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LATEST NEWS UPDATES | What does corporate data tell us about job growth in India? -Tadit Kundu and Pramit Bhattacharya

What does corporate data tell us about job growth in India? -Tadit Kundu and Pramit Bhattacharya

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published Published on Mar 20, 2018   modified Modified on Mar 20, 2018
-Livemint.com

Corporate job growth has recovered over the past couple of years but the pace of job creation remains lacklustre

The promise of creating new jobs helped Narendra Modi and his Bharatiya Janata Party (BJP) win a historic victory in the 2014 general elections. With a year left for the next general elections, Modi and his government find themselves under fire from opponents for what they perceive to be a failure to live up to that promise.

The debate on job creation in the country has been handicapped because of lack of regular and credible data. While several new job surveys are currently underway, and their results will likely be known a few months down the line, they are not likely to be comparable to previous surveys because of methodological differences.

One way to examine trends in job growth is to look at corporate and industrial data to figure out how many employees companies and industrial units are recruiting. A Mint analysis of corporate data sourced from the ProwessIQ database of the Centre for Monitoring Indian Economy (CMIE) suggests that while corporations have been creating new jobs, the pace of job creation has been lacklustre over the past few years.

The ProwessIQ database consists of records of over 27,000 Indian firms (listed and unlisted) but the number of firms for which employee data is available over the past few years is very small. To get around this problem, we consider a two-year rolling sample of firms for which records are available for two successive years. The average sample size for the past decade, based on this methodology, is 1,360 firms. For the latest year— fiscal year 2017 (FY17)—our sample includes more than 2,000 firms, which collectively employ nearly 6.4 million employees.

The data shows that corporate jobs grew at an average annual pace of 4% between fiscal year 2006 and fiscal year 2009. The shock of the global financial crisis led to a sharp slowdown, with job growth slowing to 2% in fiscal year 2010 before recovering sharply to grow at 5% in fiscal year 2011. However that recovery, much like the recovery in India’s economic engine, was short-lived. The pace of job creation was less than 1% in fiscal year 2013 and a little above 1.5% in fiscal year 2014. Fiscal year 2015 actually saw a contraction in jobs, after which there has been a slow recovery. However, the pace of job creation over the past couple of years—at roughly 2% per annum—is significantly lower than the pace of job creation in the 2006-11 phase.

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Livemint.com, 20 March, 2018, http://www.livemint.com/Companies/CU8tCJi5Qsk1JIY0OOnQFN/What-does-corporate-data-tell-us-about-job-growth-in-India.html


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