Why we need new ways to measure Employment Numbers in India

TN Mohandas Pai shared in an interesting article that between 2014 and 2019, the Indian Nominal GDP grew by an estimated Rs 78 lakh crore. That is a a growth of 69.2% at a CAGR of 10.9%.

Old ways to measure employment via CMIE and PLFS are passe and incomplete. Need more sophisticated models based on Aadhaar and multiple sources argues @TVMohandasPai Click To Tweet

He asks the obvious question – how can such a growth happen without corresponding increase in employment? And that is the point isn’t it?

Oft-quoted surveys, like PLFS (Ministry of Labour) and Consumer Pyramids (CMIE), indicate a decline in employment. However, they survey merely 105,000 and 160,000 households, respectively; not statistically representative of 1.35 billion people since the context in which people work has fundamentally changed. Many scholars have also pointed out technical challenges in the surveys. (Source: The Financial Express)

As the old surveys and methods (PLFS (Ministry of Labour) and Consumer Pyramids (CMIE)) become unreliable, it is imperative that we use the right ways to measure employment. And, since all the databases are now linked to Aadhaar it is probably better to look at sources like EPFO (Employee Provident Fund Organization), ESI (Employee State Insurance), NPS (National Pension Scheme), IT returns, vehicle sales, Mudra scheme, and others.

EPFO applies to organizations with 20+ employees. And that is across 190 industry classifications.

So, the right way should indeed be to create a model which incorporates data from all the relevant sources of employment based metrics and then link it to Aadhaar. The simplistic surveys with mediocre rigor that pass off as the benchmark for employment wouldn’t even make the cut in a respectable research firm beyond the intern level!