The Congress on Monday (September 30, 2024) dismissed as “half-truths” the government’s assertions of creating eight crore employment opportunities between 2021 and 2024 and 6.2 crore net subscribers joining the EPFO database, and said no “spin-doctoring” can take away from the fact that 2014-24 has seen “jobless growth”.

Congress General Secretary in-charge communications Jairam Ramesh said that amidst the “U-turns and scandals” that have marked the last few months of this “tottering” Government, “the non-biological PM and his drum beaters have tried to find some solace in their economic record, claiming to have created eight crore employment opportunities between 2021 and 2024”.

“This claim initially emerged from the RBI KLEMS data, which we had earlier countered on July 15th, 2024. The Government’s spin doctors have now mustered another statistic – that of 6.2 crore net subscribers joining the Employees’ Provident Fund Organisation (EPFO) database between September 2017 and March 2024. Both claims are based on half-truths,” he said in a statement.

To justify its claim of eight crore new jobs, the government adopts an expansive definition of employment, without registering the quality and circumstances of employment, Mr. Ramesh argued.

A large part of the claimed “employment growth” is recording unpaid household work done by women as “employment”, he said, adding that it is not new job creation. The ’80 million new jobs’ headline also elides discussion on the quality of jobs, Mr. Ramesh said.

Amidst the poor economic climate, the share of salaried, formal employment in the labour market has decreased, he said and pointed out that workers are moving to low-productivity informal and agricultural jobs, which KLEMS is capturing as jobs created.

“This is why the KLEMS data shows an increase in employment during the COVID-19 pandemic years, when large sections of the economy fully shut down. While crucial sectors like education saw 12 lakh fewer jobs in 2020-2021, a whopping 1.8 crore ‘jobs’ were ‘created’ in agriculture,” he said.

Thus, factory workers, teachers, miners, etc. who returned home during COVID-19 and had to return to farming and agricultural labour are registered as a “job created” in agriculture, Mr. Ramesh argued.

This shift to low-productivity, poorly paid jobs is an economic travesty, which the government is touting as an achievement, the Congress leader said.

“Finally, in the absence of a Population Census since 2011, the KLEMS statisticians assumed a population level to arrive at their projections. Several economists have indicated that the population estimate used was too large, resulting in an overestimation of jobs created,” Mr. Ramesh said.

He further said the Government cites the addition of 6.2 crore net subscribers in the EPFO database to show record employment growth, without revealing the full picture.

EPFO only tracks the organised sector which is less than 10 per cent of total employment, he said.

“The Supreme Court verdict in 2020 required the EPFO to include contractual workers at any establishment which employs more than 20 people. A substantial number of workers who were already employed are now being reflected in EPFO data – these are not new jobs created,” Mr. Ramesh said.

“Part of the net increase in EPFO has to do with ease of registration – the process is now online, free of cost, and hassle-free, without requiring a visit to the EPFO office. Subscribers can now transfer their PF accounts while changing employers, without having to submit a claim for final settlement,” he said.

Establishments with 20 or more employees come under the purview of the EPF act, Ramesh said and pointed out that firms which move from 19 to 20 employees in one year will suddenly appear in the EPFO data as 20 new “jobs” even though net job creation is a single job.

“Many retirees do not withdraw their assets from the EPFO because it offers attractive returns – they are captured as being employed in EPFO data,” Mr. Ramesh said.

“Whatever statistical jugglery they engage in, the truth remains: India’s unemployment rate today is the highest it has been in 45 years, with the unemployment rate for graduate youth at 42%. This crisis is of the Government’s own making, caused by the decimation of job creating MSMEs through the Tughlakian demonetisation, a hastily rushed through GST, an unplanned COVID-19 lockdown, and rising imports from China,” Mr. Ramesh said.

The final straw has been the PM’s economic policy of favouring a few large business groups, which is destroying competition and impacting inflation as well, he said.

“No spin-doctoring can take away from this fact: 2014-24 has seen JOBLOSS growth,” Mr. Ramesh added.

Employment, or the lack of it, has been a major issue of debate among economists and policy makers in India in recent years. Recently, Prime Minister Narendra Modi claimed that India created “eight crore new jobs in the last three to four years”. The Prime Minister was using data from the India-KLEMS database hosted by the Reserve Bank of India (RBI). As per this database, the total number of workers in India rose from 56.6 crore in 2020-21 to 64.3 crore in 2023-24, that is, a net rise by 7.8 crore workers. Tailing this claim, the research team of the State Bank of India (SBI) published a validating report that claimed a match between the total number of workers in the India-KLEMS database and in the NSSO’s Annual Survey of Unincorporated Sector Enterprises (ASUSE), 2022-2023.

What lent an element of surprise to these claims was the rise in the number of workers over the two COVID-19 years and after. According to the International Labour Organization (ILO), the employment-to-population ratio between 2019 and 2023 was stagnant, if not falling, in East Asia, South-East Asia and the Pacific. Given such trends elsewhere, analysts have had serious methodological and empirical suspicions in relying on the India-KLEMS database to posit an outlier status for India in employment creation.

The India-KLEMS project began as an academic exercise financed by the RBI in 2009. From 2022, the RBI hosts the database. KLEMS stands for Capital (K), Labour (L), Energy (E), Material (M) and Services (S). It is a framework used to measure industry-level “total factor productivity” (TFP), which is considered by mainstream economists as a measure of the efficiency of all the inputs to produce a unit of output.

In other words, the objective of the KLEMS framework is not to produce data on employment. The employment figures are merely inputs into the database’s modelling framework. Further, the the RBI does not directly collect data on any input, including employment, that enter the India-KLEMS database. It sources sectoral data on employment, input usage and output from official sources, including the Central Statistics Office, Census of India, Annual Survey of Industries and the Periodic Labour Force Surveys (PLFS). It is amusing then that data sourced by the RBI from other official sources, and used as inputs to estimate TFP, are portrayed as “RBI jobs data” to make political statements on employment generation in the economy.

The method in India-KLEMS

India-KLEMS borrows employment data from the PLFS, but not as absolute figures of the number of workers. The PLFS provides only the share of workers in the population, or the Worker Population Ratio (WPR). To obtain the number of workers, the WPR is multiplied with the total population. This is where the problem begins, as there is no official population figure for India after 2011.

Also read: PM Modi speaks about an increase in job avenues for youth, data shows otherwise

To obtain a population estimate for the intercensal years, demographers typically interpolate population numbers from the last available Census. But here, India-KLEMS adopted a strange solution. The estimates of population in 2017-18, 2018-19 and 2019-20 were borrowed from the Economic Survey (ES), 2021-22. The ES projected these populations by assuming that population growth rates between 2001 and 2011 were the same for the years after 2011. The WPRs were multiplied by these population projections to obtain the number of workers for each corresponding year.

But for the years between 2020-21 and 2023-24, India-KLEMS used a totally different source and method. It used population projections from 2011-2036 published by the Ministry of Health & Family Welfare (MoHFW) in 2020. From the Census figures of 2011, this publication arrived at annual population projections using demographic models that factored in the Total Fertility Rates (TFR) and the mortality rates reported in the Sample Registration System (SRS) of 2017. The simple question is why the India-KLEMS database did not use the MoHFW’s population projections for all the years after 2017-18. It appears that while the RBI adds new estimates to the series after 2022, it does not correct or update older estimates published before it began hosting the database.

There are two major issues here. Firstly, population projections from the ES and the MoHFW disregard the sharp fall in fertility rates in India over the last decade. The replacement TFR is canonically assumed to be 2.1 children per woman. However, results from the most recent National Family Health Survey (NFHS) show that India’s TFR had fallen to 2.0 in 2019-21. Similarly, a 2024 study published in The Lancet argued that the “reference TFR values in Bangladesh and India are projected to decrease below 1.75 by 2026 and 2027, respectively”. These falls in TFR are not considered in the population projections in the ES or by MoHFW.

Secondly, the population projections in and by the ES and the MoHFW are not available separately for rural and urban areas. So, the India-KLEMS managers took the national sex-wise populations, assumed population growth rates for rural and urban populations and obtained separate rural and urban population projections. However, it is well-known that India’s rural population is growing at a slower rate than the urban population. Assuming uniform growth rates for both is likely to lead to an overestimation of the rural population. For these two reasons, the population figures with which the WPRs were multiplied by in India-KLEMS, and the number of workers obtained thus, are likely to be overestimates.

Shifts in employment structure

When PLFS data are readily available for analysis, one fails to understand the need to depend on India-KLEMS for a temporal analysis of employment. PLFS data show that India’s WPR fell from 38.6% in 2011-12 to 34.7% in 2017-18, and then rose to 41.1% in 2022-23. The rise in overall WPR was largely due to a rise in the rural female WPR, which rose from 17.5% in 2017-18 to 30% in 2022-23. WPRs for other population segments also rose, but not as much as for rural women.

These changes are the basis for two claims of the government: one, that crores of new jobs were generated during and after the pandemic; and two, that this phenomenon was gender friendly as women occupied the jobs vacated by men in the rural workforce.

Both the claims are flawed. The rise in rural female WPR was largely due to an increase in unpaid forms of self-employment among rural women in agriculture. Between 2018-19 and 2022-23, the share of rural women employed in agriculture rose from 71.1% to 76.2%, and the share of rural women who were self-employed rose from 67.8% to 78.1%. Among female workers in agriculture, the share of those who were employed purely on a subsidiary basis (that is, those who worked only irregularly, and on a minor scale) rose from 15.6% in 2018-19 to 27.7% in 2022-23. And within all subsidiary employment in agriculture, the share of unpaid family work was about 65% in 2022-23.

But a rise in unpaid subsidiary work can show up as higher WPRs for women. When these rising WPRs are multiplied on with an increasing projected population, we obtain a steady rise in the total number of workers. Even if the WPRs were constant, one would have obtained a rise in the number of workers because of the increase in the projected population. This is what we see in the projected workforce figures in India-KLEMS. In short, there was little expansion of meaningful and paid employment in India after 2017-18. The departure of men from agriculture hardly changed the status of rural working women.

The ASUSE comparison

This leaves us with one outstanding matter — the SBI report’s claim that the number of workers in India-KLEMS and ASUSE 2022-23 broadly match. The ASUSE covers only unincorporated non-agricultural establishments in manufacturing, trade and other services. Apart from agriculture, it explicitly excludes a range of manufacturing and trading establishments from its sampling frame. The number of workers in the unincorporated non-agricultural establishments — defined and covered as above in ASUSE — was 11 crore in 2022-23. The SBI report, however, estimates the total number of workers from ASUSE as 56.8 crore, and claims comparability with the figures in India-KLEMS.

Clearly, the SBI report assumed a certain number of workers employed in sectors not covered in ASUSE — such as agriculture, construction, registered factories, corporate sector, government and cooperatives — using other household surveys that employ different concepts and methodologies. It then added those numbers to the number of workers in ASUSE to arrive at the inflated estimate of 56.8 crore workers. But there is no scientific basis for such an indirect method, that too to make an inane and motivated validation.

To sum up, data from India-KLEMS, which was designed for very different purposes and uses questionable methods, are being used to drive a specific political narrative on employment generation. But the real culprit in this episode is the Government of India, which has refused to organise the new decadal Census till date.

The absence of accurate population figures has led analysts and institutions to use many erroneous projections based on heroic assumptions. Consequently, we end up needlessly politicising economic debates and restricting the space for reasoned studies of important trends in the Indian economy.

P. C. Mohanan is former member, National Statistical Commission and R. Ramakumar is Professor, Tata Institute of Social Sciences, Mumbai.

Chairman Warren Buffett, left, at the Berkshire Hathaway Inc. annual shareholders’ meeting in Omaha, Nebraska, U.S., on May 3, 2024.
| Photo Credit: REUTERS

Billionaire investor Warren Buffett said that the Indian market has “unexplored” opportunities which his conglomerate holding company, Berkshire Hathaway, would like to explore “in the future”.

Mr. Buffett’s remarks came at Berkshire’s annual meeting on May 3 when Rajeev Agarwal of DoorDarshi Advisors, a U.S.-based hedge fund that invests in Indian equities, asked him about the possibility of Berkshire exploring in India, the world’s fifth-largest economy.

“It is a very good question. I am sure there are loads of opportunities in countries like India,” he said.

“The question, however, is whether we have any advantage or insights into those businesses in India or any contacts that will make possible transactions that Berkshire would like to participate in. That is something a more energetic management at Berkshire could pursue,” the co-founder, chairman and CEO of Berkshire Hathaway said.

Mr. Buffett, 93, said Berkshire has a great reputation around the world. He said, his Japanese experience has been fascinating enough.

“There may be an unexplored or an unattended opportunity…but that may be something in the future,” he said about India.

Mr. Buffett said the question is if Berkshire has some kind of advantage in pursuing those unattended opportunities, particularly against people who are managing other people’s money and getting paid based on assets.

During a Question and Answer session, Mr. Buffett answered several questions related to some of the key investment decisions taken by Berkshire Hathway lately.

Decidedly reducing stake in Apple was one of the key topics. Mr. Buffett clarified that it had nothing to do with the long-term view on the stock and Apple will probably remain one of their largest holdings despite the recent slowdown.

He also told shareholders that Vice Chairmen Greg Abel and Ajit Jain have proven themselves the right people to lead Berkshire after he departs.

Women planting paddy seedlings in an agricultural field in Nagaon district of Assam.
| Photo Credit: Ritu Raj Konwar

On March 11, Bahutva Karnataka, a forum for concerned citizens and organisations, released a report titled ‘Employment, Wages and Inequality’, at the Press Club, Bengaluru. The report analyses the progress in various employment-related indicators in the last decade, ever since the National Democratic Alliance (NDA) came to power, including employment generation, formalisation of jobs, and improvement in wages.

As the general elections draw near, the report also examines the progress of the NDA’s employment-related initiatives. In April 2019, for instance, Prime Minister Narendra Modi claimed that 2.5 crore jobs have been added annually. Data reveal that the share of formal employment with social security and other advantages attached to it has remained stagnant. On the other hand, the number of self-employed individuals has increased substantially. Further, while wage earnings have increased when adjusted for inflation, the increase is negligible.

The stagnation is reflected in the share of households earning less than the national floor level minimum wage (NFLMW). About 34% of households in India earned less than the proposed NFLMW of Rs. 375 a day. Further, wage inequality has resulted in widening the gap between the rich and the poor. In 2022, the top 1% and 10% of the population held 22% and 57% of the national income, respectively, while the bottom 50% held 12.7%, according to data from the World Inequality Database.

Chart 1 | The charts compare the share of employment across various employment categories in 2011-12 and 2022-23 for men and women.

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Data show that the share of employment in the formal sector remained below 25%. The share of those who were self-employed remained above 50% by 2022-23. While the share of self-employed women was the highest, it also saw the highest growth of 8% points from 56.5% in 2011-12 to 64.3% in 2022-23. According to the report, between 2011-12 and 2022-23, women doing unpaid labour in their family business or farming rose from one in four to one in three due to lack of other remunerative employment and stagnant household earnings.

Also read:Top 1% Indians’ share in national income is higher now than under British-rule: Data

Chart 2 | The chart shows the year-wise average weekly wages, adjusted for inflation, for male and female regular salaried workers and casual labourers.

Data show there has not been any significant growth in income in the last five years across employment categories.

Further, many households still earn less than the NFLMW (Map 3). In 2019, an expert committee, set up by the Ministry of Labour and Employment, recommended that the NFLMW should be at least Rs. 375 per day and Rs. 3,050 per week. Of the 34 States and Union Territories (UTs) analysed, in about 19 of them, more than 20% earned less than Rs. 375 a day or less than Rs. 3,050 a week in 2022-23. In Chhattisgarh and Uttar Pradesh, above 50% of the households earned less than this threshold. The report adds that nearly 30 crore workers make less than the minimum wage.

Map 3 | The map shows the State/UT-wise share of households earning less than the national floor level minimum wage

The stagnancy in income growth among the majority of the population, when juxtaposed with India’s increased GDP per capita, hints at a widening gap between the rich and poor. In the last 10 years, GDP per capita increased by 60%, while close to 35% of the total households earned less than the NFLMW. The share of national wealth held by the wealthiest 10% of the population increased from 63% in 2012 to 64.5% in 2022, while the share held by the poorest 50% reduced further from 6.1% in 2012 to 5.6% in 2022 (Chart 4). The chart shows the year-wise wealth share of the top 10% and the bottom 50% of the population.

Chart 4 | The chart shows the year-wise share of national wealth held by the top 10% and bottom 50% of the population.

Source: ‘Employment, Wages and Inequality’ report

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