NEW DELHI: Amid an acute jobs crisis evident from anecdotal accounts, stagnant corporate headcount, low wage growth and data from independent agencies like the Centre for Monitoring Indian Economy (CMIE) , the government has recently sought to paint a rosy picture. On January 2, the Union labour ministry issued a press statement, where it cited the Reserve Bank of KIEMS database, to state that employment in the country rose 36% to 643.3 million between 2014-15 and 2023-24, as compared to a 7% increase in the previous decade
However, experts have sounded caution. They noted even self-employment and unpaid labour is counted in the data cited by the government, and raised the issue of the deteriorating quality of jobs. Also, some suggested that KLEMS, being not a robust primary data source for employment, figures put out are just “estimates”, that could be incorrect.
To be sure, the labour ministry’s latest claim of improving jobs scenario is consistent with a similar assessment by it July. Seeking to rebut a Citigroup research report which said that India would struggle to create sufficient employment opportunities even with a 7% growth rate, the ministry said that official data sources like Periodic Labour Force Survey, RBI-KLEMS, EPFO etc. showed “consistent improvements” in the key labour market indicators. The government also said that Labour Force Participation Rate (LFPR) and Worker Population Ratio (WPR) both have been improving, while the unemployment rate declined in the last five years.
Experts noted that since the KLEMS data don’t go into details of where the employment has been generated, it gives no picture of the quality of jobs.
“The main reason for the fall in unemployment in the past decade has to do with the rise in employment in agriculture in the rural areas. Most of these jobs are unpaid family labour,” said P Ramakumar, professor, Tata Institute of Social Sciences. “This is not quality employment, it’s not meaningful, productive employment in any form,” he said.
According to the KLEMS data, in Narendra Modi government’s tenure, employment in agriculture soared by 19% as against (-)16% in the United Progressive Alliance’s (UPA) regime. In manufacturing, the employment rose 15% as compared to 6%, and in services by 36% as against 25%. The share of agriculture in total employment is around 42-43% now, and that of manufacturing is around 9-10%.
“The sharp rise in agricultural employment is a sign of distress in the job market. It means, workers are unable to find jobs in other sectors,” said former chief statistician Pronab Sen. “This also means the per worker productivity in agriculture has gone down dramatically.”
Sen explained that largely the increase in employment in the past decade is in “distress categories”. “Regular employment has dropped, while self employment has risen, that too in agriculture,” he said.
According to the periodic labour force survey (PLFS), the percentage of workers (among total workforce) with regular wages dropped from 22.8% in 2017-18 to 21.7% in 2023-24. On the other hand, self-employed workers rose 52.2% to 58.4%. The first PLFS survey was conducted by the National Sample Survey Office (NSSO) in 2017-18.
Meanwhile, on the KLEMS database, experts and statisticians say that it’s not the ideal source for assessing employment in the country, as the RBI doesn’t collect any employment data, but y make estimates based on data sourced from PLFS, Annual Survey of Industries (ASI), Annual Survey of Unincorporated Sector Enterprises (ASUSE) etc.
Former member of the National Statistical Commission PC Mohanan said that KLEMS’ estimates are only as good as the population number used for their similar projections. “The worker population ratio from PLFS is inflated with the (India’s) population estimate, and is then used to give employment estimates,” explained Mohanan.
“The population projections have severe limitations, because as per NFHS (National Family Health Survey) data, fertility rate has declined, as compared to the assumption they (RBI) made…given this scenario, the KLEMS estimates perhaps are not correct. Statistically, it’s not a robust source to make claims on employment,” said Mohanan.
The RBI-KLEMS project began as an academic exercise by the RBI in 2009. KLEMS stands for capital (K), labour (L), energy (E), material (M) and services (S). It is a framework used to measure industry-level “total factor productivity” (TFP), which is considered by economists as a measure of the efficiency of all the inputs to produce a unit of output.
The KLEMS borrows employment data from the PLFS, but not as absolute figures of the number of workers. The PLFS provides only the share of workers in the population. Thus, to obtain the number of workers, the WPR is multiplied with the total population, where issues arise, as the population estimate is based on assumptions, as the last census exercise took place in 2011.
Source: The Financial Express
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