The analysis is full of caveats and requires caution in interpreting the survey results.
Last week, the Ministry of Labor and Employment released the results of a new Quarterly Employment Survey (QES) for April-June 2021 For the organized (formal) sector. It represents establishments (or units) employing ten or more workers. The sectors surveyed were manufacturing, construction, trade, transportation, education, health, housing and restaurants, information technology/business process outsourcing (IT/BPO), and financial services. The survey reported the following. First, “It is heartening to know that the estimated total employment in the nine selected sectors from the first round of QES is 33.8 million, while the total in these sectors is 2 crore and 37 lakh has been taken collectively, as reported. In the 6th Economic Census (2013-14), which shows a growth of 29%. Secondly, the employment fell from 3.078 crores in March 2020 before the first nationwide lockdown to 2.848 crores as on July 1, 2020. Thus, the report showed that 24 lakh jobs lost during the lockdown in 2020 were returned by the first quarter of 2021. .
The new QES is a welcome step as it will help in timely preparation of employment estimates for large units. However, the above analysis is full of caveats and caution is needed in the interpretation of the survey results.
limited coverage
As is widely known, establishments with ten or more workers account for a small proportion of all non-agricultural establishments – a mere 1.66% as per the 2013-14 Economic Census (EC). In addition, a disproportionately large share of workers – 81.3% as per the Periodic Labor Force Survey (PLFS, 2018-19) – work in the unorganized sector. With its limited coverage, QES based on data for formal sector enterprises may not provide a total picture of employment dynamics. Hence, it is only misleading to draw conclusions about the total job losses during the lockdown on the basis of this survey.
Data from the Center for Monitoring Indian Economy (CMIE) showed that 12.1 crore workers lost their jobs during April 2020. Most of these workers were employed informally – there were 9.1 crore job losses among small traders and casual labourers. The official PLFS indicated the extent of the crisis in the labor market during the nationwide lockdown. The unemployment rate in urban areas by current weekly status (i.e. activity status during the seven days preceding the survey date) increased from 9.1% in January-March 2020 (before the lockdown) to 20.8% in April-June 2020.
Importantly, the new QES data suffers from several methodological shortcomings such as an outdated sampling frame, non-comparability of employment numbers obtained from EC-2013 with sample estimates obtained from QES for only a quarter, and the use of Difference information in the methods to be done. We explain these problems below.
Performing a scientific sample survey requires a “sample frame”, i.e. a list of units (e.g., individuals, households, businesses, etc.) in the survey population. Since this list is the basis for sample selection, the frame is of utmost importance for survey design. To create a framework for its enterprise surveys, India has been conducting ECs since 1977, albeit at long and irregular intervals. The most recent was in 2013-14, which QES has used.
The new QES has a sample of about 11,000 establishments. The datedness of the frame implies that the QES does not include units installed after 2013. In addition, the EC-2013 has based on the “Enumeration Blocks” of the Population Census, 2011 as primary geographical units. The outdated nature of the sampling frame, which has been accepted for some time, makes the new QES employment estimates irrelevant.
To understand the origins of QES, the Bureau of Labor (LB) conducted the first such survey in 2009, with a modest sample size of about 2,000 manufacturing units for eight selected labor-intensive and export-oriented industries in 11 states. The survey sought to assess the employment impacts of the global financial crisis and was conducted until December 2015. In April 2016, LB replaced this series with another quarterly series, with a larger sample size and enhanced regional coverage. EC-2013 also served as a sampling frame for this survey. However, this was soon abandoned as the government-appointed Task Force on Reform of Employment Data (2017) recommended doing away with QES based on its limited coverage and outdated sample frame.
Given the above background, the rush to produce a new QES that takes its sample from the EC-2013 frame seems startling. It would have been more prudent to wait for a new updated frame to be released in EC-2020 and campaign for it. QES. In fact, looking at the old structure, it is misleading to draw conclusions about employment change even for the organized sector during the lockdown. It is also worth noting that the QES was primarily a telephonic survey and the responses of establishments have not been verified (as has been the common practice for quarterly surveys of LBs).
Further, it is misleading to compare the employment estimates derived from the new QES for April to June 2021 with the employment numbers based on EC-2013 reported in the first paragraph. The latter is a census, conducted throughout a year to provide a frame. The first is a sample survey conducted with a short reference period. The QES questionnaire asks establishments about employment details for a specific quarter, in this case, April 1, 2021. In contrast, the EC-2013 questionnaire asks establishments about the number of persons working on the last working day. Fieldwork in installation.
conceptual problem
Furthermore, there is a conceptual problem in comparing the employment numbers of EC with that of QES. Although the former asks questions about the number of persons working in an enterprise, it is not a good tool for estimating the size of the workforce or analyzing employment trends as the main objective of the EC is not to estimate employment. Rather, it is to create a framework.
An initiative to generate quarterly employment data for selected industries in the organized sector is desirable. However, in the rush to generate high-frequency estimates, no compromise can be made on the data quality and its reliability. Therefore, the conclusion drawn using the new survey data, as explained in the opening paragraph, is misleading. LB’s hasty attempt has only created (avoidable) confusion and reduced the potential value of QES.
Radhika Kapoor works with the Indian Council for Research on International Economic Relations, New Delhi. Works at R Nagaraja Center for Development Studies, Thiruvananthapuram
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