By Dr. Gyan Pathak
The Union Ministry of Finance in its Monthly Economic Review of February 2023 has not only defended again the highly debatable criterion of ‘one hour per week’ engagement of a workers in an economic activity being classified as employed by the Periodic Labour Force Survey (PLFS) conducted by the Union Minister of Labour and Employment, but also claimed that job market in India has been improving. However, the criterion misleads about the actual number of employments on the one hand, and the decelerating economic growth makes the claim of ‘improving labour market’ a suspect apart from on account of rising unemployment in the country from January 2023.
The latest government data on unemployment is not available and hence we are bound to look into the data collected by Centre of Monitoring Indian Economy (CMIE) that reveals that the unemployment rate in India was 7.17 per cent that rosed to 7.45 per cent in February, and as on March 24, it has further risen to 7.7 per cent on 30 day moving average.
It should be noted that the Centre has always been criticizing the private data as full of errors while the government has always been non-interested in collecting and providing their so called ‘correct data’ on real time basis. Moreover, even the delayed government data is based on a criterion which says a person employed if one gets as little as one hour of work per week. The criterion conceals large number of unemployment in disguise apart from in very low paid works and self-employments, which makes the very survival of such ‘employed’ very difficult. The workforce who stop searching for jobs after being frustrated by not getting one because lack of jobs in the market, are also not counted as unemployed. The system thus veils the frightening ground reality in the labour market and the jobless.
Since the private data exposes the falsity of the government data, the monthly review defended the government data and the criterion of its collection by asserting that a wide range of methodologies is used to estimate unemployment / employment across different surveys conducted by some private entities and the Government. Often variances in such estimates are seen, which can be attributed to differences in the methodology of such surveys. These revolve around sampling design, definitions, and questionnaires fielded to the respondents.
The report while defending the one-hour-per-week criterion to measure unemployment as per Current Weekly Status (CWS) says that the 13th ICLS (ILO’s International Conference of Labour Statisticians) resolution stipulates that, for operational purposes, the notion of “some work” should be interpreted as work for at least one hour during a short reference period. This means that engagement in economic activity for as little as one hour is sufficient for a person to be classified as employed.
The review said that the inclusiveness of resilient economic growth in the third quarter of the current financial year 2022-23 is also reflected in the improvement in the employment indicators. We must note that the GDP growth was actually only 4.4 per cent at constant price (2011-12) and decelerated from 6.3 per cent in Q2, and 13.5 per cent in Q1. How can a contracting economic growth can improve the labour market and push up employment along with reducing unemployment?
Such questions are mind boggling for common people, since they are suffering the joblessness on the ground, while Modi government goes on claiming improvement. In support of their assertion, the review of the Union Ministry of Finance said, “As per the Periodic Labour Force Survey (PLFS), the overall urban unemployment rate for people aged 15 years and above declined from 8.7 percent in the December quarter of 2021 to 7.2 per cent one year later in the December quarter of2022.”
The reduction in the unemployment rate is accompanied by improvements in the Labour Force Participation Rate (LFPR) and higher Worker to Population Ratio (WPR), reflecting an increasing synchronisation of the labour market with the growth process. The PLFS data further indicates that employment indicators in the quarter ending December 2022 have gone beyond pre-pandemic levels, indicating that the labour markets have recovered well from the impact of the Covid-19 pandemic, the review asserted.
High-frequency Indicators further reflect an improvement in the overall employment situation across sector, the review said. India’s labour market is showing robust growth in formal sector jobs, as indicated by a steep rise in subscription base of the Employees Provident Fund Organisation (EPFO). Net payroll additions under EPFO witnessed YoY growth of 41.4 per cent in December 2022,indicating that employment in the formal sector has passed the stage of recovery and is registering a growth surge.
The review mentioned the creation of digital identities like Aadhaar, registration of unorganised workers on the e-shram portal, and registration of MSMEs on the Udyam portal, which played a significant role in promoting the formalisation of the economy. Since inception, 28.6 crore unorganised workers have been registered on the e-shram portal, with 5.2 lakh registration in February.
It was claimed in the review that PMI indices for employment in manufacturing and services remained in an expansionary zone in February 2023, with manufacturers experiencing an increase in new work intakes. The rise in employment in services companies in February 2023 was supported by continuing growth in contact-intensive services.
The review supported its argument by saying that The Naukri Job Speak Index also reflects an uptick in overall hiring activity, observing a sequential monthly growth of 9 per cent in February 2023. The TeamLease Employment Outlook Report states that the Intent to Hire for India has risen from 65 per cent in Q3 of FY23 to 68 per cent in Q4 of FY23, with the strongest hiring sentiment for the services sector.
The demand for work under the MGNREGA scheme has been declining since May 2022, and was 14.6 per cent lower in February 2023 compared to corresponding year of the previous year, signalling the availability of better employment opportunities in the rural sector.
However, the unemployment data from CMIE indicate that the unemployment is rising since January when it was 7.14 per cent (8.55 per cent in urban and 6.48 per cent in rural areas). Now on March 24 it stands at 7.7 per cent (8.3 per cent in urban and 7.4 per cent in rural areas). (IPA Service)