More than three million workers joined India's state-run social security fund in six months through February, giving Prime Minister Narendra Modi some ammunition to defend his record on creating jobs ahead of a general election due next year.
A new data series on payrolls released by the Employees Provident Fund (EPF) for the first time on Wednesday, however, gives an incomplete picture of how many new jobs are being created in the non-farm sector. The provisional data showed 472,075 employees were added to the state-run social security fund in February, and 604,557 joined in January, bringing the six-month total to 3.11 million.
"The data shows there was a good increase in jobs every month in the last six months, which will now help fill the missing link for policy-making," said Soumya Kanti Ghosh, chief economist at the country's largest lender, the State Bank of India.
As nearly 15 million join the workforce every year, India still has a long way to go before the world's fastest-growing major economy can cope with the country's demographic bulge.
"Unemployment is a serious issue in India, and we must be worried over the implications," N.R. Bhanumurthy, an economist at the National Institute of Public Finance and Policy, a Delhi-based think-tank, said. Modi won the 2014 election promising to revitalise the economy and create strong jobs growth, but some critics have accused his government of making exaggerated claims over just how well the economy is doing.
India's growth stuttered after the government's decision to take high denomination bank notes out of circulation overnight in late 2016 in a bid to make the country less reliant on cash transactions and flush out money that was being kept out the taxman's sight. The implementation of the introduction of a national goods and services tax last year also knocked growth, and caused some companies to shed jobs.
Since then an upturn in global and domestic demand, along with some deregulation, has helped the economy regather momentum, and it is expected to grow 7 percent in the fiscal year to March next year. To bring more of the vast workforce into the organised sector, Modi this year announced the state would partially cover employers' contributions to the EPF for three years. The government says it will cover an amount up to 12 percent of employees' salaries.
As a result of those incentives, critics say the new data series overestimates job creation in the organised sector as many workers who were previously working on contract have been taken on as staff by the same employers and added to the fund.
The unemployment rate in India nearly doubled in the nine months through March, to hit 6.23 percent, and is like to rise to 6.75 percent, according to estimates from the Centre for Monitoring Indian Economy (CMIE), a private consultancy.
CMIE reckoned the number of jobs actually fell to 406 million in fiscal year just ended, down from 406.7 million in the previous year. In a bid to boost employment, the government has relaxed labour laws to let companies hire workers on a fixed term basis, while raising social security benefits for them. Earlier it was mandatory for employers and employees of companies with 20 or more workers to contribute to the EPF, but the government plans to amend the rules so that companies with 10 or more employees have to open an account with the fund for their workers.
Comments
Comments are closed.