By Suranjana Roy
A study titled ‘Towards a Payroll Reporting in India’ showed that 590,000 jobs were generated in the formal sector every month until November in the current financial year. Proportionally expanding these trends, India is expected to create seven million jobs in the formal sector in 2017-18.
The academic research is authored by SBI group Chief Economic Advisor, Soumya Kanti Ghosh and Indian Institute of Management, Bangalore professor Pulak Ghosh. The objective of the study was to measure the total workforce or the total individuals on the payroll. This was in contrast to the misleading figures in the Quarterly Employment Survey (QES) conducted by the Labour Bureau. The report suggested gradually moving to a Monthly Payroll Report, similar to the Nonfarm Payroll in the US, measuring the additional job creation in the formal sector.
Data used in the report
The report used primary data from three major sources: Employees’ Provident Fund Organisation (EPFO), Employees’ State Insurance Corporation, and General Provident Fund and National Pension System (NPS). This was done due to a number of factors such as lack of consolidated source to measure employment, the Quarterly Employment Survey (QES) being marred by several limitations such as delayed results, lack of information on unemployment level, lack of response or verification of a productive unit, exclusion of employees in the education sector, among others.
Findings of the report
According to EPFO, 36.8 lakh jobs were created in the Financial Year (FY) 2017-2018 (till November 2017) against the 45.4 lakh in FY17, a period which saw distortions in businesses due to the demonetization. This means 55.2 lakh jobs would be created in the current fiscal year. Among 190 industries, the top 10 sectors—manufacturing and usage of computers, chemicals, textiles, contract engineering, garments, building and construction, trading, general engineering products and expert services—contribute 75% of the total payroll. The report estimates that 5.9 lakh jobs were created every month in the formal sector in the current fiscal year.
This report comes as a vindication for the Narendra Modi-led government amidst the accusations of achieving jobless growth. It is estimated that out of an average of 25 million babies born each year, 15 million gets added to the labour force, a 6.6 million of which is qualified manpower. This negates the findings of the Asia-Pacific Human Development Report 2016, which stated the serious challenges of finding jobs in the Indian job market for the next 35 years.
Suggestions made by the report
As a way forward, this report suggested expanding the monthly payroll report to the informal sector and using the trends to reorient skill development programs. To incentivise the payroll capture, certain suggestions were made. According to the report, it should be mandatory for the professional bodies, hospitals, nursing homes etc. to submit the details of the new joiners every three months to the local government offices. The report also suggested that from April 1, 2018, the government should ask every GST filer to provide the total number of permanent employees and contract employees on the payroll. Some tax deduction (per person) may be given for domestic help if their name and details are registered with tax authorities by the households employing them. Currently, NPS gives extra tax deductions of Rs. 50,000 per annum. The government should continue this incentive and provide new incentives to encourage people to join NPS.
In essence, this empirical study boosts hope for the magnitude of youth in the country who are striving for livelihood and social stability. With a subsequent increase in employment in both the formal and informal sectors, India could get closer to its aim of full employment. Wages would increase too. With a mere percentage of frictional unemployment, we may soon realise the Gandhian ideal of everyone contributing to the economy.
Featured Image Source: Pexels
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