The first week of 2023 has brought the signs of the beginning of even higher level of unemployment in India at 8.4 per cent than 8.3 per cent in December 2022 which was 15 months high. It is indeed a bad news, but not so bad as the Modi government’s trick to show the actually falling formal employment as provisionally rising month after month.
EPFO’s annual report of 2021-22 tabled in the Parliament of India in December has revealed that only 46.34 million members contributed during the year, as against 48.92 million in the pre-pandemic year 2019-20. It meant that the actual formal employment as measured by EPFO contribution had fallen by 2.58 million. It was a fall of 5.3 per cent.
However, the through monthly provisional EPFO data, Modi government tried to prove month after month that formal employment was rising. The provisional monthly data showed that the members contributing in the EPFO increased by almost 20 million by 2021-22, while it actually fell by 2.58 million.
It clearly shows that EPFO’s monthly data is not reliable, for it is always provisional, and it undergoes several revisions that substantially alter the actual position of formal employment in the country. There may be some motif of the Modi government behind releasing monthly inflated data to present a comparatively rosy current trend on the employment front.
For example, the latest provisional payroll data of EPFO was released on 20th December, 2022 that highlighted 12.94 lakh net members in the month of October 2022. Year-on-year comparison of payroll data reflects an increase of 21,026 in net membership in October, 2022 as compared to the corresponding month during last year in 2021. As per data, around 2,282 new establishments have started complying for the first time under the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952 ensuring social security cover to their employees. However, nobody knows, what will happen to this data after several revisions during 2022-23, the final data of which would be available only after a year.
As the annual report for 2021-22 reveals, the formal employment in India has been on the decline since 2019-20, and the country is still struggling to reach that level. It means the employment with social security coverage of provident fund has been on the decline, and informality in the labour market is on the rise.
In recent AITUC convention it was claimed that informal employment has risen to 97 per cent of the total workforce, much more than the earlier government estimate of 90 per cent. It means only a fraction of the workforce in India are in formal employment with social security coverage such as EPFO’s membership.
Unemployment rate last year in January was 6.56 per cent which rose to 8.3 per cent in December, and now average 8.4 per cent in the first week of 2023, as per the CMIE data. Urban unemployment was highest in the last 16 months in December at 10.9 per cent. Rural employment also rose from 5.83 per cent in January 2022 to 7.44 per cent in December.
According to CMIE data, unemployment rate of January 6 on 30 day moving average was 8.3 per cent in the country, with urban unemployment 9.8 per cent and Rural unemployment 7.5 per cent.
Labour participation rate (LPR) rose in December to 40.5 per cent from 39.6 per cent in November, and 39 per cent in October. It means, 7 million more people added to workforce in November compared to October, and another 10.6 million joined the workforce in December. It has created some hope among the unemployed to get a job, and hence they have been searching for one, that in turn has increased the unemployment rate.
Moreover, if we dive deep into the methods of calculation, we can put it in another way. The 10.6 million addition into the workforce does not mean all of them have been employed. According to the CMIE data, only 8.4 million actually found job while 2.2 million joined the ranks of the unemployed. Similarly, 7 million joined the workforce in November, but only 5.5 million found employment and 1.5 million added to the unemployed people. It shows how both the unemployment and employment rate can rise simultaneously.
In December total employment in India was 410 million which is the highest level of employment since January 2020. However, the employment rate in proportion of the working age population is still very low. It was 36 per cent in October 2022, which rose to only 36.4 per cent in November, and 37.1 per cent in December.
About 27.8 million unemployed people were looking for employment in September 2022, which rose to 33.4 million in October, 35 million in November and 37.1 million in December, as per the CMIE data. The number of job seeking persons are most likely to rise in coming months amidst deceleration of economic growth in the country, which urgently needs to be human centred. The challenge is to create large number of decent formal salaried jobs with social security coverage, which has been on the decline since demonetisation of 2016, and worsened during the last three years of the pandemic. (IPA Service)