

The ProwessIQ database consists of records of over 27,000 Indian firms (listed and unlisted) but the number of firms for which employee data is available over the past few years is very small. To get around this problem, we consider a two-year rolling sample of firms for which records are available for two successive years. The average sample size for the past decade, based on this methodology, is 1,360 firms. For the latest year— fiscal year 2017 (FY17)—our sample includes more than 2,000 firms, which collectively employ nearly 6.4 million employees.

The data shows that corporate jobs grew at an average annual pace of 4% between fiscal year 2006 and fiscal year 2009. The shock of the global financial crisis led to a sharp slowdown, with job growth slowing to 2% in fiscal year 2010 before recovering sharply to grow at 5% in fiscal year 2011. However that recovery, much like the recovery in India’s economic engine, was short-lived. The pace of job creation was less than 1% in fiscal year 2013 and a little above 1.5% in fiscal year 2014. Fiscal year 2015 actually saw a contraction in jobs, after which there has been a slow recovery. However, the pace of job creation over the past couple of years—at roughly 2% per annum—is significantly lower than the pace of job creation in the 2006-11 phase.

Surprisingly, it is smaller firms that are adding jobs at a faster pace compared to bigger ones. Dividing the overall sample of corporations into four quartiles based on net sales, we find that firms with the smallest sales (bottom quartile) have been adding jobs at a faster clip than firms with the largest sales.

The overall trend in corporate jobs broadly mirrors the trends in employee growth reported by the Annual Survey of Industries (ASI), which covers a much larger sample of firms but excludes services altogether from its coverage. The ASI data on employees is more volatile compared to the Prowess data, and is available only till fiscal year 2016 but they point to the same long-run trends. The only sector where organized jobs seem to be growing is the public sector, as an analysis by howindialives.com published in Mint showed.

The data from Prowess does not tell us much about the nature of jobs being added: whether it is regular or contractual jobs which are being added. But data from ASI, which provides that bifurcation, shows that the reliance on contractual workers has grown over the past few years.

This suggests that of the jobs being created, many may be of a temporary nature without the benefits that regular employees enjoy. Independent household surveys also show that most salaried workers in India are insecure, lacking written contracts or benefits such as provident fund and maternity leave. The ICE 360° survey conducted in 2016 showed that 68% of salaried workers in rural India, and 71% of salaried workers in urban India lacked even a written contract.

The 2017 report of a task force on improving India’s employment statistics headed by former NITI Aayog vice-chairman Arvind Panagariya recommended that the government should consider even jobs without written contracts as formal jobs as long as those employed in such jobs are covered by either provident fund or insurance schemes (public or private). Such alternative definitions of formal employment may provide an artificial boost to India’s official employment numbers. But generating adequate numbers of high quality jobs will require greater imagination and effort.

Sachin P. Mampatta contributed to this story.

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