Job creation still a challenge after four years of Modi govt

While the Centre for Monitoring Indian Economy (CMIE) claims that the country added just 1.43 million jobs in 2017, noted economist Surjit Bhalla indicated, in one of his recent columns, that the numbers could well be about 15 million. The government, and policy think tank NITI Aayog, seem to have taken a middle path with claims of 7 million job creations during the year.

The government numbers were reached by extrapolating data from state-run social security bodies, while CMIE used a household survey. Bhalla used a part of the CMIE data, besides publicly available numbers from social security bodies such as Employees’ Provident Fund Organisation (EPFO) and Pension Fund Regulatory and Development Authority (PFRDA), to arrive at his figures.

The stakes are, in fact, so high that CMIE managing director Mahesh Vyas countered Bhalla’s claims. In response, the economist has thrown an open challenge to debate the job creation numbers with Vyas.

It is, therefore, pertinent to ask how reliable India’s job creation data really is, more so, as the contradictions have dominated the political discourse over the past four years, and would only intensify in the run-up to the 2019 Lok Sabha elections. This, at a time, when more than 12 million Indians enter the labour market every year.

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“Job is a vital economic need, but it has a political and social side, too. When a political party comes to power by making employment growth an election agenda, people will expect, debate and criticize if it falls short. In the last four years, the jobs debate has grown in proportion. From pure value-perspective, this debate is good for the country," said K.R. Shyam Sundar, a labour economist and professor at XLRI Jamshedpur.

“Employment growth is great fodder for the opposition parties to target the government and drive home an issue that impacts the masses. That’s the reason why, of late, the jobs debate has become a key rallying point during elections."

Amid the narratives around employment growth, three questions come to the fore. Is the Indian youth getting jobs? Does formalization augur well for wage premium? Is formalization of jobs about social security or job security?

Right now, however, the question is not about jobs, but about formal jobs, and the payroll data released recently by the government point to the fact that formal jobs are growing, says Manish Sabharwal, chairman at staffing company TeamLease Services.

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“There were 100 million new voters in the last election and there will be 100 million new ones in 2019. India’s youth has raised its aspiration from subsistence wages to living wages. And the way to meet these aspirations is…through raising the productivity of our firms and workers. This needs formalization, financialization, urbanization, industrialization and human capital," said Sabharwal, also a member of the employment task force set up by the government.

According to him, people may criticize, but a gradual formalization of jobs is happening and it is good for everyone.

In fact, a section of experts are of the view that the informal labour market in India remains a huge drag as it does not come with social or job protection, which effectively impacts the productive use of almost 90% of the workforce.

“The current payroll data, claiming creation of 3.46 million jobs in six months ended 28 February, is a good beginning to streamline jobs statistics. But the government needs to be conscious that any attempt to divert the attention through number jugglery can be counterproductive. India still has a jobs problem and calling it in any other name will not change the ground position," said XLRI’s Sundar.

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“In 2018-19, the fifth year of the NDA government, employment growth or lack of it will be watched very carefully from a jobs point of view ahead of the general elections," he added.

In a draft report, titled Systematic Country Diagnostic for India, released in February, the World Bank said India needs to create regular, salaried jobs with growing earnings rather than self-employed ones, in order to join the ranks of the global middle class by 2047—the centenary of its independence.

The report only fuelled the ongoing debate, which followed Prime Minister Narendra Modi’s statement saying selling pakodas was also a kind of employment. The Union labour ministry, too, is considering a proposal to bring establishments deploying less than 10 people into the fold of job creation data. Effectively, it would mean that small businesses and even shops run by a single owner, or with one employee, too, will be part of the employment generation numbers.