Paragraph 1: Between September 2017 and April 2018, as per a CSO report, the economy added 4.1 million new jobs in the formal sector. The CSO release defines jobs as ones that provide at least one government financed (or mandated) social security benefit such as Employees’ Provident Fund (EPF), National Pension Scheme, or Employees’ State Insurance Scheme. NITI Aayog and official economists have also put out similar estimates since early this year, inviting widespread skepticism among knowledgeable people.

Paragraph 2: How reliable or credible are the official estimates? Very little and for two reasons: the estimates are based on administrative records of implementing the social security schemes, whose completeness, consistency and accuracy are unknown; and since a formal sector worker, in principle, can legitimately access more than one social security scheme, double counting is a distinct possibility. The release does not explain how the problem is addressed in the database. Therefore, rightly, experts have demanded the release of the administrative data for independent verification.

Paragraph 3: Moreover, the official data suffer from a conceptual problem. The social schemes mentioned above are applicable to establishments above a certain size (of employment), and to certain kinds of enterprises. For instance, in the factory sector, those employing 20 or more workers are mandated to provide EPF to all the workers. So, if in a factory, employment goes up from 19 to 20 workers, it comes under the purview of the EPF, to be provided to all the 20 workers. Thus, the EPF enrolment increases by 20 workers, but the additional job created is just for one worker. Herein lies the fault.

Paragraph 4: The formal sector stands at the apex of India’s labour market pyramid, agriculture being at the bottom, employing 50% of the workforce. The remaining workers are in the non-farm informal sector, spread across rural and urban areas. In fact, it is this sector that has grown in recent decades at the expense of the other two sectors mentioned above. Moreover, nearly half of the informal labour workers are self-employed in household (or own account) enterprises, often engaging unpaid family labour. Varying degrees of under-employment or disguised unemployment are the defining feature of informal labour markets.

Paragraph 5: Since 1972-73, the five-yearly Employment-Unemployment Surveys (EUS) conducted by the National Sample Survey (NSS) have been the mainstay for analysing labour market trends. Though infrequent, the database has served a valuable purpose of capturing the complexities of the labour market; access to household-level data lately has spawned rich and granular analyses of the informal economy. As the last round of the EUS was in held in 2011-12, there is no reliable way of updating employment trends. The EUS has been replaced with an annual Period Labour Force Survey, and a time use survey. However, it will be a while before these data series come up with stable and credible estimates. The Labour Bureau under the Ministry of Labour and Employment has been carrying out household surveys somewhat similar to the EUS since 2010-11. They show a decline in worker-population ratio between 2013-14 and 2015-16, suggesting a deteriorating employment situation recently.