Damned Lies and Statistics

Narendra Modi rose to power on the promise of creating 20 million jobs. Contrary to expectations, the past four years have seen a record decline in employment creation. According to the latest data collected by the International Labour Organisation, the number of unemployed people is expected to rise to 18.9 million this year, from 18.6 million in 2018. In an interview to the right-wing magazine Swarajya, the prime minister said, “more than a lack of jobs, the issue is a lack of data on jobs.” As part of a larger mistrust of existing unemployment statistics, a task force instituted at Modi’s behest in 2017 scrapped the Employment–Unemployment Survey—carried out by the National Sample Survey Office every five years since Independence—and replaced it with a completely new data-gathering methodology. As a result, there is a significant data gap on job creation since 2012.

The EUS case is only one more example in the recent past of independent statistical agencies and data being delayed, discredited or manipulated for political purposes. For instance, the figures on the impact of demonetisation, which dealt a body blow to the economy, took almost a year to come to light, being released well after the Uttar Pradesh assembly election in 2017. Similarly, the routine procedure of updating the base year for the calculation of economic growth resulted in two divergent back series being produced. The autonomous National Statistical Commission found that growth had slowed under the Modi government, while the government’s Central Statistics Office and the NITI Aayog revised the methodology used to measure national income to conclude that growth had been slower under the previous United Progressive Alliance government. The resulting controversy raised questions about the integrity of the series, and led to claims of unnecessary political interference by the NITI Aayog.

That India has been going through a period of “jobless growth” over the past two decades is not a matter of perception. Youth unemployment was a major political plank in the recent assembly elections, and will continue to be one for the upcoming general election. Evidently, discussions on the jobs crisis have moved away from the pages of government reports and surveys, and into the streets and the political arena. Youth from three of the richest agricultural communities—the Marathas, Patels and Jats—in Maharashtra, Gujarat and Haryana, all rich states with high levels of urbanisation and industrialisation, have initiated massive protests, demanding job reservations in the public-sector—an arena that has seen a significant decline in employment. This year, about 25 million people applied for 90,000 railways jobs, while 3.7 million applied for 12,000 jobs with the Gujarat government.

The government has argued that there have been no credible data sources on employment creation since 2014. This is because the usual metrics for measuring employment and unemployment from the NSSO are no longer available. The EUS data collection, which should have been carried out in 2016–17, was initially delayed by the Modi administration. It was then replaced altogether by the Periodic Labour Force Survey—a new system aimed at bringing out data on the labour force more frequently. But even the PLFS reports have been delayed. Despite the government’s assurance that the data gathered on the state of unemployment in 2017–18 would be available by the end of the year, there has been no sign of it yet. It is unlikely that the data will be released before the general election.

The reasons for this kind of concealment are not hard to guess. Existing data sources unanimously show that the decline in the pace of job creation under the Bharatiya Janata Party-led government is far worse than even under the previous UPA term. Ironically, the BJP utilised the same data sources during the 2014 general election to discredit the UPA government and build up its promise of infusing 20 million jobs into the economy.

The present regime is also complicit in actively disseminating misinformation about what constitutes employment data. A case in point are Modi’s comments regarding the Employees’ Provident Fund Organisation. In the interview to Swarajya, Modi said, “If we look at numbers for employment, more than 41 lakh formal jobs were created from September 2017 to April 2018 based on EPFO payroll data. According to a study based on EPFO data, more than 70 lakh jobs were created in the formal sector last year.”

Fortunately, the current chief statistician of India, Pravin Srivastava, clarified that the EPFO data is not a measure of employment creation, but only a measure of the formalisation of existing jobs—people signing on may not necessarily have been unemployed before. It is neither a substitute for the larger EUS surveys, nor is it a comprehensive resource. At best, this data represents 20 percent of the economy, but even within this, some of the new enrolments are because of existing enterprises joining the EPFO, or workers switching jobs. It is important to remember that the same task force that recommended scrapping the EUS also made it clear that the best sources for assessing employment are the NSSO surveys, and strongly advised against using EPFO data.

But there are still ways to glean information on unemployment for the period after 2012. Estimates can be made from other government sources. The Labour Bureau, for instance, has been releasing regular reports based on its Quarterly Employment Surveys since 2008. These, too, confirm a slowdown in employment generation in recent years, as do the bureau’s Annual Employment Surveys, which have been canvassed five times so far. While not strictly comparable to the detailed, cross-sectional NSSO employment surveys, these come closest at present to having a nationally representative, credible employment survey. The last annual survey suggested that the total number of workers in the economy actually declined by 16 million between 2014 and 2016. The immediate response of the government was to shut down this series too.

But what exactly are the challenges of employment creation? There are two parts to the problem. The first is the quantitative aspect. Fortunately, most political parties agree on the quantum of jobs that need to be created. The figure of 20 million jobs is not a figure pulled out of a hat. Even by a conservative estimate, the number of new entrants to the labour force is anywhere between ten and twelve million every year. This is not surprising, given the fact that India has a large young population.

The problem is compounded by the fact that people are leaving agricultural work—the mainstay of the Indian economy—in droves. Since 2005, up to eight million workers have left farming every year. The recent farmers’ protests are a clear indication of how rural distress drives people to move to cities in search of jobs that are scarce. Economic policies propounded by successive governments over the past three decades, in which capital has been privileged over labour, have brought us to this impasse. Most governments have not realised that the problem is not just of creating jobs, but also enabling individuals to earn livelihoods that allow families to survive.

That brings us to the second point, which is the the declining quality of existing occupations. More than 90 percent of the jobs in our country are informal in nature, with no long-term contracts or social security. The informal sector is usually the first port of call for workers exiting the rural economy. Jobs in both agriculture and urban centres have seen real incomes decline over the past four years. The secondary data sources are unable to capture the scale of this problem. Most survey estimates suggest low levels of unemployment in the country, which the government posits as a sign of a healthy economy. But that is misleading. In a low-income country with a large informal sector, it is common to have low rates of open unemployment—the condition in which people are willing to work, but have no work to do. Because the poor need jobs to feed their families, they are forced to enter into an exploitative, and unregulated, job market.

Initiatives such as Skill India and Make in India tend to focus on the supply side of the equation, seeking to create employable workers. But increasing supply without creating a demand for workers only adds fuel to the fire. In such a situation, interventions such as the National Rural Employment Guarantee Scheme can relieve the symptoms for some time, but will fail to solve the problem.

Enterprises in the unorganised sector have also suffered due to regulatory overdrive, which treats them as predatory establishments and tax evaders. Demonetisation paralysed a part of the informal sector, which carried out most of its transactions in cash. The rest of it was dealt a severe blow with the implementation of the goods and services tax. Not everybody who moves out of agriculture can be absorbed into factories and offices. The few openings are, in any case, cornered by the privileged.

While there is no immediate solution to the problem, there are ways to reduce the severity of it—by increasing domestic demand, particularly in the rural economy. Such an injection of demand through public spending would not only strengthen the informal sector, but would also create employment. For a successful transition, the government should realise that in the process of growth, informal is normal.