CMIE Current Affairs - 2019

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Examining the Government Data on Job Creation

The Prime Minister while addressing the Lok Sabha made the following claims about the creation:

  • New jobs were created in the unorganised sector, which accounts for 80-85 per cent employment.
  • PM cited an increase in the sale of commercial vehicles, infrastructure building and housing activities as evidence for the claim.
  • PM further said that 1.8 crore people had enrolled in the Employees’ Provident Fund (EPF) in the past 15 months, and 64 per cent of them, who were below the age of 28 were first-time employees.
  • PM also cited data showing an increase in the registration of employees under the National Pension Scheme (NPS) from 65 lakh in March 2014 to 1.2 crore till October 2018.

Why the critics claim this argument as flawed?

The critics refuse to buy these data on job creation based on the following grounds:

  • Considering the EPF enrolments as a reflector of job creation is not correct as it can be the formalisation of informal jobs.
  • Enrolment for the EPF does not necessarily mean that the person has got a job. It is most likely that the person has enrolled for the EPF for the first time though he/she had a job for a long time.
  • As per the law, an employer with 20 people or more is required to register with the EPFO. If a firm had 19 employees till yesterday and today 20th person joins in, then all 20 would be enrolled for the first time. Hence what is perceived as 20 jobs created is actually one.
  • PM also said that new 6.35 lakh new non-corporate taxpayers such as doctors must have provided jobs in the past four years. Experts call it “incomprehensible” in the absence of the source of the data.
  • As per data from CMIE India’s unemployment rate shot up to 7.4 per cent in December 2018 and the number of unemployed increased by a substantial 11 million – the highest in 15 months.

Further critics cite the alleged data from the NSSO survey which is said to be withheld by the government. It is said that the report puts the unemployment rate at 6.1 per cent in 2017-18, post-demonetisation. It is the highest level of unemployment since 1972-73 – the period since when the jobs data is comparable.