A good start

Employment surveys should be made more relevant

The Labour Bureau under the Union Ministry of Labour and Employment has released its report on the new Quarterly Employment Survey (QES), which is meant to examine shifts in job patterns in nine major sectors of the urban economy: Manufacturing, construction, trade, transport, education, health, hospitality, IT, and financial services. The QES is meant to focus mainly on the “formal” or organised sector, given that it is limited to establishments with more than 10 employees; the plan is to merge it with a survey of smaller enterprises after a year to build a holistic picture of the economy. This is the government’s attempt to fill a much-needed hole in the Indian statistical firmament regarding high-frequency data on employment. Most mature economies have monthly figures for unemployment, but India has had to hobble along in recent years using infrequent large-scale surveys combined with smaller private-sector efforts.

This first round of the QES was conducted mainly during the second wave of the Covid-19 pandemic, and thus much of the surveying had to be done using the telephone. The original database from which the sample of surveyed establishments was selected dates from the full-scale Economic Census of 2013-14; a more recent round of the Economic Census was carried out in 2020 but is yet to be made public. The government has compared its extrapolation of employment in the nine sectors to the full figure in the Economic Census of 2013-14 and concluded there has been healthy growth in the amount of employment available in these sectors. However, this comparison may be faulty, given that many establishments in the 2013-14 sample were non-responsive and some of them had shut down. The gain or loss of jobs in these sectors can only be determined with a higher degree of certainty when the 2020 Economic Census results are released, which should be done without delay in order to make the QES more relevant and to give it a clear baseline.
 

More interesting and trustworthy than the headline comparisons to 2013-14 are the QES’s snapshots of the economy as it exists now, and the effects of the pandemic. It is important to note, for example, that even among these relatively organised sectors, enterprises in India are small across sectors, other than arguably in the IT/BPO sector. It is also worth noting which sectors have proved themselves capable of employing those who have lower educational qualifications: Hospitality, trade, construction, and manufacturing all have those with a high school degree or less in reasonable proportions, while transport, financial services, and IT do not. About 18 per cent of formal establishments claim to provide skill development programmes. This data should help the government target its up-skilling efforts.

The data regarding the pandemic economy is also of importance. According to the QES, most of those employed across sectors continued to receive full wages during the lockdown of March-June 2020. This included three-fourths of those in manufacturing and trade. Even in construction and hospitality, anecdotally sources of big job losses, two-thirds of those employed by establishments with over 10 workers continued to draw their full wages. It is possible, therefore, that the wage and job losses were sharply concentrated in smaller enterprises that employ fewer workers. The government has made a good start towards re-creating a structure for labour statistics in India. It must follow up by releasing the Economic Census 2020 and by taking on board constructive criticism from the academic community about the statistical features of the QES.