English Vocab

A Misleading Story of Job Creation

A recent research report titled “Towards a Payroll Reporting in India” authored by the Group Chief Economic Adviser of the State Bank of India and a professor from the Indian Institute of Management, Bangalore has caught the media’s and the Prime Minister’s fancy. Ostensibly (as appears or is stated to be true, though not necessarily so; apparently), the main objective of the report was to make a case for a better payroll reporting system in India, which is perfectly justified and needed. But, along the way, it also made an extravagant claim that 55 lakh new

jobs are created every year in India. Unsurprisingly, the Prime Minister ignored the case for a better payroll system but pounced (to make a sudden approach) on the 55 lakh new jobs number, citing it to claim in an interview that his government is doing a splendid job in creating new jobs. Unfortunately, it is a case of data analysis gone berserk (out of control especially due to extreme excitement). The celebrations are completely unjustified.

Flaws in analysis

How did the report arrive at the 55 lakh new jobs number? It used data from the Employees’ Provident Fund Organisation (EPFO) which registers employees from the formal sector for provident fund benefits. It found that as of November 2017, there were 36.8 lakh new members in the age group of 18-25 years who registered with the EPFO vis-à-vis the previous year. It assumed that any 18- to 25-year-old registering with the EPFO implies that he or she found a new job in the organised sector. It thenextrapolated (to predict by projecting past experience or known data) this November 2017 data to the full year of FY-2018 and boldly claimed that 55.2 lakh new jobs were created in FY-2018.

It doesn’t take much to realise the flaws in this analysis: New 18- to 25-year-old EPFO members do not automatically mean net new jobs in the economy; an informal job that turns formal with an EPFO registration does not mean it is a new job; cherry-picking an EPFO data point and post-demonetisation/Goods and Services Tax (GST) time frames lead to these grossly misleading conclusions.

The Indian economy was subjected to massive external forces of formalisation by the twin forces of demonetisation in FY-2017 and the GST in FY-2018. As we know through numerous surveys, demonetisation resulted in thousands of employersretrenching (to change the way things are done in order to spend less money or reduce (something) in extent or quantity to diminish) a large part of their informal workforce paid in cash and registering the remaining employees as formal workers with benefits such as provident fund. This upheaval (a major change or period of change that causes a lot of conflict, confusion, anger, etc.)) will show up as new formal jobs in the EPFO data set but it does not mean net new jobs were created. The study does not adjust for these effects. This was the phenomenon that played out post-demonetisation in FY-2017.

Next came the GST-induced formalisation in FY-2018. The GST by design was a policy of formalisation of the Indian economy through a networked system of tax credits which could be claimed only if the business was formally registered under the GST. It is then likely that the GST coerced thousands of small and medium businesses in the country to transition at least a part of their workforce from informal to formal employment. The costs of formalisation may have resulted in many firms cutting costs or even shutting down. The EPFO methodology does not capture any of these costs of forced formalisation but merely showcases the new formal employees as new jobs. In other words, if, say, for every five informal employees, four lost their jobs due to the GST and demonetisation and one became formal, this study will count it as one new job created. Instead, the truth would be that four jobs were lost and one job turned formal from informal, not new. Thus, the study conflates (to combine (things, such as two readings of a text) into a composite whole) what could be formalisation gains with new jobs.

It is well-known that when an employee loses her job or stops working, her membership from the EPFO database is not removed automatically. So, the EPFO data set may reflect new additions accurately but not deletions, i.e. job losses. When we talk of new jobs in the economy, we usually mean net new jobs, not gross jobs. So, it is somewhat misleading to claim that the economy has “created 55 lakh new jobs” when we do not know how many lost their existing jobs.

If one had to truly separate out GST- and demonetisation-induced formalisation effects, then the study should have compared the EPFO numbers of FY-2016 and FY-2015. We did exactly that. And what did we find? In FY-2015, the total number of contributing EPFO members grew 7%. In FY-2016, it grew 8%. But after demonetisation, in FY-2017, it grew 20% and by December 2017, it had grown a further 23%. Are we then saying that the Modi government did not produce enough jobs in the first two years but, miraculously, after demonetisation and the GST, there were jobs galore (in large numbers or amounts), as per the same EPFO data set? Cherry-picking data points (EPFO data) and time periods (FY-2017 and FY-2018) are old, time-tested statistical tricks to arrive at fallacious (based on a mistaken belief or deceptive; misleading)conclusions.

Accumulated deposits in banks

Let us understand this with another example. It is generally agreed that growth in total accumulated deposits in banks is an indicator of the robustness of the economy. The total number of deposits in all banks in India was Rs.6.22 lakh crore at the end of FY-2016. By the end of FY-2017, bank deposits had grown to nearly Rs.11 lakh crore, a 76% increase of Rs.4.8 lakh crore. Can we then infer that Indians grew substantially richer in FY-2017 and the overall economy is very robust()? Obviously not because demonetisation forced people to deposit their currency into banks which is why bank deposits grew in FY-2017. Instead, if we combine the value of currency and bank deposits and compare, we find that there is actually a 5% decline in FY-2017, not a 76% increase! So, if we cherry-picked just bank deposits as a data point and chose the time frame as FY-2017, we could have shown that Indians had become inordinately richer. That does not mean it is true. This is what the EPFO study does in making a case for 55 lakh new jobs in FY-2018. It neither accounts for job losses nor adjusts for induced formalisation. It is patently false and misleading.

India’s jobs situation is a very grim challenge that must be acknowledged, confronted (to deal with (something, such as a problem or danger) and for which we must debate solutions. All evidence, confirmed by both governmental agencies and analysis by independent organisations like the Centre for Monitoring of Indian Economy and well-known labour economists, have clearly demonstrated how growth in new jobs (formal and informal) has slowed down dramatically. A serious issue such as lack of jobs for millions of youth cannot be wished away by hiding behind misleading data analysis and a media spin.

Courtesy-The Hindu (National)

1. Ostensibly (adverb): (As appears or is stated to be true, though not necessarily so; apparently.) (प्रत्यक्ष तौर पर, जाहिर तौर पर)

Synonyms: Evidently, Apparently, Presumably, Putatively, Seemingly, Supposedly

Antonyms: Implausibly, Impossibly, Improbably, Incredibly

Example: Ostensibly, the surveillance cameras have been installed for our protection, but we believe management uses them to monitor our daily activities.

Related words: Ostensible (adjective)

2. Pounced (verb) : (To make a sudden approach) (कूदना , उछलना ,अचानक दृष्टिकोण बनाना)

Synonyms: Swooped, Lunged, Plunged, Devolve, Elude

Antonyms: Nostalgic, Effortless, Dormant, Recoil

Example: Most predators wait to pounce until they are sure their prey isn’t paying attention.

Verb forms: Pounce, Pounced, Pounced

Related words: Pouncingly (adverb) Pouncer (noun)

3. Berserk (noun) : (Out of control especially due to extreme excitement.) (बेकाबू,अस्त-व्यस्त, आपे से बाहर)

Synonyms: Involute, Frantic, Crazy, Amuck, Bonker, Hysterical

Antonyms: Composedly, Placidly, Calmly, Sane, Tranquil

Example: The media went berserk, talking about how the values like freedom of expression were being compromised by some fanatics.

Related words: Berserkly (adverb) go berserk (phrase)

4. Extrapolated (verb) : (To predict by projecting past experience or known data) (अनुमान से निर्णय करना)

Synonyms: Conclude, Decide, Deduce, Derive, Infer, Make Out, Conjecture

Antonyms: Certainty, Ascertain, Cast Up

Example: We can extrapolate the number of new students entering next year by looking at how many entered in previous years.

Verb forms: Extrapolate, Extrapolated, Extrapolated

Related words: Extrapolation noun, Extrapolative adjective

5. Retrenching (verb) : (To change the way things are done in order to spend less money or reduce (something) in extent or quantity to diminish ) (अल्प-व्यय करना, कमकरना, घटाना)

Synonyms: Diminishing, Shortening, Curtailing

Antonyms: Accumulation, Aggregation, Hoard, Conglomeration

Example: In this turbulent economy, many businesses are having to retrench and cut down on spending.

Verb forms: Retrench; Retrenched; Retrenched;

Related words: Retrenchable (adjective) Retrencher (noun)

6. Upheaval (noun): (A major change or period of change that causes a lot of conflict, confusion, anger, etc.) (उथल-पुथल, घोर परिवर्तन)

Synonyms: Disturbance, Bouleversement, Cataclysm, Paroxysm, Tempest, Tumult,

Antonyms: Stagnation, Harmony, Consonance, Equanimity

Example: The upheaval caused by the unexpected closing of the discount store left many workers without salaries to feed their families.

7. Conflates (verb) : (To combine (things, such as two readings of a text) into a composite whole) (सम्मिश्रित)

Synonyms: Confound, Aggregates, Conjugates, Modulate

Antonyms: Cleave Disunite, Rupture, Sunder; Disperse, Dissolve, Scatter; Detach, Disengage, Split

Example: The movie conflates documentary footage and dramatized reenactments so seamlessly and ingeniously that viewers may not know what is real and what is not

Verb forms: Conflated; Conflated; Conflated;

Related words: Conflation, (noun)

8. Galore (adjective) : (In large numbers or amounts) (बहुतायत में, अधिकता, प्रचुरमात्रा में)

Synonyms: Copious, Profuse, Gushing, Lavish, Riotous

Antonyms: Meager, Niggardly, Scant, Sparse, Stingy; Deficient

Example: Since your hotel is surrounded by restaurants galore, you should have no problem finding a decent meal.

Related words: Galore adverb, galore determiner ((immediately postpositive) in great numbers or quantity)

9. Fallacious (adjective): (Based on a mistaken belief or deceptive; misleading) (ग़लत,तर्कहीन, मिथ्या)

Synonyms: Illogical, Inconsequent, Faulty, Flawed, Inaccurate, Imprecise, Irrational,

Antonyms: Logical, Rational, Reasonable, Valid, Well-Founded, Justified

Example: The huge fallacy of the proposed budget is the government’s inability to come up with the necessary funds.

Related words: Fallaciously (adverb) Fallaciousness, Fallacy (noun)

10. Confronted (verb) : (To deal with (something, such as a problem or danger) (सामना करना)

Synonyms:  Brazen, Face, Dare, Defy, Outbrave, Outface

Antonyms: Dodge, Duck, Funk, Shirk, Sidestep

Example: My mother said she used to be afraid to confront those who hurt her feelings.

Verb forms: Confront, Confronted, Confronted

Related words: Confrontal, Confronter (noun)