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Job changes in focus for better data on formal employment

The new mechanism will help track people who change jobs to get a picture of formal employment in the country.

, ET Bureau|
Updated: Mar 25, 2019, 06.04 PM IST
The government has stepped up efforts to broaden the base to estimate jobs created in the country.
New Delhi: The government plans to put in place a mechanism to track people who change jobs to get a comprehensive picture of formal employment in the country and the net employment generated.

At present, the monthly data released by the Employees’ Provident Fund Organisation (EPFO) captures new additions and also those who exit or rejoin the system after changing jobs or a gap in employment. However, the reporting of exits and those rejoining is delayed and is not considered reliable.

“The mechanism to count those returning and rejoining is not very strong at present... once in place, it should give more robust figures,” an official told ET on condition of anonymity. “Soon, net employment numbers will also be provided.”

The monthly payroll data being released since April 2018, covering the period from September 2017, has some shortcomings, because of which it is not a clear gauge of new jobs created in the economy.

That’s because only firms with 20 or more employees come under the provident fund net, leaving out a large number of micro, small and medium enterprises. Moreover, EPFO is not mandatory for those with a salary of more than Rs 15,000 a month.

The increase in subscribers could be also because post demonetisation and switch to the goods and services tax regime, formalisation of economy may be happening and the additions may not be new jobs but simply reclassification of informal jobs as formal employment. The latest data shows that the number of EPFO subscribers shot up to a 17-month high of more than 896,000 in January.

The government has stepped up efforts to broaden the base to estimate jobs created in the country in the wake of scathing criticism over the controversial periodic labour force survey report whose leaked draft showed a whopping 45-year high unemployment in 2017-18.

Though some sections of the government have claimed that Mudra loans can be used to estimate employment, the official cited earlier said, “EPFO and Mudra are establishment approach. They review people who are present, not those who are not there.”

The survey and establishment approach need to be reconciled to provide a more robust data, the official said. “The surveys give one picture of employment and these management information systems give another picture. Both should ideally converge at some point of time,” he said.
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