07 Oct Employment Estimation as per new Quarterly Employment Survey and the Issue (GS 3, Economics, The Hindu, Indian Express)
Context: The Ministry of Labour and Employment recently released the Quarterly Employment Survey (QES) for April to June 2021 for the formal/ organised sector. The establishment or units employing ten or more workers, in the field of nine sectors of education, health, construction, manufacturing, trade, Information-Technology/ Business processing outsourcing (IT/BPO), financial services, accommodation and restaurant, were surveyed.
Findings of QES: It has reported a 29% growth in employment in the said nine selected sectors from the 2013-14 sixth economic census. The report showed that 24 lakh jobs lost during lockdown came back by the first quarter of 2021.
Issue in report: The report of the survey is welcome. But the interpretation and analysis of the survey calls for caution. Coverage in the report is limited. The share of establishment with workers 10 or more is very small. Especially for non-agricultural establishments, Which was just 1.6% as per the economic census 2013-14. It is worth mentioning here that a large share of workers, 81.3% as per the Periodic Labour Force Survey (PLFS) 2018-19, worked in the unorganised sector which is not covered. Thus with its limited coverage, the employment data of the organised sector, published in QES cannot provide an overall picture of the present employment situation of the country. Drawing inferences from this report regarding the overall job losses during lockdown and job recovered post lockdown would be misleading.
The official PLFS report indicated the extent of distress in the labour market during the nationwide lockdown. More than 12 crore workers lost their jobs in April 2020 as per the data from the Centre for Monitoring Indian Economy. Most of those who lost their jobs were from informal sectors like small traders and casual labours.
The unemployment rate as per the current weekly status in urban areas increase from 9.1% in January-March 2020 (before lockdown) to 20.8% in April-June 2020. The current weekly status counts the employment active status during seven days preceding the survey date.
We can notice other shortcomings in the methodology of comparing the employment data published in the new QES with Economic Census 2013-14. QES is for one quarter while Economic Census 2013-14 was for one year. Sample frame ( i.e. list of units, persons, households businesses etc. in the survey population) is a must for conducting a scientific Sample Survey.
The basis of sample selection is of utmost importance for the survey design. The sample frame used is employment estimate renders it outdated which makes it irrelevant
The most recent sample frame we have is of 2013-14 which the new QES has used. Hence the new QES has not included the units setup after 2013.
In addition, there is a conceptual problem in comparing employment numbers of the EC with the QES. Although the former asks questions about the number of persons working in an enterprise, it is not a good instrument for estimating the size of the workforce or for analysing employment trends as the principal objective of the EC is generating a frame, not estimating employment.
On the pretext of the global financial crisis of 2008 the Labour Bureau conducted the first survey in 2009 selected export-oriented And Labour-intensive industries in 11 States. The sample size was small taking 2000 manufacturing units. The survey was conducted till December 2015. In April 2016 the Labour Bureau replaced this series with another quarterly series, Which had better sectoral coverage and larger sample size.
The EC2013 served as the sampling frame for this survey, too. However, it was soon abandoned as a government appointed Task Force on Improving Employment Data (2017) recommended doing away with the QES on grounds of its limited coverage and an outdated sample frame. Given the above background, the rush to produce a new QES that draws its sample from the EC2013 frame seems baffling. It would have been more prudent to await the release of a newly updated frame in the EC2020 and then canvass for the QES.
Way Forward: It is desirable to produce employment data quarterly for selected industries in the organised sector. a more scientific methodology is required to estimate the employment data of the unorganised sector as well. However, in a rush to produce estimates there cannot be compromise on the quality of data and its reliability. The comparison of the two data should be logical and scientific, which we are not witnessing in the new Quarterly Economic Survey. It can undermine the potential value of QES and will lead to wrong inferences. .
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