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The reality of jobs : A data-driven perspective

The Central Statistics Office (CSO) recently released the provisional estimates of fourth quarter (Q4) GDP for the year 2017-18. At constant prices (2011-12 base), the GDP grew at a rate of 7.7% that quarter, one of the fastest rates across the world for a comparable economy. The trend showed a consistent acceleration of GDP growth ratesquarter-wise for 2017-18, with Q1 growth recorded at 5.6%, Q2 at 6.3% and Q3 at 7.0%. CSO release also noted that, employment intensive sectors such as manufacturing and construction recorded a rapid growth, with each growing at 9.1% and 11.5% respectively.

Now,the above pieces of data are solid economic facts. So, when critics argue that no jobs are being created and that youth across the country remainjobless, I find this assertion quite unjustified;infactspurious and without any basis. This probably could be mere perception of a few. Far more likely, this seems an attempt to spread false narrative. Such critics easily escape counter challenge as they exploit the data void related to job creation.Three major loopholeshelp these critics. One, informal employment far outweighs formal employment. Infact, estimates suggest that informal jobs accounts for as much as 80% of all jobs. Second, tools for measuring informal jobs do not exist. Third, even for tracking formals jobs (both in organized and unorganized sector), we do not have robust systems that track job creation situation.

So, effectively as things stand, significant portion of job creation pretty much goes undetected. That said, there is ample evidence otherwise (from macro-economic data trends and other data releases such as payroll reporting etc.) that can be reliably used to assess the jobs situation. While these data may not give theprecise quantum of the numbers of jobs created, they can provide reasonable idea aboutthe broader jobssituation.Given this context, the paragraphs below provide some relevant data-driven perspectivestothe jobs debate.

First, data points towards a sharpjump in key output metrics of select employment intensive sectors. Let’s now look into some specific datatrends of sectors such as infrastructure and construction space which are known to be employment intensive. Meaning growth in outputs of these sectors is known to generate direct and indirect employment through the multiplier effect.Consider the following.The average annual expenditure on highways construction has jumped from around INR 32,500 crore in 2013-14 to around 1,16,000crore in 2017-18. The pace of highways construction increased from 12 kms/day in 2013-14 to 27 kms/day in 2017-18. In rural roads, the pace of construction jumped from 69 kms/day in 2013-14 to 134 kms/day in 2017-18.

Under Railways , the capital expenditure is on track to increase from INR 2.3 lakh crore over 2009-14 to INR 5.30 lakh crore over 2014-19. That’s a jump of around 230%. The pace of railway renewals and commissioning of new railway lines recorded more than 50% increase as compared to their average levels of 2009-14. In the housing sector , the government has already constructed more than 1 crorerural houses during 2014-18 as compared to 25 lakhs during 2009-14. The average time for construction of a house also went down from 314 days in 2015-16 to 114 days in 2017-18.

While the data above mainly pertained to infrastructure and construction space, the trends are similar for manufacturing space as well. Domestic production of cement increased from around 248 million tons (MT) in 2013 to around 280 million tons in 2017. That of coal increased from around 565 MT in 2013-14 to 676 MT in 2017-18. Similarly, in the automobile sector, the number of passenger vehicles manufactured in India jumped from around 31 lakh in 2013-14 to 40 lakh in 2017-18 and two-wheelers from 1.68 crore in 2013-14 to 2.32 crore in 2017-18. The above facts clearly point out that growthininfrastructure, construction, manufacturing etc. had been quite robust over the last 4 years. Given the nature and basic dynamics of these sectors (intensive involvement of manpower), it is natural to assert that such strong levels of growth in these segments cannot be supported withoutaddition of multiple jobs – both in the informal and formal space.

Second, the above observationsare also consistent with other evidences and findings of some independent studies.Using the recently released payroll reporting data (Employers provident fund organization (EPFO)), a recent analysis by independent researchers estimated that more than 70 lakhs jobs may have been created in the formal sector in 2017 alone. The number of accounts/ number of loans sanctioned as part of PradhanMantri Mudra Yojana (PMMY) during 2015-16 to 2017-18 wasaround 12.30 crore.Out of this, around 3.50crore beneficiaries were new entrepreneurs who got collateral free loan for their ventures. On a conservative basis, one can easily expect that most of these entrepreneurs would have added at least job each in the country.Add to these, unofficial news reports suggest that new age digital technology ventures such as Ola, Uber, e-commerce logistics delivery players etc. may have created more than 10 lakh informal jobs.Finally, the Prime Minister recently stated that professionals such aschartered accountants, doctors and lawyers, are estimated to have created about 6 lakh jobs in 2017 alone. He also added that, in the informal sector, the sale trends of automobiles (auto, trucks, commercial vehicles, passenger vehicles etc.)suggestthat about 20 lakh jobsmay have been created last year in this space. These pointers hencefurther substantiate the fact that the narrative of jobless growth has no merit.

Finally, perspectives related to the lack of reliable statistical framework to capture jobs data. For this purpose, the government earlier relied on three different sources: a) Labour Bureau’s Quarterly Report on Employment Scenario (QES); b) National Sample Survey Office’s (NSSO) Employment-Unemployment surveys and c) Employment – Unemployment Survey by Labour Bureau. Each of these had different data sources, study methodology and release frequency. For instance, QES was based on surveys of non-farm establishments which employed 10 or more workers for a limited set of sectors. Other two were household based surveys. NSSO survey had a frequency of 5 years while that of Labor Bureau was 1 year. Even these household surveys collated different aspects of job creation. Such multiplicity of sources and methodologies created huge confusion and inconsistency.Hence the government decided to institute a newapproachwith an objective to disseminate reliable and robust jobs data on a high frequency basis. NSSO is currently administering the same and is likely to release its first findings sometime soon.

The above perspectives clearly show thatthe narrative that the economy is not adding jobs has no basis.Infact, quite the contrary, sectoral data trends, other quantitative evidence and independent studies allsuggest that significant jobs are being created. Critics have deftly leveraged the void in jobs related data framework to spread this false narrative. The good news is that this void is temporary.Very soon weshould have a robust reliable assessment of the on ground situation related to jobs. Till such time, assessmentpertaining to job creation or the lack of it, must be backed byanalysis of related data trends (some of which have been briefly presented in this article)to have more meaningful dialogue on this matter of national importance.

(OSD, Economic Advisory Council to Prime Minister (EAC-PM))

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