Job Creation: Fact, Myth or Data Interpretation

The subject of employment generation has been a major concern of people worldwide ever since the Great Economic Depression of 2008 which was triggered by the falling of Lehman Brothers in the United State of America, the effect of this crash was not limited to the boundaries of the United States, rather it travelled thousands of miles across all continents and oceans, it was a worldwide concern. The trickledown effect of the crash was clearly seen in terms of worldwide decrease in Employment Growth Rate; as a result, all political parties and their leaders make employment creation an agenda in their electoral promises/manifestos. India is no different.

Unemployment in India has a variety of reasons ranging from caste system to slow economic growth, from a slow rate of industrialization to increase in population. There is no denying that unemployment and underemployment are at a rise in India. Strangely, one of the reasons of white-collar underemployment/unemployment is the expansion of universities and colleges; this expansion has indeed resulted in a higher number of graduates and post-graduates, but the lack of employability quotient in higher education proves to be a barrier when these students hunt for jobs.

Governments after governments have wanted to address the issue of employment and many have tried too, but the factual results are far away from the desirable results. On November 21, 2013, Mr Narendra Modi, the then PM hopeful had said: “If BJP comes to power, it will provide one crore jobs which the UPA Government could not do despite announcing it before the last Lok Sabha polls”. It wasn’t new for a candidate to make such large promises, unlike many, after coming to power the BJP led Govt. took steps to reduce unemployment, these steps were seen in the form of Make-in-India, Skill India and various other schemes to increase entrepreneurship, thereby increasing self-employment.

After four years of the current rule, there hasn’t been any significant increase in employment generation rate. But here it gets interesting. Despite failing to deliver on this promise, the Finance Minister in the Union Budget for 2018-19 made one statement in respect of employment generation. In point number 78 of the written copy of his speech, he stated, “An independent study conducted recently has shown that 70 lakh formal jobs will be created this year.” FM’s use of the term “independent study” was incorrect. The study being referred to was initiated, designed, guided and approved by the Prime Minister’s Office (PMO). Bitten by the government’s own data bug showing low employment and rising unemployment, the Current dispensation looked desperate to come out of the depressing picture and needed an “independent” study to counter Labour Bureau data. According to the Labour Bureau, in nine months till December 2016, only 2.31 lakh new jobs were created across eight labour-intensive sectors and the unemployment rate rose to 5 per cent. The Economic Survey 2016-17, quoting the Labour Bureau, stated, “Employment growth has been sluggish.” Union Statistics Minister D V Sadananda Gowda in a written reply to a question in Lok Sabha on August 3, 2016, said, “Employment growth has shown signs of a slowdown in key labour-intensive and export-oriented sectors, despite GDP growth of up to 7.6 per cent in the last three years.

As exposed by the Business standard in February 2018, on October 29, 2017, the PMO directed NITI Aayog to give ‘“quick indicators for direct or indirect reflections on employment data” to enable them to arrive at “desired trends in employment at the earliest”. As directed by the PMO, the Niti Aayog, prepared a report for the financial year 2017-18 on the basis of Employees’ Provident Fund organization (EPFO) subscribers’ data, NITI Aayog asked the Employees Provident Fund Organisation (EPFO) to provide EPF subscribers’ data for the specific period of April-October 2017. Accordingly, EPFO provided 8.7 crores of encrypted data of EPF subscribers from its national data centre at Hyderabad. NITI Aayog then provided these data to Pulak Ghosh of Indian Institute of Management (IIM), Bangalore and State Bank of India (SBI) Chief Economist Soumya Kanti Ghosh for preparing the report, as desired by the PMO, sitting in the office of NITI Aayog in New Delhi.

The time table was prepared by the PMO for this so-called independent study. The PMO directed NITI Aayog on October 29, 2017, to prepare this “independent study” mainly based on EPFO data; NITI Aayog, accordingly, wrote to EPFO on November 2; EPFO provided the data to NITI Aayog on November 4 and 27. Pulak Ghosh and Soumya Kanti Ghosh were brought to Delhi and were seated in the office of NITI Aayog in New Delhi to prepare their “independent study” report. They then made their presentation to the PMO on January 12, 2018, and the report was approved by the PMO; the report was then published on January 16. The prime minister quoted the study report on January 20 in a specially televised interview and finally, the finance minister made his budget speech on 1 February 2018 claiming the creation of 70 lakh formal jobs in FY-18.

This “independent study” was published as “A Study by Indian Institute of Management, Bangalore & State Bank of India”. As desired by the PMO, the report’s authors said “surveys to measure employment in India is mostly misleading” and that Labour Bureau “survey has many limitations”.

This background was necessary for me to proceed to my point of contention. There has been a lot of debate as to which institution or data collection method can be relied upon to calculate job creation. Ordinarily, these data were computer by the Labour Commission which relied on many parameters including the census survey, there is no denying that this method has limitations and sometimes undermines the actual figures. But using EPFO data is grossly misleading and also shows an orchestrated move by the govt. to show what is not real.

As per the rules of EPFO, an organization having 20 or more employees has to register with them; the idea behind this rule is to guarantee employment benefits to the employee. Now, let’s take an example of ABC Pvt. Ltd. A small manufacturer for handicrafts, ABC has 19 employees as on January 1, 2017, because of the increase in demand, the company employees Mr A in the packaging department. With the employment of Mr A, ABC now stands at 20 employees, thus has to register with the EPFO. EPFO will count this registration as 20 new jobs created, whereas factually 19 jobs have been formalized into the organized sector and only one new job is created.

This leads to four major questions, firstly, why is the Govt., especially the PMO shopping for desirable institutions for data collection which was previously done by another organization with more elaborate formulas and methods?

Secondly, why are ministerial and secretarial resources being employed to deliver “desirable data” instead of desirable results?

Thirdly, why isn’t the Govt. devising methods which are more accurate for data collection as opposed the methods which provide Govt. supporting “desirable data”?

Lastly, is job creation and statements made in favour of it a fact, myth or major case of misrepresentation of data to lure in public support?