01 May 2018 19:39 IST

New payroll data says there's been job growth

The latest data helps the Centre save face to some extent

Critics of the Modi government have often used lack of job growth as one of the factors to criticise the Centre. With demonetisation and the GST hitting smaller businesses hard, it was widely believed that the country’s youth were struggling to find jobs.

The trouble was that the Centre did not have data to disprove its opponents. The last NSSO survey to gauge the extent of unemployment in the country was conducted in 2015-16.

It was then reported that the unemployment rate was at a 4-year peak of 5 per cent with unemployment among women higher at 8.7 per cent compared to 4 per cent among men.

The recently released payroll, while too good to be true, helps the Centre save face, to some extent.

What is it?

The NITI Aayog has tapped the data collected by the Employees’ Provident Fund Organisation (EPFO), Employees’ State Insurance Corporation (ESIC) and the Pension fund Regulatory and Development Authority (PFRDA) to put together a payroll report for the formal sector. This report will be released every month from now on, to help track jobs added in the formal sector.

The report released last week tries to gauge the employment addition in the September 2017 to February 2018 period. According to the data captured by the EPFO, 31.1 lakh new jobs were added in the six-month period under consideration. The PFRDA’s data show 4.2 lakh new payrolls were generated in the period, in the Tier-I account. This largely reflects the additions to Central and State government jobs. The ESIC data is reported to be in line with the numbers reported by the other two.

Why is it important?

While in no way comprehensive, this is an important first step by the Centre to track job growth more closely.

The numbers put out by EPFO and PFRDA suggest that job creation in the economy is happening and this will be taken as a positive by the Centre. But this report only shows part of the picture.

The numbers do not capture employment generation among professionals. The NITI Aayog could additionally source numbers from the ICAI, bar council, medical council and other professional bodies to account for other avenues of employment. Also, employment generation in the informal sector, in agriculture and in micro enterprises can be captured only with the help of periodic surveys. The NSSO is trying to bring out annual and quarterly surveys of employment that can help provide a more holistic picture going ahead.

Care should also be taken to filter the numbers shown by the EPFO and PFRDA to remove duplication and inactive accounts, to arrive at the correct numbers. Since any business that employs more than 20 persons needs to register with EPFO, it is possible that many of the new jobs accounted in the period under consideration already existed in the informal sector and moved to the formal sector with business expansion.

Why should I care?

If you are about to start working, then the job situation in the country will be of utmost interest to you. Monthly reports about the unemployment in the country, the sectors that are adding more jobs and so on can help you decide on your future career path.

Unemployment rate is among the key data points used by central banks in formulating monetary policies. Once this data is collated in a more comprehensive manner, the RBI could begin using this as one of its inputs. Reliance on surveys done by private organisations can now cease.

The bottomline

It pays to watch out for data that is beginning to roll out on employment.

(The article first appeared in The Hindu BusinessLine.)