Employment: Correct Facts


Employment: Correct Facts

Krishnamurty V Subramanian (former chief economic adviser, GOI) takes issue with incorrect narratives using the private data generated by the Centre for Monitoring Indian Economy (CMIE) regarding the employment situation. “The National Sample Survey Organisation (NSSO)’s Periodic Labour Force Survey (PLFS) data employs a robust methodology and is reliable. So, we use the PLFS data to document the correct facts on employment in India.”


Pre- Covid-19 pandemic data

First, argues Subramanian ‘unlike inferences from the unreliable CMIE data, the employment situation improved consistently – both in quantity and quality – before the Covid-19 pandemic. From 2017-18 to 2019-20, regular wage/salaried employees increased by 1.5 crore, a growth of 13.2%; the increase among females was 0.72 crore or 29.4% and that for males 0.79 crore or 8.8%. Further, formal employment increased by 1.2 crore or 25.3%.The quantity of employment improved pre-pandemic as well. From 2017-18 to 2019-20, the unemployment rate (UR) in usual status, which captures long-term unemployment, decreased from 6.0% to 4.8%, the Labour Force Participation Rate (LFPR) increased from 49.8% to 53.5%, and the worker-population ratio (WPR) increased from 46.8% to 50.9%. These changes were widely dispersed – in rural and urban areas, and for males and females.”


Post-Covid data

Second, “post-Covid, urban employment registered a robust V-shaped recovery after the adverse impacts during the lockdown and the second wave of the pandemic. Compared to the October-December 2019 quarter, in the April-June 2023 quarter, WPR increased from 44.1% to 45.5%, LFPR from 47.8% to 48.8% and UR declined from 7.8% to 6.6%. As urban areas were most affected by the pandemic, the complete recovery in employment in urban areas is crucial. The unemployment rate recorded in the April-June 2023 quarter is the lowest over the last five years. The annual PLFS data, which covers both rural and urban areas, also shows complete recovery in employment post-pandemic. This pattern of complete recovery in employment is reflected similarly in data from EPFO and MGNREGS. The monthly EPFO data as well with the net additions in August 2023 being 116% higher than that in December 2019. The demand for work under MGNREGS in December 2022 is half the demand in December 2019. It has further declined in 2023. This shows that demand for distress work has declined sharply in the rural areas. As with the pre-pandemic period, this improvement in the quantity of employment is also reflected in the quality of employment. Regular wage/salaried employees increased by 2.8 crore from 11.5 crore in 2017-18 to 14.3 crore in 2022-23. Formal employment increased by 1.6 crore from 4.7 crore in 2017-18 to 6.3 crore in 2022-23. This increase is consistent with formalisation of the workforce, which began before the pandemic, accelerating during the pandemic."

These results, states  the former CEA  “clearly show that the dire narratives painted on employment are clearly not backed by carefully constructed empirical evidence….”

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