Context

• The discourse around employment in India has become a contentious issue, with conflicting reports and statements from various sources contributing to public confusion.
• Recently, the Prime Minister cited a Reserve Bank of India (RBI) report claiming the creation of 8 crore jobs over the past 3-4 years, countering opposition claims of high unemployment.
• However, contrasting reports from financial institutions and data-gathering agencies paint a different picture, highlighting the complexities and discrepancies in employment data.

Conflicting Reports and Statements

• PM’s assertion was based on the RBI's 'India KLEMS Database,' which details methodologies and measures of productivity, including labour employment.
• The State Bank of India (SBI) also supported this narrative, stating that 8.9 crore jobs were created in manufacturing and services between FY14 and FY23.
• However, the Centre for Monitoring Indian Economy (CMIE) reported an unemployment rate of 9.2% in June 2024, up from 7% the previous month.
• This discrepancy between official and independent reports underscores the ongoing debate over the true state of employment in India.

An Analysis of Ground Realities of Unemployment in India and Discrepancies in Data

• Massive Turnout for Job Examinations
  • One of the stark indicators of the unemployment crisis in India is the overwhelming number of applicants for limited government job vacancies.
  • In February, approximately 47 lakh applicants appeared for an exam to fill around 60,000 constable positions in Uttar Pradesh.
  • This staggering ratio of applicants to available jobs underscores the desperation among job seekers and the fierce competition for stable employment.
  • Similarly, in 2022, the Railway Recruitment Board's Non-Technical Popular Categories (NTPC) exam attracted 1.25 crore applicants.
  • The large number of aspirants for a limited number of positions highlights the scarcity of job opportunities in the public sector, traditionally seen as offering more job security and benefits compared to the private sector.
• Protests and Discontent
  • Public protests have also been a significant manifestation of the unemployment crisis.
  • The announcement of the Agnipath scheme in 2022, which proposed short-term recruitment for the armed forces, led to widespread unrest in states like Bihar and Uttar Pradesh.
  • Young people took to the streets, expressing their frustration over the lack of permanent job opportunities and the perceived instability of the proposed scheme.
  • These protests not only reflect the discontent among job seekers but also the broader societal implications of inadequate employment policies.
• Discrepancies in Employment Data
  • The conflicting reports and data sources further complicate the understanding of the true state of unemployment.
  • The official data often paints a rosier picture, citing significant job creation and low unemployment rates.
  • However, independent agencies like CMIE report higher unemployment rates, suggesting a disconnect between official narratives and ground realities.
  • The differences in data collection methodologies and definitions of employment contribute to these discrepancies.
  • For instance, the Periodic Labour Force Survey (PLFS) includes individuals who may not be earning an income but are engaged in some form of work, while the CMIE adopts a stricter definition, counting only those earning an income from work as employed.
  • This fundamental difference results in significantly divergent employment figures.

The Plight of Educated Youth and Its Social and Economic Implications

• The Plight of Educated Youth
  • The situation for educated youth is particularly dire. Despite holding degrees and qualifications, many young people struggle to find suitable employment.
  • The high turnout for exams and the subsequent protests indicates that even those with higher education are not immune to the challenges of the job market.
  • This is especially concerning given that the educated youth are expected to be the drivers of India’s demographic dividend – the economic growth potential that results from shifts in a population’s age structure.
  • The frustration among educated youth is compounded by the mismatch between their qualifications and the available job opportunities.
  • This situation not only wastes potential talent but also demoralises the youth, who see little return on their educational investments.
• Economic and Social Implications
  • The high levels of unemployment and underemployment have significant economic and social implications.
  • Economically, the inability to find gainful employment limits individuals' purchasing power, stifling consumer demand and hindering economic growth.
  • It also leads to a loss of potential tax revenue for the government.
  • Socially, the frustration and disillusionment among the youth can lead to increased crime rates, social unrest, and mental health issues.
  • The protests following the Agnipath scheme announcement are a testament to the potential for unrest when a significant portion of the population feels neglected and hopeless.

 The India KLEMS Data, The Complexity of Indian Employment Data and Discrepancies Between PLFS and CMIE Data

• The India KLEMS Data
  • The KLEMS data, frequently cited in recent debates, is designed to measure productivity growth in the Indian economy.
  • It relies on official sources like the Employment and Unemployment Surveys (EUS) and the Periodic Labour Force Survey (PLFS).
  • However, KLEMS does not independently estimate employment, raising questions about its reliability as an employment metric.
  • This discrepancy points to potential misinformation in the briefings provided to Prime Minister Modi.
• The Complexity of Indian Employment Data
  • The variations in employment estimates arise from the complex structure of the Indian economy, which includes a large unorganised sector employing 94% of the labour force.
  • Reliable data for this sector is scarce, complicating efforts to accurately measure employment.
  • The absence of recent census data and outdated Urban Frame Survey (UFS) information further exacerbates this issue.
  • The period from 2016 to 2024, marked by significant economic shocks like demonetization, GST implementation, and the COVID-19 pandemic, has further complicated data accuracy.
  • These events disproportionately affected the unorganised sector, making pre-shock data unreliable for current estimates.
• Discrepancies Between PLFS and CMIE Data
  • Differences in employment estimates also stem from varying definitions of employment.
  • The PLFS, an official data source, counts individuals as employed even if they do not earn an income from their work, including those engaged in free labour or non-income-generating activities.
  • In contrast, CMIE adheres to the International Labour Organization (ILO) definition, counting only those who earn from their work as employed.
  • This fundamental difference results in significantly lower labour force participation rates reported by CMIE compared to PLFS, leading to a discrepancy of about 90 million individuals.

Way Forward

• Addressing Discrepancies and Improving Data Collection: Addressing these discrepancies and improving data collection methodologies is crucial for formulating effective employment policies and mitigating growing frustration among job seekers.
• Need for Action on Employment Issues: Admitting and acting on these issues, rather than denying them, is essential for addressing the employment crisis in India.

Conclusion

• The debate over employment in India highlights the challenges of obtaining accurate and reliable data in a complex and rapidly changing economic environment.
• Conflicting reports from various sources reflect differing methodologies and definitions, contributing to public confusion.
• While official narratives may present an optimistic view of job creation, ground realities suggest that unemployment remains a pressing issue, particularly for the youth.