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Nearly one month into 2023, joblessness is again a key talking point, especially with data published by a private agency showing an alarming rise in urban unemployment. The Centre, though, has questioned the credibility of the data. And, last week, in an online “Rozgar Mela", Prime Minister Narendra Modi gave away letters of appointment to 71,000 government recruits. With the general elections looming, jobs are sure to dominate political debate. But different sides will draw different pictures from the available data.

The jury is out on which jobs data to trust. Against this backdrop, it is hard to tell what is really happening in the job market. Surveys by the Centre for Monitoring Indian Economy (CMIE), referred to earlier, reported urban unemployment at 10.1% last month, the highest in five years barring the lockdown-hit months. The other data set is the government’s Periodic Labour Force Survey (PLFS), whose data, unlike the CMIE’s, is released with a lag of a few months. The latest PLFS has put urban unemployment at 7.2% in the September-ended quarter (see chart 1), lower than CMIE’s 8.4% for the same period.

Soon after CMIE released its December 2022 data, the labour ministry issued a rebuttal, saying that “many private companies/organizations conduct surveys based on their own methodologies, which are generally neither scientific nor based on internationally accepted norms". But while PLFS’ unemployment rate was lower than that reported by CMIE in the last two quarters with available data, the CMIE’s data (aspects of which independent experts also contest) has mostly been more favourable to the government than the PLFS’. In 13 of the 18 quarters with comparable data, PLFS has reported higher urban unemployment.

Graphic: Mint
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Graphic: Mint

Data debate

Drawing conclusions from CMIE’s monthly data may be misleading due to its typical volatility (see chart 2) due to the seasonal nature of informal jobs. However, annual CMIE figures (which avoid volatility) show clear divergences with PLFS.

All-India data from the annual PLFS, which covers both rural and urban areas, is available from 2017-18 to 2020-21, during which PLFS showed a declining trend in unemployment, while the CMIE showed an upward trend (see chart 3). One factor could be that CMIE follows the financial year, while PLFS data is for July-June, the agricultural year. Different methodologies, sample designs, and recall periods are also at play. Independent experts criticize the CMIE’s survey data for underrepresentation of poorer households. (The company has in the past said it would carry out a thorough study to make the survey more robust and representative.)

Mahesh Vyas, managing director at CMIE, told Mint there had been high volatility in monthly data due to seasonality but also due to economic shocks such as demonetization, the rollout of the goods and services tax, monsoon volatility, and the pandemic. Vyas said CMIE’s methods were broadly in line with international norms, save for a few areas where they had been innovative in an effort to “add value". Despite the criticism, CMIE data is widely relied upon due to the lag in official data. The silver lining is that CMIE’s total unemployment numbers do show improvement from 8.8% in pandemic-hit 2020-21 to 7.7% in 2021-22 and 7.6% in April-December 2022.

Data vs politics

Before the 2019 general elections, the Centre faced criticism for withholding the first PLFS report (which had unfavourable findings) until the election results came out. The time lag made the data somewhat irrelevant. Quarterly urban PLFS reports were expected to be more frequent, but also saw year-long lags initially (see chart 4). The lag is now down to under three months. “There has been a push to release the report within 60 days as delays give room for unnecessary reliance on private data," a statistics ministry official told Mint on the condition of anonymity.

Despite the data contradictions, jobs are a key issue for voters, even though it may not sway poll results. Around 19.2% of voters surveyed before the 2019 polls by Lokniti-Centre for the Study of Developing Societies (CSDS) picked jobs and related topics as the most important issue while voting (see chart 5). The trend has stayed similar in state polls as well.

Yet, results show this isn’t an issue on which people end up voting, Sanjay Kumar, co-director at Lokniti-CSDS, said. “While unemployment is becoming an increasing concern, unless there is a dramatic deterioration, it may not change voting preference as issues like nationalism, Hindu identity will likely overshadow the worry over jobs," Kumar said.

While the Centre rejects reports showing high unemployment, it launched ‘Rozgar Mela’ in October 2022, promising jobs to 1 million personnel. Both CMIE and quarterly PLFS reports show improvements, but both still report unemployment at a worrisome 7%-plus. The issue is sure to dominate electoral talk in the coming months.

 

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