This is interesting piece on india's employment growth in recent years. The unique document containing information on employment type and quality in recent years.

1. A presentation made by State Bank of India Chief Economist Soumya
Kanti Ghosh and Indian Institute of Management-Bangalore professor
Pulak Ghosh to the Prime Minister’s Office (PMO) in January captured
how subscriber data is shoddily maintained by the Employees’ Provident
Fund Organisation (EPFO) - something that the recently released study
on creation of seven million jobs in 2017-18 did not include.
Out of around 80 million accounts that the two researchers analysed,
there were 10 million records with only names and no other details about
the subscribers, including their date of joining, date of birth and father’s
name, among others, in the EPFO’s records.
Several records maintained by the EPFO had names such as A, a, xxx, 9,
z, with provident fund contribution against them.
Ghosh and Ghosh briefed these facts to the PMO in a presentation made
four days before making their report, Towards a Payroll Reporting in
India, was made public on January 16.
Top officials from the NITI Aayog, finance ministry, labour and
employment ministry and the Ministry of Statistics and Programme
Implementation were present at the meeting.
The slides in the presentation, Navigating Through Numerous
Challenges in EPFO Data, were not part of the study that was released
last month. The presentation was reviewed by Business Standard.
Only 20 per cent of the members had Permanent Account Numbers
(PANs) and there was “no consistency in capturing the members’ data
with some or the other details of the subscribers missing, that made it
really difficult to remove duplicates,” Ghosh and Ghosh told the PMO.
“(It) looks like there is 30-40 per cent of unclean data. Only few remain
useful with all the fields populated,” according to the presentation.
The EPFO has also captured the date of birth inaccurately for several
users, showing the members were either over 100 years old or less than
18 years.

2. “Since we cannot identify many members uniquely, we are not sure how
many new payrolls are created, or how many are in a job for a while but
are being counted as fresh,” Ghosh and Ghosh admitted, estimating that
seven million jobs would be added to the payroll in 2017-18.
The EPFO data analysed by the researchers also showed that in some
cases, members have received contribution even before their joining
date, “probably due to late registration”, and some members received
multiple provident fund contributions for months.
“EPFO should do a thorough job of cleaning the entire databases and
their systems should be structured,” the researchers said during the
presentation.
The study, however, made it clear that it removed all the accounts where
information was incomplete and also ensured “there was no duplication
by strict name matching across years.”
The EPFO gave the NITI Aayog 60 gigabytes of the EPFO database for
January 2015 to November 2017, including names, dates of birth,
permanent account numbers, provident fund contributions, and industry
names. NITI Aayog gave Ghosh and Ghosh access to the database.
EPFO has 184 million subscribers in its database, out of which around
40 million members were making active contributions, as on March 31,
2017.
Till the end of March 2016, there were around Rs 40,800 crore in the
inoperative provident fund accounts.
EPFO Central Provident Fund Commissioner V P Joy didn’t respond to
a series of questions mailed to him on Monday. However, a senior EPFO
official said it used to do manual entry into its system till 2012, after
which an electronic challan system was introduced.
“It is legacy data that is slowly being cleaned up as we have moved to an
electronic recording system.

3. "In fact, the database since July last year is even better as we are doing
Aadhaar-based verification,” the official said.
However, for Aadhaar-based verification, basic details such as name,
father’s name and date of birth should match with the Aadhaar detail
concerned.
The EPFO is facing several hurdles in linking provident fund accounts
due to the missing details.
“Particulars of some members are missing in their profile i.e. (name,
father’s or husband name, date of birth, gender) due to which
demographic verification is pending…. As a result, the member and
employer have to face hardship to get their Aadhaar seeded with the
UAN,” the EPFO had said in a missive to employers in September last
year.
Trade union leaders said workers face hardship due to irregularities on
the part of the employers in registering them under the EPFO.
“There are workers who are unable to claim the money due to missing
details. That is the reason that a huge amount is kept under inoperative
accounts.
"We have been telling the EPFO management that it is not unaccounted
but belongs to some workers who are not aware about their PF accounts.
"EPFO needs to identify these workers and keep records electronically,
which hasn’t happened in full swing,” Centre of Indian Trade Unions
vice-president and EPFO’s central board of trustees member A K
Padmanabhan said.

4. The jobs statistics debate:
A good starting point
An analysis of more than 900 listed companies with a
total employee base of 5 million shows that jobs growth
has been good at 3.7% during FY17 and 4% in FY16
Last Published: Thu, Jan 25 2018. 04 19 AM IST
Employment situation picked up in 2014 but did not take off until the second
half of last year. Photo: Hemant Mishra/Mint
2019 is the year of national parliamentary elections in India. In
2018, several states will elect their legislative assemblies. Both
the years will witness more noise than discussion, and more heat
than light. Even research that might have been in the works and
published this year or next will be viewed through tinted (or
tainted) glasses. A recent paper by Pulak Ghosh of the Indian
Institute of Management in Bengaluru and Soumya Kanti
Ghosh, chief economic adviser of the State Bank of India, is an
early victim of such a politicised interpretation.
If one searched for their report, one gets a summary and a full
report. The authors have been careful not to claim that their
work is the most authoritative one on the state of job creation in
India. Nor do they claim that they have come up with a model to
estimate job creation in the entire Indian economy: formal, or
informal and agricultural sectors. They are very clear that their
work is about whether jobs are being created in the organised
sector. Towards this end, they have looked at data from the
Employees’ Provident Fund Organisation (EPFO), the

5. Employees’ State Insurance Corporation (ESI) and the National
Pension System (NPS).
As far as one can tell, they seem to have erred only on the
conservative side. They have made their assumptions clear.
They claim that India is on track to create 5.5 million formal
sector jobs based on trend in the current financial year, up to
November 2017.
My initial reaction was one of scepticism. The first question that
came to mind was the reconciliation between job creation and
economic growth, and job creation and bank credit growth to
industry. India’s gross domestic product (GDP) growth has
slowed throughout the financial year 2016-17, and it appears to
have bottomed out in the first quarter of 2017-18. In the quarter
ending September 2017, there was a slight rebound in economic
growth. However, bank credit to industry has not really picked
up. Therefore, it would be reassuring if other evidence—direct
or indirect—reinforces their estimate of formal job creation.
I will now examine four issues—job creation by large listed
companies, Reserve Bank of India (RBI) surveys of
manufacturing companies, funding constraints for businesses
and, finally, informal employment.
Healthy growth in job creation by large corporations
First, India does not have a survey of business or commercial
establishments as the US has. So, there is no payroll estimate
available from employers. In October last year, Mahesh
Nandurkar, the India strategist at CLSA India, wrote in Business

6. Standard, “We looked at company annual reports of listed
companies and nearly all listed companies give number of
employees as at the end of the financial year. This is the most
authentic and high frequency (once every year) data that one can
get. Our analysis of more than 900 listed companies with a total
employee base of 5 million shows that jobs growth has been
good at 3.7% during FY17 and 4% in FY16. This is actually in
line with the jobs growth seen for these companies over the last
10 years. Thus, at least for this sample, the jobs creation has not
slowed down over the last two years.”
As Nandurkar correctly points out later in the article, these are
jobs created directly by India’s large listed companies on their
payroll. India’s tax policy and tax system favour capital over
labour, unfortunately. Yet, if their payroll growth has been
around 4% in the last two full financial years, then it is quite
likely that in the overall formal sector (including small but
unlisted firms), job creation has witnessed a higher percentage
growth. Yes, that would be still formal sector jobs, even if not
necessarily better-paying corporate jobs. Even employees hired
by contract labour firms (Teamlease for example) and placed in
companies would be counted as formal jobs because EPFO, ESI
contributions will have to be made for those workers. Ghosh and
Ghosh do not claim that all the formal sector jobs that have been
created have been created on the payrolls of the corporate sector.
Indeed, they do want India to start measuring corporate payroll.
Hiring and hiring intentions picked up in 2H2017
Second, the Reserve Bank of India conducts several useful
quarterly surveys. One of them is the Industrial Outlook survey

7. which asks more than a thousand businesses (companies) in the
manufacturing sector about various aspects of their business
conditions from inventory to working capital to exports to
imports and to employment conditions.
Two charts are shown below. One goes as far back as the data
permit. The other is from the time the National Democratic
Alliance government came to office.
Click here for enlarge

8. Click here for enlarge
These are net positive responses (increase–decrease of jobs) on
employment. The information content of the charts is high. Net
hiring by manufacturing businesses fell precipitously from 2011
until 2013 (three years) almost reaching the lows seen in the
aftermath of the global crisis of 2008. That is a reason to suspect
the economic growth numbers that are now reported for that
period. They are too rosy to be credible. The job situation was
dire. That is another story for another occasion.
That said, employment situation picked up in 2014 but did not
take off until the second half of last year. The uncertainty caused
by demonetisation is seen in the data and there was a dip in the
second quarter of 2017 (April-June). In 2017, hiring intentions
have taken off even more impressively than the present

9. employment situation. So, the RBI survey does not negate the
picture that Ghosh and Ghosh have painted.
Bank lending was not missed
Third, what about the fact that banks were not lending to
industry? In its assessment of the Indian financial system
(‘Financial system stability assessment—press release and
statement by the executive director for India’, December 2017),
the International Monetary Fund made two observations:
■ “The Indian financial system is undergoing a gradual
structural shift, with a greater role for non-bank intermediaries
and higher recourse to market funding for large corporates.
■ The financial system is diversifying, with market shares of
nonbank intermediaries (notably, mutual funds and nonbank
financial companies—NBFCs) and private sector players
increasing gradually—albeit from a low base. Banks’ share in
credit flows fell from 50% during FY2015/16 to 38% in
FY2016/17, as corporates increased private debt placements and
issued commercial paper, replacing bank funding with market
sources.”
Clearly, credit-worthy borrowers have been able to tap the
market and raise funding. Hence, meagre bank lending growth
need not have held back hiring by the formal and incorporated
entities that had access to capital markets.
Informal employment—do we know anything?

10. Finally, what about informal employment? Timely data are not
available. One must rely on surveys. Most surveys of informal
employment done after demonetisation start with a pre-
conceived conclusion and find responses that would validate
them. The case in point is a rather interesting study on the
response of the community in rural Tamil Nadu to
demonetisation (Insights on Demonetisation from Rural Tamil
Nadu—understanding social Networks and social protection—
Economic and Political Weekly, 30 December, 2017). The
authors mention that there was widespread support for
demonetisation. Yet, they write in dire tones about its impact.
They do not concede the possibility that they may be missing
something given the “wide public opinion support” that they
acknowledge twice in the report. Second, most non-agricultural
jobs in India have no written contract (see Chapter 2, Economic
Survey 2012-13). It is more likely the case for informal jobs.
Therefore, it is rather difficult to know if, on balance, jobs were
created or destroyed in the informal economy.
Clearly, much needs to be done to create good quality jobs in
India, from enabling job-seekers with the right and matching
skills and attitudes, to lowering the cost of hiring labour, to
making hiring workers desirable and to enable hiring in well-
paying jobs. The first thing the government can do is to work on
creating a better and timely jobs market data. Indeed, yours
truly wrote that a useful mission for NITI Aayog will be to
improve India’s economic data to first-world standards. America
sets the standard even among developed countries. In this
regard, what the Ghoshs have done is a very good starting point.
Critics have to do better than to set up strawmen arguments and
knock them down.

11. V. Anantha Nageswaran is an independent consultant based in
Singapore. Read his Mint columns here.
Comments are welcome at baretalk@livemint.com
First Published: Wed, Jan 24 2018. 12 55 PM IST