Employment of young women hit most

by Mahesh Vyas

CMIE’s Consumer Pyramids Household Survey has provided the fastest and most detailed description of the impact of the lockdown on employment in India. Administrative data also provides some interesting insights into the impact of the lockdown on employment. Most administrative data lack the comprehensive coverage that a large and representative sample survey enables. Nevertheless, they add value and enhance our understanding of the most debilitating economic shocks of the times.

The Employee Provident Fund data shows a sharp fall in new additions to subscriptions to the Fund in April 2020, the first complete month of the lockdown. These fell to 167,112 during the month. This was just 15.5 per cent of the additions registered a year ago, in April 2019.

EPF data is available systematically since September 2017. For about a year since then, this showed a monthly addition of well over a million subscribers to the Fund. This reflected, to a great extent, an aggressive government campaign to make firms register with the Fund. But, the effect started wearing off in a year.

The average monthly registrations fell from 1.26 million in the first year, September 2017 through August 2018 to 1.05 million in the second September - August period. In the next six months, which is from September 2019 through February 2020, the average monthly additions fell further to 0.85 million.

In March 2020, the month that was partially hit by the lockdown, registrations fell to just 0.4 million, or less than half the average of the previous six months. Then, it fell to 0.17 million in April the first full month of the national lockdown.

The most recent data released shows a recovery of registrations to 0.28 million in May. The sharp fall in March and April and then the recovery in May is line with observations in other datasets. What is interesting in the EPF data set is the age- and gender- composition of registrations.

While the registrations have declined since September 2017, the age composition of the registrations had moved in favour of the younger labour force, till recently. Registrations of people of 21 years or less increased from 24.7 per cent of total registrations during September 2017 through August 2018 to 26.6 per cent in the next year and then to 27.1 per cent in the next six months that ended in February 2020, just before the lockdown. This was an impressive shift in favour of young labour over three years. During the lockdown months of April and May the share of these youngsters fell almost dramatically to 22.2 per cent.

Even share of the age group 22-28 years which hovered around 38-39 per cent of registrations in the pre-lockdown period fell to 33.4 per cent in April-May 2020.

Evidently, while the lockdown has hit employment in all age groups, it has hit employment of youngsters who are less than 29 years of age much more than it has hit the relatively grown up age groups.

The lockdown has also hit women more than it has hit men. The ratio of new male registrations to new women registrations had improved steadily from 4.2 in the first year from September 2017 to 3.6 in the second year to 3.5 during the six months September 2019 through February 2020. In the lockdown months of April and May 2020, the ratio shot up to 3.9. The deterioration is very sharp among women of 21 years of age or lesser.

Evidently, the lockdown has hit the young more than it has hit the older people and it has hit young women a lot more than young men.

We arrive at the same conclusion using the CPHS data. The share in total employed of those less than 30 years of age declined from 20.9 per cent in 2019-20 to 18.8 per cent during April-June 2020. The men to women ratio deteriorated from 8.4 during 2019-20 to 9.1 during April-June 2020.

The CPHS database measures the entire stock of employment including the unorganised sectors while the EPFO data discussed above was entirely about new additions to the workforce in the organised sectors. The EPFO’s coverage is narrow. But, it is official and reveals the same story of widespread stress on the jobs front during the first month of the lockdown and a partial improvement in the second month. It also shows the same nature of the lockdown’s impact as loaded against the young and against young women in particular.

EPFO data releases have been delayed during the lockdown because companies have been given time concessions in filing their monthly returns. Data for May 2020 was released towards the end of the third week of July. This reveals a new limitation in using administrative data to understand economic trends. It is evident that such data are susceptible to administrative interventions. Earlier, the EPFO data were contaminated by an administrative drive to increase registrations. Using EPFO registration numbers to understand employment was confounded by this drive to increase registrations. Now, the data are delayed because of concessions.

None of the administrative interventions are questioned here. What is questionable is the use of administrative data to understand economic trends, because such data are vulnerable to government interventions, and trends observed using such data can be confounding.


Published first in Business Standard Link