Labour ministry rebuts Citigroup's research report on employment in India

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New Delhi: The labour ministry on Monday rebutted a recent report by Citigroup which forecast that India will struggle to create sufficient employment opportunities even with a 7 per cent growth rate.

The ministry in a statement said the report "fails to account for the comprehensive and positive employment data available from official sources such as Periodic Labour Force Survey (PLFS) and the Reserve Bank of India's KLEMS data."

The recent research report by Citigroup on employment in India, quoted by some of the print and electronic media, forecast that India will struggle to create sufficient employment opportunities even with a 7 per cent growth rate.

Ministry of Labour and Employment strongly rebuts such reports which do not analyse all official data sources available in the public domain, it said.

According to PLFS and RBI's KLEMS data, India has generated more than 8 crore (80 million) employment opportunities from 2017-18 to 2021-22.

This translates to an average of over 2 crore (20 million) employment per year, despite the fact that the world economy was hit by COVID-19 pandemic during 2020-21 which contradicts Citigroup’s assertion of India’s inability to generate sufficient employment.

This significant employment creation demonstrates the effectiveness of various government initiatives aimed at boosting employment across sectors, the statement added.

The Annual PLFS report depicts an improving trend in labour market indicators related to: (i) Labour Force Participation Rate (LFPR), (ii) Worker Population Ratio (WPR) and (iii) Unemployment Rate (UR) for persons of age 15 years and above during 2017-18 to 2022-23.

For instance, the WPR i.e. employment increased from 46.8 per cent in 2017-18 to 56 per cent in 2022-23.

Similarly, the labour force participation also increased in the country from 49.8 per cent in 2017-18 to 57.9 per cent in 2022-23.

The Unemployment Rate declined from 6 per cent in 2017-18 to 3.2 per cent in 2022-23.

The PLFS data shows that during the last 5 years, more employment opportunities have been generated compared to the number of people joining the labour force, resulting in a consistent reduction in the unemployment rate.

This is a clear indicator of the positive impact of government policies on employment, it stated.

Contrary to the report, which suggests a dire employment scenario, the official data reveals a more optimistic picture of the Indian job market, the statement said.

The ministry said that the formal sector employment figures are also being bolstered by government efforts to improve ease of doing business, enhance skill development, and provide incentives for job creation in both the public and private sectors.

The EPFO data suggests that more and more workers are joining formal jobs.

During 2023-24, more than 1.3 crore subscribers joined EPFO which is more than double compared to 61.12 lakh who joined EPFO during 2018-19.

Moreover, during last six-and-a-half years (since September 2017 to March 2024) more than 6.2 crore net subscribers have joined EPFO.

The ministry said that it is well known that the private data sources, which the report/media refers to as more reliable, have several shortcomings.

These surveys use their own derived definition of employment – unemployment which is not aligned to either national or international standards, it said.

The sample distribution and methodology are often critiqued for not being as robust or representative as official data sources like PLFS.

Therefore, it stated that reliance on such private data sources over official statistics can lead to misleading conclusions and thus, should be used with caution.

Further, the ministry said that some authors use data selectively which undermines the credibility of their analysis and does not present an accurate picture of the employment scenario in India.

Such reports fail to consider the positive trends and comprehensive data from official sources, it stated.

The official data sources like PLFS, RBI, EPFO, etc. show consistent improvements in the key labour market indicators, including increased LFPR and WPR, and a declining Unemployment Rate during last five years.

The ministry emphasizes the credibility and comprehensiveness of official data, cautioning against the selective use of private data sources that can lead to misleading conclusions about India's employment scenario.

The government remains committed to creating a robust and inclusive job market, and the evidence suggests substantial progress is being made in this direction, it stated.