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The government view is that new net subscribers show jobs created but this does not inspire confidence for two primary reasons. Photo: Mint
The government view is that new net subscribers show jobs created but this does not inspire confidence for two primary reasons. Photo: Mint

Opinion | Why does govt peddle statistics not reflective of jobs growth

What could pass as byproducts of administrative churning by social security agencies cannot be flagged as growth in jobs

The recent payroll report mentions that there were 14.56 million “new" Employees’ Provident Fund (EPF) subscribers during September 2017-August 2018, while 9.10 million members “ceased" their subscriptions and of the latter 1.86 million subscribers “rejoined" the scheme.

What could have accounted for the rise in the EPF database? The government view is that new net subscribers show jobs created but this does not inspire confidence for two primary reasons.

One, the administrative measures to promote ease of doing business, such as the Unified Shram Suvidha measure, the Universal Account Number (UAN) linking and the Amnesty Scheme (existent during the first quarter of 2017 enabled legally covered but unregistered firms under EPF scheme to register their employees on a token penalty of one rupee in lieu of exorbitant penal interest rates in normal circumstances) which could have led to more “formalization" rather than actual jobs being created.

This is because of the fantastic figures that Employees’ Provident Fund Organisation (EPFO) throws at the public and the high incidence of fraud on the part of small firms and contractors and the latter account for more than one-third of the formal factory sector employment. The EPFO website boasts that 171.4 milliom accounts (both operative and non-operative, one would assume) are being maintained by it, according to the annual report for 2015-16.

This is understandably a very tall claim as it accounts for more than one-third of the total workforce of 474.1 million as in 2011-12 and the share could decline with updates of workforce for 2015-16. Still, this is a fantastic figure.

A report by Prof Radhicka Kapoor of the Indian Council for Research on International Economic Relations cites government submission to Lok Sabha to show that of the claimed 171.4 million accounts, only 22% received contributions during 2015-16.

Two, there could be “threshold crossing" effects of firms that could overstate the numbers. Even if 123,000 firms that have been counted by the Economic Census 2013 employing 15-19 workers (which need not be a correct estimate) cross the threshold of 20, some amount of formalization can exist.

On the other hand, the EPF subsidization schemes (the government will pay EPF contribution in the case of new employees) could have generated some jobs.

What is puzzling is that accessions (new subscribers) have shown higher but generally constant trend while subscribers could exit and rejoin and resubscribe at will. These statistics almost reflect a market place wherein people walk in and walk out and again walk in. The reaccessions may be because of Aadhaar seeding. But calculations of proportion of exited subscribers rejoining and resubscribing has shown a steep rise over September 2017-August 2018 period. At the same time, given that EPF payments have been made online, these discrepancies do not make sense. Then, there is something wrong in the administrative system as without UAN number accessions cannot take place in a machine-driven system and the report says rejoining members are based on UAN and Aadhaar number. Then, is it reflecting formalization of records? The statistics begs a lot of questions.

Expert services, which may mean self-employed people in the age group of 18-21 account for 57.74% of new net payroll subscribers in the top industries identified by EPFO, followed by trading establishments. These may be the small personal and other services such as salon, cybercafes, and household services that have mushroomed in urban spaces that might have been legally invisible but as a result of the goods and services tax (GST) are becoming visible and hence probably coming under the net of EPFO. These sectors have a high labour turnover, which might probably explain the demise and resurrection of subscribers.

Why does the government keep peddling these statistics though they are not even marginally reflective of jobs growth? Given the vast ambiguity that surrounds this data base, this is a desperate attempt by the government in these electorally hot times to impose on the middle classes and possibly others a kind “corrective political discourse" to those flagged by opposition parties. What could pass as byproducts of administrative churning by social security agencies cannot be flagged as growth in jobs to the extent that is claimed.

K.R. Shyam Sundar is a labour economist and professor at XLRI, Jamshedpur.

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