From ‘pakoras’ to payrolls
The answer that the electorate is seeking is not some confusing estimates of employment but whether the govt has brought real improvement in living conditions
The National Democratic Alliance (NDA) government led by Prime Minister Narendra Modi came to power on the promise of providing 20 million jobs a year. The electoral promise was in the backdrop of dissatisfied youths wanting to join the mainstream of growth with the high growth years of United Progressive Alliance (UPA) not being able to create enough jobs. It is fair to expect that at the end of its term, citizens will be asking the NDA government to come clean on the promise. Unfortunately, the government’s response has been to shift the terms of the discourse to pakoras and payroll jobs rather than coming out with credible numbers on how many jobs have been created in the economy.
The answer to the question is difficult given that the NDA government purposely pushed the usual employment-unemployment surveys of the National Sample Survey Office (NSSO) from their regular schedule to 2017-18, results of which are unlikely to be available before the elections. But the absence of NSSO does not mean there are no measures of how the government has done in terms of employment creation. The most credible of them as of now appear to be the annual surveys of the Labour Bureau which suggest a hefty decline of 16 million jobs between March 2014 and July 2015, the last year for which information is available. Even the quarterly surveys of the Labour Bureau suggest only a modest growth in employment with the rate of employment creation halving during the NDA period compared to the UPA period. Then again, there are private surveys such as those by CMIE, which point to a dismal record of the government on employment creation. Clearly, none of the data sources suggests an uptick in employment creation during the current NDA regime.
Sadly, this evidence on lack of employment generation was sought to be downplayed by taking recourse to creating confusion on employment statistics. It was the PM who raised questions on the employment statistics by stating that the self-employed, such as those who sell pakoras, are not being counted. He was clearly misinformed because all forms of self-employed have been part of employment statistics since the beginning and these not only include the pakorawalas but also chaiwalas. But even counting these, the Labour Bureau numbers suggest a decline in employment creation during the NDA period. The second set of data, again reiterated by the PM, is the projected employment creation based on payroll data by a study Towards a Payroll Reporting in India by Soumya Kanti Ghosh, group chief economic adviser at SBI and Prof. Pulak Ghosh, professor at IIM Bangalore. These sets of data have already been questioned on the nature of assumptions made to derive these estimates to the quality of data. But it is difficult to verify the numbers which are based on data which only they have access to. But even if we take their estimates in good faith, the addition of 7 million workers cannot be treated as increase in employment in the economy. At most, the data suggests that an additional 7 million workers joined the formal workforce last year. Since the formal sector by their estimates is only 20%, their estimates are silent on the remaining 80% of the workforce.
Of the remaining 80%, the bulk is in agriculture and there is now conclusive evidence from the NSSO as well as the Labour Bureau that 5 million workers are moving out of agriculture every year. If that trend continues, then the net addition will only be 2 million per year which is same as that of the UPA period and one-tenth of what the government promised. But an equally large number of the remaining 80% are in the unorganized sector which has seen a worsening of business environment after demonetisation and hurried rollout of the goods and services tax.
While these may have confused matters and been used to score political brownie points, they have also opened up the debate on an equally important aspect of the jobs debate—the quality of employment. For most people, the demand for jobs is not about getting a livelihood opportunity alone but about getting a decent income. In any case, for a country with almost one-third of its population in the poor category and almost half of them classified as vulnerable, the concept of unemployment is a luxury it cannot afford. Precisely because of which, the number of unemployed in the economy is only a small fraction of the number of poor. The working poor are not poor because they don’t have jobs but because the existing jobs are insufficient to provide them a decent income. For the poor, any opportunity to earn income is better than dying of starvation. Most who sell pakoras are not doing so because that is the business opportunity they aspire for but simply because that is the last choice. Most of the Jats, Patels and Marathas who are demanding government jobs are also not unemployed but are dissatisfied with the existing income in agriculture.
The demand for jobs is not just about subsistence, it is also about aspirations. For a majority of those who are struggling at the bottom of the distribution chain, the reality is either stagnant incomes or decline in real incomes. This is true for pakorawalas as well as those in payrolls and for a large majority of casual manual labourers who have seen a real decline in wages. Equally true for the humble farmer whose income has remained stagnant in real terms in the last four years. The issue is not just whether somebody is earning income from whatever activity they do but whether the income earned is sufficient to give them the basic necessities of food, shelter, education and health. For the government, the answer that the electorate is seeking is not some confusing estimates of employment but whether it has brought real improvement in living conditions. It is this question that the PM will have to answer as he prepares for the next electoral battle in 2019.
Himanshu is an associate professor at Jawaharlal Nehru University and visiting fellow at Centre de Sciences Humaines, New Delhi.