Not an edifying spectacle.

   By Ravi Shanker Kapoor ,  12-Feb-2019
Not an edifying spectacle.

PM speech on jobs was unconventional in the extreme and didn’t sound convincing.

Prime Minister Narendra Modi’s defence in Parliament of his government’s achievements in employment generation neither covers him in glory nor gives a fillip to our democracy. The kind of facts and figures he quoted to assert that job creation was impressive during his tenure was unusual; it would have been laughable had it not been the Prime Minister making that speech.

A few days before his speech, a draft employment report by the National Sample Survey Organization (NSSO) was leaked to the media, showing that the unemployment rate, at 6.1 per cent, was at a four-decade high. Typically, the report was trashed by government functionaries. 

In his address in Parliament, Modi rightly pointed out that the transport sector employs a lot of people. As many as 36 lakh trucks and commercial vehicles, 1.5 crore passenger vehicles, and 27 lakh new autos have been sold, he said, adding that these numbers didn’t reflect in the job data. “Are these not being utilized or have people bought them to just keep them parked? Do these not create jobs?” He also talked about highway expansion and taxi apps: “Are these driverless cars?”

Further, he said, in the 15 months till November 2018, 1.8 crore people were enrolled in the Employees Provident Fund, almost two-thirds of them below 28 years of age. Similarly, enrollment in the National Pension System (NPS) went up to 1.2 crore employees by October 2018 from 65 lakh. “Isn’t this indication of job creation,” the Prime Minister asked.

While the numbers he blockquoted are correct, this is not the accepted method in which the unemployment rate is calculated anywhere in the world. The International Labor Organization has a clear definition: “The unemployment rate is calculated by expressing the number of unemployed persons as a percentage of the total number of persons in the labor force. The labor force (formerly known as the economically active population) is the sum of the number of persons employed and the number of persons unemployed. Thus, the measurement of the unemployment rate requires the measurement of both employment and unemployment.” 

The ILO describes the unemployed people as “all persons of working age who were: a) without work during the reference period, i.e., were not in paid employment or self-employment; b) currently available for work, i.e., were available for paid employment or self-employment during the reference period; and c) seeking work, i.e., had taken specific steps in a specified recent period to seek paid employment or self-employment.”

The website, www.investopedia.com, also defines the unemployment rate as “the number of unemployed people is divided by the number of people in the labor force, which consists of all employed and unemployed people. The ratio is expressed as a percentage.” The unemployed people are “those who are willing and available to work.”

In other words, there is a fairly well-known method of measuring employment. Therefore, Prime Minister Modi’s speech, aimed at painting a rosy picture about the job situation using unheard of methods, was not a very edifying spectacle.