Making Sense of ‘Payroll’ Data

A new untested method to measure formal sector employment, which goes against trends shown by an array of well-established sources of employment data, is being promoted by this government to further its own interest. On 25 April 2018, the Employees’ Provident Fund Organisation (EPFO), the Employees’ State Insurance Corporation (ESIC), and the Pension Fund Regulatory and Development Authority (PFRDA) released data on formal employment based on “payroll” reporting. The data was released a fortnight before the crucial Karnataka assembly elections, quite similar to the release of a report in January, a fortnight before the union budget. The study used administrative records from the EPFO, ESIC, and National Pension Scheme (NPS). The Prime Minister and finance minister used these estimates to confirm their claim of creating seven million new jobs in the economy in 2017–18 and to deflect attention from the fact that the economy has not been creating enough employment despite claims of high economic growth.

To reiterate what was pointed out after the January release: the estimates only measure the extent to which workers are availing social security provisions. Some of these are voluntary such as the ESIC, and some are mandatory such as the EPFO. The NPS is mandatory for central government employees, but voluntary for some state government and private sector employees. Even EPFO enrolment is mandatory only for enterprises that meet certain criteria.