A small recovery in the labour force holds out a hope

by Mahesh Vyas

The September-December 2017 Wave of CMIE’s Consumer Pyramids Household Survey concluded on December 31. During a Wave, the entire sample (168,161 households in the present case) are surveyed over a four month period. The survey just completed took observations of the employment/unemployment status of 436,000 individuals from the sample households, who were of 15 years of age or more as of the date of the survey.

Estimates derived from this data-set are the most robust.

The final estimates of employment / unemployment based on this survey became available on January 15. A complete statistical profile with state-level rural-urban details is available on https://unemploymentinindia.cmie.com/. The same site also provides all the past statistical profiles as well. In all, there are six profiles corresponding to six Waves of data since January 2016 produced under the BSE-CMIE partnership.

The months September through December are part of the busy season in India. This includes the period of kharif harvesting and also the period of most important festivals in India. Economic activity is therefore elevated during these months compared to other months of the year. Besides agriculture harvest, expectations of higher spending by households also leads to increased activities in the foods, garments and retail trade industries during these months. As a result, employment is generally expected to be the highest during these months.

As expected, employment during the September-December 2017 period was 0.58 million higher than it was in the preceding Wave of May-August 2017. It was also slightly higher than its level during January-April 2017. This higher employment during September-December reflects the seasonality of employment in India.

If we remove the effect of seasonality by comparing the employment level during September-December 2017 with the same months of 2016, we see a fall in employment, of a substantial 1.37 million.

But, merely comparing values of similar months while measuring change does not give a complete understanding of change. A year-on-year-ago comparison merely makes a comparison over like months. But, the change that we measure over these two periods is in fact the cumulative effect of several changes that happened during the course of the year.

For example, the 1.37 million loss of jobs mentioned above did not happen during September-December 2017. It happened over the entire period of a year. In fact, 1.37 million is a summary measure of the fall in employment over a year that comprises of a 1.54 million fall during January-April 2017, then a 0.42 million fall during May-August 2017 and finally a 0.58 million increase during September-December 2017.

Changes are best seen over the preceding period. For example, ideally we should compare employment in the September-December 2017 Wave against employment during the previous Wave which was May-August 2017. But, this would require the data to be de-seasonalised which, is possible only when there is sufficiently long time-series of data to conduct what statisticians call the de-composition of a time-series into its seasonal, trend and random components.

While employment increased by 0.58 million during September-December 2017 compared to the preceding four months, it had grown by a much larger 3.4 million during September-December 2016 compared to its preceding four months. This is a comparable and useful comparison. Here, data shows that the increase in employment seen this year is significantly lower than the increase recorded in a similar period last year.

While this is disappointing, there are other statistics that are encouraging. For example, the Labour Force increased by 5.1 million. While employment increased by 0.58 million, the count of unemployed increased by 4.5 million. Although most people who thronged the labour markets did not find jobs, it is a good sign to see labour returning to the jobs markets. This is because before this, the labour force shrunk relentlessly for an entire year. As a result, in spite of the 5.1 million increase in the labour force during September-December 2017, it was 10 million lower than the level a year ago.

Hopefully, the small recovery in the labour force and employment seen in the September-December 2017 Wave will gather momentum in the coming Waves.

Another encouraging statistics is that for the first time the number of persons who were unwilling to work declined - by 6.2 million. This count had always increased so far. Correspondingly, there is an increase in the count of people willing to work.

If a much greater number of people have expressed a willingness to work then it reflects a hope that must have risen from somewhere that jobs will become available. The challenge is to find the corresponding jobs for these aspirants.

First Published in Business Standard Link

Unemployment Rate
Per cent
5.9 -0.0
Consumer Sentiments Index
Base September-December 2015
92.6 0.0
Consumer Expectations Index
Base September-December 2015
91.9 0.0
Current Economic Conditions Index
Base September-December 2015
93.7 0.0
Quarterly CapeEx Aggregates
(Rs.trillion) Mar 17 Jun 17 Sep 17 Dec 17
New projects 4.06 2.14 1.23 1.12
Completed projects 1.96 0.86 1.05 0.93
Stalled projects 0.74 2.67 0.67 0.93
Revived projects 0.86 0.30 0.29 0.23
Implementation stalled projects 0.33 0.69 0.73 0.58
Updated on: 24 Feb 2018 8:20PM
Quarterly Financials of Listed Companies
(% change) Mar 17 Jun 17 Sep 17 Dec 17
All listed Companies
 Income 10.2 9.7 7.9 11.9
 Expenses 11.9 10.0 9.0 12.9
 Net profit 16.4 -19.8 -16.8 -12.4
 PAT margin (%) 6.0 5.3 5.7 5.0
 Count of Cos. 4,474 4,463 4,442 4,291
Non-financial Companies
 Income 11.8 10.3 7.7 12.7
 Expenses 15.6 10.6 7.5 11.7
 Net profit -2.2 -25.2 -4.2 13.2
 PAT margin (%) 6.1 5.2 6.4 6.6
 Net fixed assets 6.9 9.2
 Current assets 2.7 78.8
 Current liabilities 8.9 11.0
 Borrowings 4.9 10.5
 Reserves & surplus 6.1 5.2
 Count of Cos. 3,457 3,447 3,421 3,335
Numbers are net of P&E
Updated on: 24 Feb 2018 8:20PM
Annual Financials of All Companies
(% change) FY14 FY15 FY16 FY17
All Companies
 Income 10.0 5.4 1.5 6.8
 Expenses 9.9 5.5 1.7 7.1
 Net profit -2.5 0.3 -12.9 22.1
 PAT margin (%) 3.1 3.1 2.8 5.3
 Assets 12.3 9.5 10.1 8.3
 Net worth 9.7 8.5 11.7 7.4
 RONW (%) 6.1 5.9 4.9 7.9
 Count of Cos. 24,633 24,657 22,529 10,919
Non-financial Companies
 Income 9.7 4.6 0.6 6.7
 Expenses 9.4 4.8 0.0 7.6
 Net profit -3.1 -8.1 13.2 15.9
 PAT margin (%) 2.2 2.0 2.5 4.9
 Net fixed assets 11.7 13.3 17.4 7.2
 Net worth 8.3 6.9 12.4 5.4
 RONW (%) 5.0 4.7 5.1 8.5
 Debt / Equity (times) 1.1 1.1 1.0 0.8
 Interest cover (times) 2.0 1.9 1.9 2.7
 Net working capital cycle (days) 69 67 65 52
 Count of Cos. 19,858 20,066 18,861 8,566
Numbers are net of P&E
Updated on: 21 Feb 2018 10:31AM

Data added for HPI at Assessment prices and HPI at Market prices