Photo: Indranil Bhoumik/Mint
Photo: Indranil Bhoumik/Mint

The politics of ‘half-baked’ payroll data

The hurry to release the payroll data appears aimed at fending off any criticism on job creation by the centre in the run-up to the Karnataka polls

Last week the government released monthly payroll data of workers registered with the Employees’ Provident Fund Organization (EPFO), the National Pension Scheme (NPS) and the Employees’ State Insurance Corporation (ESIC). The data were a follow-up of a similar report released by Ghosh and Ghosh on employment creation based on payroll data. That study was released a fortnight before the Union budget and was used by the finance minister in his budget speech even though several questions were raised on the way the report was prepared with exclusive access to some individuals but also on the quantum of jobs generated and quality of analysis presented. This one has come a fortnight before the Karnataka assembly election.

Unlike the earlier report which did a deduplication check, the data released this time hasn’t gone through such a process. The data released is for the September-February period unlike most economic data which correspond to the financial year or half-year corresponding to the October-March period. The hurry to release the data appears aimed at fending off any criticism on job creation by the centre in the run-up to the Karnataka polls. Cheerleaders have used this half-baked data to build stories of massive job creation, contrary to the evidence pointing toward a stagnation in job creation.

Even if we accept the data on face value, the criticisms of the data related to duplication, presence of inactive members and increase in enrolment due to changes in policy and the definition of eligible employees remain. But the real problem is the misconception that these are actually new jobs created. These are social security accounts and not necessarily new jobs. Some of the new enrolments could be new entrants to the social security net due to changes in the nature of enterprise or because of jobs being converted from informal to formal.

Some of these may be new jobs and some others a result of formalization. Whichever way one looks at it, they do represent an improvement. The expansion in access to social security to the majority of workers has been a long-pending agenda and must be accelerated. So is the case of formalization of enterprises. But these at best represent a minuscule share of the total workforce of the country. By the 2011-12 employment-unemployment survey (EUS) of the National Sample Survey Organization (NSSO), there were 88 million workers classified as regular workers with the remaining 384 million classified as self-employed and casual daily wage workers. The social security provisions do not fully cover even the 88 million that were reported as regular workers in 2011-12, leave alone the 81% who are not regular workers.

The data on formalization is not a barometer of employment creation. Unlike the US where non-farm payroll workers account for 81% of all workers, in India they account for less than 10% of the workforce. The growth of new accounts of around 2 million in the less than 25 age group may suggest an annual increase of 4 million workers covered by social security numbers but is no better than the employment created during the United Progressive Alliance (UPA) when the economy was creating 7 million non-farm jobs every year. But it is clearly insignificant in comparison to the demand of providing employment to the 12 million new entrants to the workforce every year and around 5 million workers moving out of agriculture.

While transparency in data for social security coverage is welcome, it is no substitute of the household surveys. Between 2004 and 2011-12, there were six nationally representative EUS surveys by NSSO. There were also five by the labour bureau between 2009-10 and 2015-16. But the government discontinued both. It has re-started the NSSO surveys but results are unlikely to be available before next year. Claims of employment creation based on social security accounts may help in the hustings but are unlikely to improve our understanding of why the economy is creating so few jobs when the economy is growing so fast. But then, no government is interested in finding a “truth" which is may be inconvenient and politically dangerous.

Himanshu is an associate professor at Jawaharlal Nehru University and visiting fellow at Centre de Sciences Humaines, New Delhi

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