Jobs- looking beyond the pakora seller !

The job situation in India is occupying disproportionate time in the policy debate circles and in the political discourse of the country and rightly so. It is after all among the more important issues that a country should grapple with! From a politics point of view, the PM rode to power on the back of a promise of creating 2 million jobs per year. Hence,in the last year of the term, it is only imperative that we evaluate the PM and the government on this promise.

As an introduction — the best estimates on the jobs created show that India is generating about 5 million jobs at this point.(http://www.iimb.ac.in/sites/default/files/Payroll%20in%20India-detailed_0.pdf)There are other reports that show that India is actually shedding jobs. ((https://www.livemint.com/Politics/sYBQOalLczD2rlAqE0xoWL/Forget-job-growth-employment-in-India-fell-between-2014-and.html)

Whichever one we choose to see and accounting for inconsistencies in reports there is no running away from the fact that India needs to create jobs in a hurry.

The PM on many occasions has used varied arguments to support his claim of job creation, including the famous pakora seller statement, oblivious to the difference between self employment and entrepreneurship!

Last week, again under pressure the PM sought to clear the air and issued this statement- https://economictimes.indiatimes.com/jobs/where-are-the-jobs-modi-hits-back-at-critics-of-his-employment-record-with-8-hard-facts/articleshow/64853383.cms. Optics and weaving optimism in the narrative is a necessity for political leadership anywhere. However, as citizens, it becomes our duty to continuously question and look through the data put out with a fine toothed comb. With that intent, here is a short analysis of the PM’s statement:

Data on jobs : Yes, there is a lack of quality data on jobs being created. There are a plethora of surverys conducted, namely- Labour Bureau’s Annual Household Employment survey, The Labour Bureau’s quarterly employment surveys which are based only on enterprises employing 10 or more workers in select sectors,Annual Survey of Industries (ASI), an enterprise survey which covers only the organised manufacturing sector, the National Accounts statistics, the NSSO’s report on the non agricultural unorganised sector and other administrative data sets.

However, they all suffer drawbacks of

a) time lag : the data collection and analysis takes a few years that by the time the survey findings are published they are obsolete and add little value to policy making.

b) silos: all surveys are conducted in specific groups. The household survey is different from the industries survey and the results of these are not recaliberated to bring out meaningful information.

Hence, the PM’s claim that there is a need for comprehensive data on jobs is irrefutable. Yes, we need timely, reliable and comprehensive data on jobs to be published. However, the government’s decision to discontinue the Labour Bureau’s household survey of employment-unemployment goes against the grain of his argument. Whatever be the motive behind the decision, we should look to improve and enrich data sources instead of altogether stopping surveys until we come up with a better way to measure and report data.

The PM in his rebuttal has quoted 8 points some of which point to schemes run by the government. I attempt to address some of them below:

  1. Claim #1- More 12 crore loans have been given under Mudra (micro loans): At first glance,loans given to set up new businesses will give an impression that these loans create employment opportunities. However, it is important to understand the Mudra scheme and its affect before we can attribute any employment generation numbers to it. There are three kinds of mudra loans based on amount disbursed under each type- Shishu,Kishore and Tarun. As the Mudra site(www.mudra.org.in ) tells us,loan disbursal under the Shishu subcategory account for 92% of the total loan disbursals where the average amount of loan granted is a paltry Rs. 19400. It is anyone’s guess as to how many jobs a loan amount like this will generate. It would at best help augment a self employed person’s working capital needs for a few days. Creating an additional job with this amount appears unviable from a business perspective. Additionally, the data on the mudra website shows that loans that have been given to new entreprenuers amount to 30% of total loans disbursed implying that most of the loans have been granted to existing entreprenuers. So, the likelihood of it generating new jobs is miniscule. For more on the Mudra scheme read this: https://teekhapan.wordpress.com/2017/09/21/mudra-loans-arent-creating-self-employment-opportunities/

a) Nature of the EPFO : EPFO becomes mandatory when an enterprise employs 20 or more people. When the 20th employee is inducted, the 19 before are also added to the EPFO database. Does that mean that 20 new jobs are created ? The answer is a resounding NO.

b) It is important to note that an amnesty scheme was introduced to bring in enterprises that were not registered under the EPFO and the government also brought in the textiles and garments sector as a whole under the EPFO.

c) The month wise data comparison of March ‘17-March ‘18, vis-a vis Sep -’17- Feb-’18 actually shows a dip in the subscriber database for the March to March time frame. Extrapolating a specific 6 month data to the whole year is just cherry picking data. Additionaly this only talks of jobs in the formal sector which at best contributes to 15% of the workforce. More references https://www.thehindu.com/opinion/lead/the-paradox-of-job-growth/article24333417.ece?utm_source=email&utm_medium=Email&utm_campaign=Newsletterhttps://www.equitymaster.com/diary/detail.asp?date=05/02/2018&story=3&title=How-to-Manage-Jobs-Data-Modi-Govt-Style

Updated: The EPFO data today actually shows a dip. So, how will the PM reconcile this ?

https://indianexpress.com/article/india/epfo-data-government-cited-to-show-job-surge-is-now-down-5247751/

Other claims :

  1. The numbers on road creation, railways etc are fraught with inconsistencies and hence do not add to the heft of the job creation argument. For eg: As per the new method of calculation of roads built a 2 way lane of 10 kms is reportedly counted as 20 kms. Hence, it is difficult to arrive at a number for jobs created .

The practical way forward would be to acknowledge the problem at hand and work towards a) getting reliable data and b) formulating and implementing policies that would move people up in the size and stability of income matrix. By the most conservative accounts India needs to create 15 million new jobs every year for the next decade atleast. Handwaving of the problem by weaving pakora seller theories may win some electoral battles but the war for acche din will remain a distant dream. Here’s hoping we work towards a productive future ….

Other References :

https://www.thinkpragati.com/podcast/the-pragati-podcast/4890/20-million-jobs/

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