IGI Logo

Another bid at filling the labor data lacuna

* The new quarterly enterprise survey (QES) depicts 29% employment growth since FY14; however, on a CAGR basis, it is low at 3.7%- albeit still higher than estimated long-term employment growth of sub 2%. Against our estimated numbers, employment reached pre-Covid levels as of Apr’21, barring construction and trade sectors. Employment fell 7% in lockdown-1.

* The labor structure depicts that female share in workforce has fallen marginally since FY14, while casualization of labor has increased. The effect of Covid-19 may have accentuated this.

* While it lacks historical perspective, the QES series will be more useful in the future for comparison in successive quarters. The government is in process to add more labor surveys covering unorganized sector as well. Reconciling various public and private labor surveys is challenging amid non-comparable processes. However, most depict some slack in labor market

* But despite several private and public demand and supply-side labor surveys, we still have a long way to go to plug the data gap on various aspects of labor and employment, which could aid evidence-based policy making processes.

What is the new quarterly enterprise survey?

The newly conducted establishment survey - Quarterly Enterprise Survey (QES) with sample of 12,000 enterprises, captures the demand side of the labor market. This covers mostly organized companies with more than 10 employees in nine sectors, as identified by the 6th Economic Census (EC 2013-14) encompassing 85% of EC’s selected sector – for Apr-Jun’21 period. QES-1 will act as a relative base to successive rounds of QES to gauge changes in employment.

A similar QES was conducted between 2016 and 2017 (with EC 2013-14 as identification base) but it was discontinued later due to coverage and quality issues. The QES assesses firms’ take on job hiring, no. of vacancies, wages, ability to find right talent, retrenchments, composition of workers, skill development, etc.

What does the new QES show?

* Employment level: The nine sectors together employed 30.8mn workers during Apr-Jun’21 vs. 23.7mn in EC, implying 29% employment growth since FY14. IT/BPO saw the most impressive growth (152%), followed by Health (77%), Education (39%) and Finance (48%), whereas Trade (-25%) and Hotel & Restaurant (-13%) saw a decline.

* Employment composition: The Manufacturing sector employed 41% of estimated labor force, followed by Education (22%), Health (8%) and Trade and IT/BPO 7%. No comparison against EC on the composition of employment was given.

* Labor structure: Nearly 90% of the establishments have been estimated to have fewer than 100 workers, close to EC in FY14 (95%). The overall share of female in workforce fell slightly to 29% in 2021 (largely in healthcare/education sector) from 31% in EC. Casualization of labor seems to have increased vs. EC (those samples not comparable), with regular workers at 88% of the estimated employed force while casual labor at 0.8% vs. 0.4% in EC.

* Hiring status: The maximum vacancies are seen in IT/BPO and manufacturing, with 33% of establishments reporting resignation and around 28% giving retirement as the reason for vacancies. 29.7% stated non-availability of requisite skilled workers as the reason for not filling up vacancies – depicting the skill gap.

First Covid lockdown saw 7.5% fall in employment; currently 0.6% above pre-Covid

A subset of the survey questionnaire focused on labor market conditions during the first Covid lockdown.

* There was a 7.5% fall in employment between Mar’20-end and Jun’20-end, with a fall seen in 27% of establishments surveyed. The job losses were across the board, with contact-sensitive (hotels & restaurants) and industrial sectors (construction, manufacturing) facing severe pain, while financial services firms were the least impacted. On estimated basis, health care sector had the highest proportion of establishments (7%) which added jobs during the lockdown period.

* Almost 90% workers received full wages in the first lockdown, mostly in the health care and finance sectors. Construction firms and restaurants reported the highest percentage share of employees receiving no pay in the first lockdown.

Comparing with our estimated employment levels as of Apr’21 as per QES sectoral proportions, we saw: (1) employment may have recovered almost 9% since Jun’20-end (or beginning of unlock-1), led by the same sectors which lost the sheen during the peak of Covid-1; (2) However, employment levels have just reached the pre-Covid levels in Apr’21, with construction, trade, etc. still below pre-Covid levels, showing economic slack.

To Read Complete Report & Disclaimer Click Here

For More  Emkay Global Financial Services Ltd Disclaimer http://www.emkayglobal.com/Uploads/disclaimer.pdf & SEBI Registration number is INH000000354

Above views are of the author and not of the website kindly read disclaimer