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Understanding the different 'Jobs' debates in India


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The work profile of a typical Indian is very different from a 9-5 officer goer. This has implications on employment data. This understanding should inform our debates on job creation.

Published in: Economy & Finance
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Understanding the different 'Jobs' debates in India

  1. 1. Employment Data: What is the Fuss About?
  2. 2. Jobs - Hottest Political Topic for Young India! “30,000 new youngsters are joining the job market every single day and yet the government is only creating 500 jobs a day. SHRI RAHUL GANDHI “…There is no denying that even PhD-holders, engineers and management graduates are applyingfor the job of a peon… ”SANJAY JHA, CONGRESS NATIONALSPOKESPERSON “… The fact remains that people are getting jobs…” NARENDRA TANEJA, BJP SPOKESPERSON 1 Sources: 1 2 3 “The truth is that jobs are not being created.” P CHIDAMBARAM, EX- FINANCE MINISTER, INDIA 2 3 “You can’t ignore the fact that there is massive underemployment across the country.” RUPA SUBRAMANYA, ECONOMIST & RESEARCHER 3 “… The notion that theEPFO data is fudged isdelusional…”MANISH SABHARWAL,TEAMLEASE SERVICES 3 3 “Youth selling pakoraoutside…and earning Rs 200 aday also means creation of jobs.”PRIME MINISTERSHRI NARENDRA MODI
  3. 3. We Help You Understand the Issues How can people make such different arguments on the basis of same data? AskHow India is here to help. To begin, let us look at the profile of some working Indians. Warning – We are covering a complex topic in a short presentation. Our aim is to only introduce the topic to you and to get you thinking.
  4. 4. Understanding India • Imagine the life of Shyam Kumar, a farmer from Bundelkhand region in UP. His farm is not irrigated. • Depending on the amount of rainfall, Shyam grows one or two crops and consequently, Shyam works in his farm for four to eight months a year. • In the remaining period, Shyam may work under the MNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) or run his grocery shop in the village. The grocery shop does not make a profit. • Shyam’s wife, Sunita, works on the farm during planting and harvesting. • Sunita also takes care of their two cows and the shop. She also tends to their kitchen garden and collects wood for the household stove as well as grass for the cattle.This is in addition to all the tasks she performs as a homemaker. SHYAM KUMAR SUNITA KUMAR MONSOON Months 1-4 WINTER Months 5-8 SUMMER Months 9-12 FARMING FARMING/LABOUR (MNREGA) SHOP LABOUR (MNREGA) SHOP FARMING/SHOP ANIMAL HUSBANDRY HOMEMAKER FARMING/SHOP ANIMAL HUSBANDRY HOMEMAKER SHOP ANIMAL HUSBANDRY HOMEMAKER Shyam Kumar’s Family
  5. 5. Sunita and Shyam have two sons and a daughter. • The eldest son, Ramesh, 22, has migrated to Delhi and works as a helper to a carpenter on a construction site. His employer - a contractor - pays him in cash. • Ramesh’s younger brother Suresh, 18 and sister Sujata, 16, work in the farm.They work anywhere between one hour a day to 10 hours a day depending on need. However, their help on the farm has not increased the produce of the farm significantly. • Sujata also helps out her mother in domestic chores and in collection of firewood and cattle feed. RAMESH SURESH MONSOON Months 1-4 WINTER Months 5-8 SUMMER Months 9-12 CARPENTER FARMING CARPENTER CARPENTER FARMING/LABOUR (MNREGA) SHOP LABOUR (MNREGA) SHOP SUJATA FARMING/SHOP ANIMAL HUSBANDRY HOMEMAKER FARMING/SHOP ANIMAL HUSBANDRY HOMEMAKER SHOP ANIMAL HUSBANDRY HOMEMAKER Understanding India Shyam Kumar’s Family
  6. 6. Disguised Unemployment: The output of Shyam’s farm has not increased even though more people – Suresh and Sujata – work on it.This is the concept of disguised unemployment. Suresh and Sujata are working on the farm and the shop, not because they are needed but because they have nothing else to do. Unrecognized work: When surveys measure employment, many activities may not be considered as employment. For example, firewood and cattle fodder collection by Sunita and Sujata and their household chores may not be considered as employment. Unhappily employed: The same work may make one person happy and another unhappy. For example, Shyam could be happy running a shop even though it does not make money.This is because being a shopkeeper is part of his identity. His son Suresh may however, not be happy about being a shopkeeper or even a farmer! APPARENT ACTIVITY MASKS UNEMPLOYMENT SOME WORK IS ESSENTIAL BUT NOT COUNTED AS EMPLOYMENT THE SAME WORK MAY MAKE ONE PERSON HAPPY AND ANOTHER UNHAPPY Understanding India Some Concepts
  7. 7. • Sunil Kumar and Anil Kumar are from Jharkhand.They drive app based taxis in Mumbai and can make between Rs. 20,000 to 40,000 per month.Their father, mother and wives take care of their family farm back home. During planting and harvesting, their aging father needs help and one of the brothers goes back home.Also, they want to spend time with their families and the brothers end up spending 7-9 months in Mumbai. • The two brothers have saved enough to buy a taxi of their own. Given the pressure of loan repayment, they ensure that at least one of them is in Mumbai through the year. SUNIL KUMAR ANIL KUMAR FARMING MONTHS OFTHEYEAR TAXI Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec TAXI NO WORK (FAMILY TIME) TAXI TAXI FARMING NO WORK (FAMILY TIME) TAXI NO WORK (FAMILY TIME) Understanding India Sunil and Anil
  8. 8. Salma Khan lives in Bengaluru and has been working for 10+ years. She is lucky to be employed as a housemaid in a well off neighborhood. She cooks at three houses and makes Rs. 22,000 /- a month. SALMA KHAN COOKS ALLYEAR ROUND EMPLOYERS: Understanding India Salma Khan
  9. 9. Sumukhi: Sumukhi is a 29-year-old IT professional. She graduated from a top engineering college and is employed as a data analysis professional in Chennai. She earns 50,00,000 per year. SUMUKHI DATA ANALYSIS ALLYEAR ROUND REGULAR WAGE EMPLOYER: Understanding India Sumukhi XYZ Co.
  10. 10. When we think of employment we think of Jobs - single employer work with regular hours and regular wages. Whereas a large part of India would be working with multiple employers over different seasons or even over different times of the day. SINGLE EMPLOYER, REGULAR WAGE 77 per cent of Indian households do not have a regular wage/salaried (excluding contract employees) person. Understanding India The Different Avatars of Work Source:
  11. 11. SEASONAL AVAILABLE ONLY PART OF THEYEAR NOT FULL TIME SELF- EMPLOYED WITH DIFFERENT EMPLOYERS NOT RECORDED ANYWHERE NOT PROFITABLE 2018 ? If Shyam Kumar was asked if he had a job (naukri), he would reply NO. If Shyam Kumar was asked if he had work (kaam), even when he was sitting in his shop that made very little profits, He would sayYES. In other words, work could be: Understanding India The Different Avatars of Work We are obliged to Dr. Pronab Sen, first Chief Statistician India, for helping us appreciate the distinction between ‘naukri’ and ‘kaam.’
  13. 13. The primary way is to ask people in households, how much work they had in the past few days /month / year. Different surveys may make different decisions on which activity and how much of it constitutes a day’s work. In general, surveys do not consider if the work is remunerative or not or is disguised unemployment. Measuring Employment Asking Households COLLECTING FIREWOOD: WORKING ONE DAY WORKING 1/2 DAY NOT WORKING SURVEY 1 SURVEY 2 SURVEY 3
  14. 14. • India is big. In 2011, there were more than 246 Million Households in the country. • India is diverse. A household may be in Delhi – the second largest city in the world – or may be in one of the nearly 6 Lakh villages. Source: Measuring Employment Challenges of Household Surveys
  15. 15. Asking households is expensive and slow and hence done once in ten years (Census). In the interim periods, sampling is used to make estimates. Sampling requires selecting a manageable number of people (sample) and asking them questions. Selecting a sample that represents the diversity of India is difficult. If we asked only the people of Mumbai questions about their job status, we would get very different answers from the answers we would get if we asked the people of a small village in West Bengal. This difficulty is visible in the different predictions made by various Exit Polls after elections! One of the problems they face is the quality of their sample! Measuring Employment These Challenges Mean …
  16. 16. The sample result are transferred into country wide Employment / Unemployment rate estimates, using • Labour Force Participation Rate from Survey (This is the percentage of 15-59 year olds that is actively looking for work) & • Unemployment rate from Survey (this is the percentage of 15-59) year olds who are actively looking for work but cannot find it. • Census projections for population. For details see: …WOULD BE ANY INTHE SAMPLING OR IN LFPR / UR… WHENTRANSLATED TOTHE POPULATION Measuring Employment From Samples to Countrywide Results
  17. 17. Because of these (necessary) assumptions and possibilities of error, it is possible for experts to disagree about the results of different surveys. And they do! POPULATION SAMPLE DRAW SAMPLE GET ANSWERS TO QUESTIONS MAKE ASSUMPTIONS ON DEFINITIONS OF WORK WORK: GET UR/LFPR AND APPLYTO POPULATION PROJECTIONS EXTRAPOLATE COUNTRYWIDE JOB CREATION ESTIMATES (POSSIBILITY OF ERROR) (POSSIBILITY OF ERROR) (POSSIBILITY OF ERROR) (POSSIBILITY OF ERROR) Measuring Employment Summary of Survey Process
  18. 18. The impact of how jobs are defined and surveys are conducted is seen in other countries similar to India. According to The Economist:“In Indonesia, less than half of those in employment collect a recognizable wage or salary.The rest mostly work for themselves or their family.” Source: LIBERIA OLD JOBLESS RATE: 85% NEW JOBLESS RATE: < 3% LAOS NEW JOBLESS RATE: 9.6% OLD JOBLESS RATE: 0.7% “For many years, Liberia’s jobless rate was said to be 85%....when the government carried out a proper recount in 2010, it discovered that the true rate, strictly defined, was under 3%.” “Its (Laos) unemployment rate was 0.7% in 2010 using the old definition but jumped to 9.6% in 2017, using the new stricter one.” Measuring Employment This Complexity is Not Unique to India
  19. 19. No official household survey has been carried out since 2015-16. CMIE – a private agency – started carrying out quarterly surveys recently. It claimed that the total number of people in work force has fallen in the last few years. Bhalla and Das – two economists – have disputed CMIE’s findings. One of their arguments is that CMIE’s LFPR rate for women is too low. CMIE claims that it is 12% now and Labour Bureau’s survey claimed it was 23% in 2015. This is too steep a fall. CMIE: WORKFORCE REDUCED IN LAST FEWYEARS BHALLA & DAS: INCORRECT. LFPR RATE FOR WOMEN ISTOO LOW LB SURVEY: 23% (2015) CMIE: 12% (NOW) Measuring Employment Issue 1: What Are the Household Surveys telling us?
  20. 20. Bhalla and Das have come out with an alternate calculation, which shows a very high increase in total labor force. They have been criticized for ‘cherry- picking’ from CMIE numbers to arrive at their conclusions.There has also been some admissions of error from CMIE. See our reading list to follow up on this issue more. However, this focus on headline numbers may distract us from more important discussions. Such as the reasons for falling participation of women in labor force. Measuring Employment The Battle Rages on !!!!
  21. 21. If women’s participation in India is indeed falling sharply, we should be discussing the reasons for that. Such a discussion would tell us more about what we should do than a discussion on totals. For more on this see: FEMALE LFPR DECREASED WITH INCOME BEFORE INCREASING (IN OTHER COUNTRIES) : WORKING CONDITIONS FOR MOST JOBS ARE NOT WELCOMING FOR MOST WOMEN MORE GIRLS ARE GOING FOR HIGHER EDUCATION MANY OF WOMEN’S ACTIVITIES ARE NOT RECOGNIZED AS WORK BY SURVEYS. Measuring Employment Falling Labour Participation Rates an Alternate Explanation PER CAPITA INCOME FEMALELFPR Now let us look at some other ways of measuring employment.
  22. 22. Surveys such as Economic Census,Annual Survey of Industries and Quarterly Employment Survey ask employers. However, in a country like India many of the employers are small enterprises and employer surveys reach only large enterprises. So most employer surveys deal with a very small proportion of the population. In other words, enterprise surveys measure jobs (and not work) and that too in large enterprises. The own-account enterprises (OAEs), which do not employ any regular workers, and enterprises employing less than 10 workers together accounted for almost 79% of India’s workforce engaged in industry and services establishments in 2013-14. Source: Report of theTask Force on Improving Employment Data, NITI Ayog EMPLOYER SURVEYS DO NOT REACH SMALL ENTERPRISES SMALL ENTERPRISES LARGE ENTERPRISES Measuring Employment Asking Employers 21% 79%
  23. 23. Occasionally, press reports take the results of enterprise surveys and extrapolate them to the entire population. This is very incorrect! It is like measuring the monthly income of a few families living in posh buildings in Mumbai and extrapolating it to the rest of the country! The Quarterly Employment Survey covered only 2.77 Crores worker out of a total of 47 Crores - Report of the Task Force on Improving Employment Data (NITI Ayog) EXTRAPOLATING ENTERPRISE SURVEYS TOTHE ENTIRE POPULATION ISVERY MISLEADING NEWS SURVEY SHOWSNO JOBSBEING CREATED Measuring Employment Issue 2: Press Reports Based on Enterprise Surveys
  24. 24. Household surveys use simplifying assumptions in face of complexity of work in India and use sampling to handle the size and diversity of the country. Different assumptions can lead to very different results. Non household surveys, while useful for specific purposes, are not at all comparable to household surveys as they usually address a very small portion of the population. Measuring Employment Summary Non-household Surveys NON-HOUSEHOLD SURVEYS ARE LESS COMPREHENSIVE THAN HOUSEHOLD SURVEYS Household Surveys DIFFERING ASSUMPTIONS
  25. 25. NEW INDIRECT METHODS Let us look first at administrative databases. The primary administrative database used is EPF database. 1. LOOKING AT ADMINISTRATIVE DATABASES 2. INDIRECT METHODS Measuring Employment Other Methods
  26. 26. What is it? Employers that meet certain conditions, have to register their employees with Employees Provident Fund (EPF) scheme. Employers need to deduct part of the employee’s salary and put it in the employee’s EPF account. The employer also has to make a contribution to the account. Many employers do not register their employees in EPF because the in hand salary of the employee reduces when the employee and the employer contribute to EPF. The EPF accounts have been recently seeded with Aadhaar. In the nine months since Sep 2017, there were been nearly 4.5 Million fresh additions to the EPF database. (Source: EPF ₹ EPF PART OF EMPLOYEE’S SALARY IS DIRECTLY PAID INTO EPF BY EMPLOYER Measuring Employment Indirect Measure - The EPF Database
  27. 27. Government supporters say: If EPF numbers are growing so fast, it is clear that jobs are growing. However, there are counter arguments, • EPFO still does not have a good grip on its numbers. For instance, the Sep -17 to February – 18 total new jobs added have been revised (both up and down) four times till now (Source: • Many companies that were not making EPF payments may have now started making them. This formalization has been helped by the subsidy provided by government for employee’s contribution. • A person employed by an informal employer earlier could now be employed by a formal one. No new job created. • Many companies could have become eligible to deduct EPF. It should be noted that in our examples, only Sumukhi and Ramesh’s employer would have been legally obliged to register him in EPF. EPFO INDIVIDUALS AND COMPANIES ENTER EPFO EPFO Measuring Employment Issue 3: What Does Growth in EPF Numbers Show?
  28. 28. In the Lok Sabha PM Modi gave many indirect indications of job creation. For example, 7.6 Lakh CommercialVehicles were sold last year and if we remove 25% as replacement demand and 2 new jobs per CV then it is 11.4 Lakh jobs. = 11,40,000 JOBS! = 5,00,000 JOBS! Similarly for passenger vehicles 25.4 lakh vehicles - 20% replacement demand and if 25% of the non replacement are employing drivers then it 5 lakh job. (Source: Measuring Employment Indirect Method – Other Proxies
  29. 29. Argument in favor: If CommercialVehicles have added more than 1 million jobs, the total economy would have added many more jobs! Counterargument: The job creation numbers depend on the assumptions that you make. If we take a much higher percentage of the sales as replacement, many of the 1 million jobs would vanish! Plus, it is possible that more jobs were lost in other part of the economy.This is a problem with all such proxies. Measuring Employment Issue 4: Are Proxies Reliable Measures of Employment?
  30. 30. A focus only on what is the total level of employment is misleading. Imagine a family of five that orders and eats 10 kg of vegetables each week.Would it worry more about whether the quantity of vegetables delivered is exactly 10 kg or would it worry more about the variety and quality of the vegetables? How should we evaluate the variety and quality of work in India? The Problem With Headline Employment Numbers 10 kg 9.8 – 10.2 kg
  31. 31. A society can think of work from two points of view: PRODUCTIVITY (Does the work increase the total output?) Economists worry about this. HAPPINESS (Does the work make the person doing it, happy?) Politicians worry about this. SHYAM KUMAR’S SHOP SUMUKHI SURESH Thus, for example, PRODUCTIVITY HAPPINESS The headline employment statistics do not tell us anything about either! Problem With Headlines Numbers How Should we Evaluate Jobs in a Society?
  32. 32. OUTPUT: SHYAM KUMAR SURESH SUJATA SHYAM KUMAR EMPLOYMENT: Recall the case of Shyam’s Family. His son and daughter joined him on the farm but the output did not change. This is disguised unemployment counted as Employment in the Headline numbers! The productivity of the farm did not increase but the surveys would count it as increased employment. BEFORE AFTER Problem With Headlines Numbers Example of Work not Leading to Increased Productivity
  33. 33. People find happiness in different things. Following are some characteristics of work that generally influence happiness. Does the work … PROVIDE INCOME MUCH HIGHERTHAN COST OF LIVING INTHE PLACE? HAVE GOOD WORKING CONDITIONS? INTERESTTHE PERSON? USETHEIR SKILLS AND TRAINING? ALLOWTHE PERSONTO LIVE INTHEIR HOME / COMMUNITY? ALLOWTHE PERSONTO HAVE A HIGH STATUS? ₹ Problem With Headlines Numbers What Kind of Work Makes People Happy?
  34. 34. Last year, Suresh found work in a textile-dyeing factory in Surat but could not adjust to life in that city.The cost of living was high and the pay low.The fumes and smells at work and near his residence made him sick. He also could not adjust to the alien culture of the city. Suresh is not happy to be a farmer either. It is just that he prefers to be at home – the cost of living is much lower and life is easier. SURAT FARMING HOME Just 1.2% of rural youth aspires to work in agriculture. Source:ASER (Rural) Beyond Basics Problem With Headlines Numbers Story of Suresh Revisited
  35. 35. Provide income much higher than cost of living in the place? Have good working conditions? Interest the person? Use their skills and training? Allow the person to live in their home / community? Allow the person to have a high status? SURAT HOME MEDIUM LOW LOW LOW LOW LOW LOW HIGH LOW LOW HIGH LOW No wonder Suresh is unhappy both at home and in the city! Problem With Headlines Numbers Suresh’s Alternatives
  36. 36. Jobs are mainly being created in West and South and there are more job seekers in North and East. U.P. BIHAR JHARKANDNORTH EAST WEST BENGALORISSA GUJARAT MAHARASHTHRAKARNATAKA TAMIL NADUKERALA Many youngsters find it tough to travel long distances to work in alien cultures. Mismatch Between Aspirations and Available Jobs Issue 5: Where Are the Jobs? Where Are the Job Seekers? The states of Bihar, Odisha and Uttar Pradesh have nearly 30% % of India’s youth (18-23) and contribute less than 14% to the total GDP. Source: RBI, Handbook of statistics,,AskHow calculations
  37. 37. Selvam is a 24 year old living in a small town in Tamil Nadu. His father paid a lot of money as donation to admit him to an engineering college. After graduation, he could not get an engineering job. His father bought a shop and now Selvam runs a data processing center which does work such as Aadhaar data changes, courier outlet, photocopy services and also provides access to many government and private services to computer illiterate citizens. The shop does not make too much money. Selvam can get a sales job but would have to travel a lot in the ‘field’. Selvam stays at home with his parents. 1 in 4 youth (18-23) in India enrolls for Higher Education. Source:All India Survey on Higher Education 2014-15 , Ministry of Human Resource Development T-23 Mismatch Between Aspirations and Available Jobs Understanding India - Selvam
  38. 38. Does the work … Provide income much higher than cost of living in the place? Have good working conditions? Interest the person? Use their skills and training? Allow the person to live in their home / community? Allow the person to have a high status? SALES JOB DATA PROCESSING MEDIUM LOW LOW LOW LOW LOW LOW Selvam chooses to run his shop even though there are jobs available. LOW MEDIUM MEDIUM HIGH MEDIUM The Unemployment rate for graduates was 12% and for those with no education only 1.27%. Source: Unemployment in India, a statistical profile CMIE. May – Aug 2018. Page 18. Mismatch Between Aspirations and Available Jobs What Makes Selvam Happy?
  39. 39. Jobs may be getting created but may not be as per the aspirations of the job seekers. Many jobs in large metros see resignations at the rate of 10- 40% per month indicating that employees are not happy with those jobs. The headline employment numbers do not reveal the mismatch between the location and aspirations of jobs and job seekers. Mismatch Between Aspirations and Available Jobs Issue 6: Do Jobs Meet the Aspirations of Job Seekers?
  40. 40. We see two types of news items regularly: 1. There is a shortage of labour. For example: The mismatch in the location and aspirations of job seekers and jobs explain such contradictory headlines! 2. On the other hand we see reports that say there is a shortage of jobs: Mismatch Between Aspirations and Available Jobs Many Jobs and Many Job Seekers
  41. 41. News reports tell us of the amazing number of applicants for government jobs. Why do candidates with PhD apply for such jobs? Because their alternative, like Selvam may be a low paid, data processing job. Mismatch Between Aspirations and Available Jobs Love for Government Jobs
  42. 42. Provide income much higher than cost of living in the place? Have good working conditions? Interest the person? Use their skills and training? Allow the person to live in their home / community? Allow the person to have a high status? GOVT. ALTERNATE MEDIUM LOWHIGH LOW LOW The choice for a PHD is clear. Especially, if the quality of the PHD is not very good. MEDIUM HIGH MEDIUM LOW LOW MEDIUM MEDIUM Mismatch Between Aspirations and Available Jobs Issue 7: Love of Government Jobs
  43. 43. Recommendation : Measure Jobs That Make People Happy The government could consider measuring relatively higher paying jobs that are considered good. This would be a good indicator of productivity as well as happiness.This measure may be a combination of many non-overlapping indirect measures, such as NUMBER OF PASSENGER CARS SOLD WITHTAXI LICENSE (TAXI DRIVERS) AREA OF COMMERCIAL SPACE REGISTERED (OFFICE JOBS) NUMBER OF COMMERCIAL VEHICLES SOLD –THE AVERAGE OF SALES 10-15 YEARS AGO (TO CORRECT FOR REPLACEMENT DEMAND) (CV DRIVERS). TAXI TAXI 10-15YRS
  44. 44. Summary of Issues 1. Most people in India do not have a single employer, regular wage paying employment (Naukri). They may have work (kaam). 2. India’s size and diversity and the complexities of work make it difficult to measure employment regularly AND with sufficient accuracy • Sufficiently accurate view is available only once every 10 years, after the census • Intermediate estimates are based on sample surveys.These make assumptions, and are difficult to make error-free • Other methods (employer surveys, EPFO database, commercial vehicle sales) represent small part of real India, use debatable assumptions, and CANNOT be extrapolated to all of India 3. Most public debate on headline numbers ignores the above limitations.Worse, the obsession with headline numbers prevents discussion on whether the work is productive or the worker is happy 4. India has long queues for Government jobs. India also high resignation rates in metros and periodic labor shortages.The mismatch between aspirations and available jobs needs to be more mainstream in public debate
  46. 46. Thank You! As we warned, this is just an introduction to the complex topic of measuring employment. If you want to dive deeper, you could go to if you wish to be added to our mailing list. Do tell us why you find the work of AskHow India useful. Website Facebook Twitter Slideshare