Over two sessions in New Delhi and Mumbai this month, TeamLease chairman Manish Sabharwal explained to The Indian Express editors Harish Damodaran and Shaji Vikraman the issues in the jobs scenario in India, for today and for tomorrow.
Understanding ‘jobless growth’ in India
If you take into account the official household survey data of the government, 29% of Indians work for an enterprise with more than nine employees. [But] if you take the official enterprise survey data, only 1.5% of enterprises say they have more than nine employees. So this is not a reconciliation problem, it is an existential issue. So many of us are troubled by the 20-year-old Arjun Sengupta Report (on ‘Conditions of Work and Promotion of Livelihoods in the Unorganised Sector’, prepared by the National Commission for Enterprises in the Unorganised Sector), which says that only 30 million people in India are formally employed. There are 47 million provident fund payers in India, 30 million de-duplicated ESI payers, and about 30 million government employees. And there are another 20 million recurring NPS payers in India. That’s 125 million. So that is 25% of the labour force.
Capturing the right picture through data
Survey data and administrative data always give different figures across the world. Survey data in India has been weak, largely because of the incorrect frame that has been used. Although I believe we need to improve our survey data [collection system], we also need to give some recognition to administrative data. Provident fund is somebody putting in cash every month. That is formal employment. ESI is cash going in. So I would say we are at about 25% formal employment already. And I think that’s an important sort of change that has not happened today, but in the last three years. Nearly 30 million people have been added to the formal sector. Now are they new jobs, or are they new formal jobs, that’s a different debate. To my mind, the fundamental question people need to answer is, “does India have a jobs problem, or a wages problem?”
Why India’s problem is wages, not jobs
You need to decide whether India’s official unemployment rate of 4.9% is a fudge. I don’t believe it’s a fudge. I believe everybody who wants a job has a job. They don’t have the wages they want or need. The diagnosis of the problem is important because if India has a jobs problem, you’ll have to throw money from helicopters, and mandate a three-day work week.