More than unemployment numbers, shrinkage in purchasing power worrying – The Economic Times

Clipped from: https://economictimes.indiatimes.com/opinion/et-commentary/view-more-than-unemployment-numbers-shrinkage-in-purchasing-power-worrying/articleshow/86621294.cmsSynopsis

With purchasing power going down significantly, rebooting the consumer-based structure is going to be a difficult task. All these assumptions need serious calculations based on government records, for which this survey is a step in the right direction.

Yashwant Deshmukh

Yashwant Deshmukh

Founder editor, CVoterManu Sharma

Manu Sharma

Senior editor, CVoterUnemployment, inflation and corruption constitute the trifecta of India’s political economy. Governments form and fall based on their performance on these key variables. The UPA government ran high consumer price inflation since 2007, topping out at nearly 12% in 2010. It also suffered an intense negative perception in terms of corruption. These two issues sank its fortune and paved the way for the NDA government in 2014.

Barring inflation, the debate around corruption and unemployment has always stood hamstrung by the lack of high-frequency data. Since corruption is an incredibly tough and subjective metric to cover, there are no standardised solutions available to measure it other than public opinion measures. On that benchmark, the present government has little to worry. But 2015 onwards, CVoter’s India Tracker has consistently shown ‘unemployment’ as the biggest public concern.

GoI’s Labour Bureau’s first Quarterly Employment Survey (QES) findings released on Monday, as part of the larger All-India Quarterly Establishment-based Employment Survey (AQEES), are supposed to construct all-India employment figures based on QES, covering establishments with 10 or more employees, along with the Area Frame Establishment Survey (AFES) for establishments with less than 10 employees. Together, these two surveys shall present a holistic picture of employment in the country.

Purely from a data standpoint, there are two key reasons for creating this series. One, existing data from economic censuses or other sources are patchy in terms of frequency and granularity. The data is not collected to a sufficient depth, and if it is, then it may not have the requisite frequency. A dedicated timely exercise removes that ambiguity.

Two, the data on the demand side of employment can be more objective. For example, data generated from family or other private surveys may be unable to differentiate gainful employment from subsistence activities. So, this data series will help enhance our knowledge of employment in the economy at a more granular level, on a stable frequency basis and with a demand-side perspective built into it. In other words, the attempt is to create a dependable time series of employment data that will aid evidence-based policymaking and policy debates alike.

The Inflation Punch
As for unemployment itself, CVoter’s Covid Tracker did reflect the red line of unemployment shooting up alarmingly after 2020 Covid-instigated lockdowns last year. Over the last 12 months, however, that spike has slowed and held steady. The concern is not about people unable to get back to their jobs, but the drop in earnings and salaries in the face of rising inflation.

Inflation doesn’t hit the aam aadmi or aurat if his or her earnings are rising in tandem. However, an alarmingly large number of households have had their incomes going down while their expenditures going up in the last 12 months. This inversely proportional equation is the foundation of all the distress signals the middle classes are throwing up.

Non-farm organised sector employment has risen from a base of 2.37 crore in 2013-14, according to the Sixth Economic Census, to 3.08 crore. This indicates a growth of 29% in overall organised sector employment. According to some, this is underwhelming, while others may treat it at par. However, this data is not final. The report itself mentions that this employment data does not capture the employment generated by establishments that emerged post-Sixth Economic Census of 2013-14. We need the survey exercise to mature before making definitive policy calls.

The survey is based on a fixed panel of 12,000 units taken from nine sectors of the economy that collectively represent 85% of employment generated in the formal sector. The establishments were further delineated into six categories based on the number of employees. Further, each state or Union territory was given a sample allocation proportional to the number of a given sized establishments belonging to it. Therefore, prima facie, this data survey meets the standards of contemporary sampling, and is comparable to similar government exercises.

In a sensationalism-driven world, technical nuances fall prey to quick-fire analysis. For example, according to this survey, the female participation in organised sector fell by 2% from 31% in the Sixth Economic Census, to 29% in the current survey. Or that maximum employment growth of 152% was registered in the IT-BPO sector. But what do these numbers portend? Answer: direction. All survey exercises are geared to throw estimates. So, any survey is bound to throw up the rough trend of things even in the most adverse surveying circumstances, bar a catastrophic failure in implementing the correct methodology.

What’s Consuming Us
Hence, when the current survey tells us that 81% workers received full wages during the lockdown period of March-June 2020, we can reasonably be sure that an overwhelming majority of organised sector workers were, indeed, paid full wages.

On the downside, the survey indicates that nearly 27% establishments underwent layoffs due to Covid-19. It can be, thus, concluded that about 1/4th of the organised sector saw layoffs.

The CVoter Covid Tracker captures another important layer of public data that says it managed to retain their jobs or work, but with a significant cut in salary or income. This is precisely the block that is complaining the most about inflation. With purchasing power going down significantly, rebooting the consumer-based structure is going to be a difficult task. All these assumptions need serious calculations based on government records, for which this survey is a step in the right direction.

Deshmukh is founder editor, and Sharma is senior editor, CVoter

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