Jobs Matter, they are critical part of the economy , lack of employment , jobless growth ,are few things that we keep hearing in newspapers etc . Covid -the pandemic did something very horrible to jobs in all sectors, lot of people lost jobs and job creation has been in news since. We have seen numbers coming out since the pandemic started to phase out , the economy has opened , the data we get however is not consistent though . Some sectors like Agri, Tech and manufacturing especially show data which have very high standard deviation( More volatility ) . Recently the IT giants of the country have started revoking the job offers , because US is going to high inflation phase, the Fed won’t sit quietly until they start seeing the unemployment figure start rising again and war in Europe is not helping either.
So what has happened in these last two years? Indian Economy is primarily informal , the structure of the jobs in India and kind of workers we have is informal. This leads to discussion around gainful job opportunities for the people in general. With the pandemic we saw the steep decline in employment in MSME sector especially . The informal nature of employment in the country and pandemic are further triggering the discussions around employment and how can we have a fundamental shift for this kind of informal economy.
As an economic indicator ( Lag indicator) Jobs are very important for any economy. Until the job market is sustained , there won’t be any revival in the demand . During the pandemic the capacity utilization was low and the oil prices were in negative because the demand around the world had gone down to almost zero. Particularly for India , where domestic consumption is a main driver for Economic growth , so until we have sustained job market consumption will be down, therefore medium term economic growth prospect also don’t look good.
In the data that came out last month , by CMIE, the unemployment rate dropped sharply , meaning more people got employment in September. However, this number could not be sustainable because the numbers were not so good in month of July and august .
For CMIE , they conduct survey of around 1 lac household ,they ask questions on the quarterly and monthly basis. These numbers in the CMIE are based on the statistical estimates for particular reference period. The variation in these numbers show there is large scale of informality in the jobs, because there are formal jobs which form a very small portion of these numbers, so maximum change is driven by these informal jobs in the data , these variations are high on monthly and weekly level .
If we look at a big picture of the employment creation , on an aggregate basis jobs are getting created if we compare with the pandemic period we have seen a pick-up in 2021 and further in 2022 BUT we are still below the pre covid Period. Though we have improved we have still not reached the pre pandemic level of employment numbers. Secondly if we look at the some quarterly trends as a broad indicator we see that , construction has seen an upsurge in employment , because housing credit has increased, over last 3 quarters or so. Hospitality and Tourism hasn’t picked up quite as much only in the last few months, Health and Education is where we see churning happening , where more jobs are getting generated in health and Education sector . Retail & Warehousing sector has also boomed because of the increased activity of the Online platforms.
Another issue that comes in head is that are we measuring the right data ? The official survey and private survey like CMIE , they all come out with a lag , the official survey like PLFS (Periodic labour force participation survey ) , conducted in annual frequency only . To address this issue , PLFS also comes in quarterly survey , but it comes only for the urban areas. Recently , the ministry of labour has started quarterly employment survey which measure the employment in establishments; They take survey of 9 sectors , and look at the state of employment In addition to these surveys , we also EPFO data which gives picture of formal employment , but the formal sector is very small in size in comparison to informal sector in the country .
However , MSME sector should be focused more on , they provide maximum employment , but we don’t have official estimates which are timely for this sector at all .
As an Economist should one be satisfied the quality of data available on jobs ?
Another than CMIE data we don’t have timely data on employment , even in the CMIE data we have so much volatility in numbers. In the official data the lag is so much , that we don’t get the exact picture on the job creation in country . Quarterly survey are also quite dated, so one is forced to rely on the CMIE data to some sense of employment , they are giving a picture of employment at the aggerated level.
Next important thing to consider is are we capturing the workers in the gig economy ?
They are not being captured at the official level , but we have some survey on gig workers, NITI Ayog came out with a report gig economy. Going forward we can also assume that these figures will also be included in the official survey.
Written By: Ankur Kushwaha, Sr. Consultant, Invest Punjab | Govt. of Punjab.
DISCLAIMER: Views expressed are personal.