The Periodic Labour Pressure Survey (PLFS), carried out by the Nationwide Statistical Workplace (NSO), is the official supply of employment and earnings knowledge in India. PLFS numbers are launched in two codecs: quarterly experiences give employment numbers for city India and the annual report is a extra complete account of the employment state of affairs in each rural and concrete markets. The PLFS survey covers the July-June interval quite than a fiscal or calendar 12 months. So, when NSO launched the 2019-20 PLFS report final month, this was presupposed to be the primary official file of what occurred to labour markets throughout final 12 months’s lockdown, which was imposed from March 25, 2020 for 68 straight days.
Whereas the interval from April-June 2020 exhibits an enormous enhance in unemployment in comparison with final 12 months, the wage knowledge, particularly for salaried employees, is a bit counter-intuitive, as actual wages present a rise of two% in comparison with the earlier 12 months. This goes in opposition to anecdotal accounts of many enterprises, together with these within the public sector (Dearness Allowance was stopped), slicing salaries throughout the lockdown. How does one clarify this?
Not all employees are included within the PLFS wage calculations
Our evaluation of unit degree PLFS knowledge exhibits {that a} lower-than-expected fall in wages within the PLFS knowledge is a results of the best way the NSO calculates wages. “Common gross earnings have been calculated by excluding these self-employed individuals who reported incomes as zero/not reported circumstances”, the PLFS report says.
The identical methodology appears to have been used to compute common earnings of salaried employees. This excludes a number of employees who’re technically employed however didn’t work as a result of illness or some other causes, and due to this fact didn’t earn any cash.
To make sure, PLFS has all the time used this methodology, however the share of such employees elevated considerably throughout the lockdown. It’s the exclusion of this workforce which has resulted in a man-made enhance or subdued lower in earnings.
Codes 61-62 and 71-72 and their impression on wages within the PLFS
Within the 15-page questionnaire which makes the PLFS survey schedule, codes 61-62 (for the self-employed) and 71-72 (for normal wage/salaried employees) are vital in understanding the impression of the lockdown on earnings. These codes describe employees who’re employed however not working due to illness or different causes. Wage calculations within the PLFS experiences don’t embody employees with zero earnings, a process which excludes a number of employees, notably those that fall below these classes (codes 61, 62, 71 and 72).
Whereas one can argue in regards to the propriety of this, in regular occasions, the apply doesn’t have a lot of an impression. Nonetheless, this was not the case throughout the pandemic, when the lockdown and precise or suspected sickness benched a lot of employees, who, whereas they weren’t unemployed technically, have been nonetheless out of labor and incomes. This may be seen from the rise within the share of employees below these classes within the April-June 2020 quarter of PLFS.
The motion to employed however not working class additionally explains a lower-than-expected rise in unemployment price
Headline unemployment price elevated from 8.8% in April-June 2019 to 14.7% within the April-June 2020 quarter. Whereas the quantity is excessive, it seems to be comparatively subdued in comparison with the huge GDP contraction of 24.4% within the April-June 2020 quarter. What explains this? Our evaluation of unit-level knowledge exhibits that employees from salaried and self-employed classes largely moved from the employed to employed however not working class quite than the unemployed class.
Together with the employed however not working class suggests a a lot bigger fall in wages throughout the lockdown
The PLFS wage calculations thus exclude employees who reported zero earnings; the proportion of employees reporting zero earnings is excessive amongst those that have been employed however didn’t work. Due to this, its April-June 2020 reported estimates ended up ignoring a lot of employees who confronted a pointy fall in wages. As soon as these employees are included within the wage calculations, labour incomes present a a lot sharper fall than what the headline wage numbers counsel. We discover that precise month-to-month earnings declined by 7.6 % for salaried employees. The distinction between the estimates from PLFS experiences and our estimates is starker for the self-employed. The estimates from the experiences counsel a decline in month-to-month earnings by 15.9% for the self-employed on the all-India degree, and by 23.1% for the city self-employed. In contrast, our estimates present that the earnings fell by 26.4% for the self-employed on the all-India degree, and by 42.8% for the city self-employed. These numbers counsel that the lockdown’s impression on labour earnings was extra extreme than what the printed wage estimates in PLFS inform us.
The authors train economics at Jindal World Legislation College, O. P. Jindal World College