It’s time for a new QES

Synopsis: The Quarterly Employment Survey is based on an outdated frame and will result in incorrect estimates.

Introduction

Recently, the Labour Bureau, under the Ministry of Labour and Employment, released the Quarterly Employment Survey (QES) results for April-June 2021 for non-farm industries in the organised sector.

However, the findings of QES met with muted scepticism on the reliability and validity of the quarterly estimates and their comparability with the dated annual census estimates.

What are issues with the present QES?

Issues in comparing the quarterly QES estimates with the annual Economic Census 2013-14:

One could compare estimates based on a sample survey with census figures provided the sample is representative of the frame it is drawn from and appropriate data multipliers are applied to sample survey data.

In comparing the QES with the Economic Census, however, this does not appear to be the case, as the sample selection is not proportional to the units in the frame.

For instance, establishments in the education sector accounted for the largest number of units in the frame, but the education sector stands third in terms of the number of units in the sample.

Additionally, there are problems in comparing a year-long census with quarterly estimates from a sample survey.

It is also important to remember that the Economic Census was designed to create sample frames for conducting surveys in the non-farm sector and not for producing employment estimates. Shortcomings of the Economic Census’s employment numbers are widely acknowledged and hence sparsely used.

QES is based on an outdated sample frame: The Economic Census is based on the “enumeration blocks” of the Population Census, 2011, as the primary geographical units. Hence the universe of establishment for drawing up QES samples is nearly a decade old.

One can reasonably expect large scale entry and exits of establishments during the seven years when the economy has grown at an average annual rate of 5%.

Estimating quarterly employment using the QES based on such an outdated sample frame and comparing it with the annual Economic Census estimates do not seem statistically appropriate.

It has to be noted that, in 2017, the revised QES was abandoned as the employment estimates were unsatisfactory.

So, what should be done to correct for the failed effort?

It is, perhaps, best to abandon the current QES, expedite the Economic Census-2020 frame, and re-launch the QES with a statistically sound sample frame.

Even the government appointed a task force on employment statistics in 2017 suggested scrapping the QES, as the outdated Economic Census-2013-14 sample frame was responsible for the poor QES estimates.

Further, the task force recommended that there is an acute need to strengthen sources of enterprise and establishment-level data by

-Increasing coverage across enterprises,

-bringing both industry and services into the fold,

-carrying out enterprise surveys at a greater frequency and to conduct the Economic Census at regular intervals.

Source: This post is based on the following articles “It’s time for a new QES “published in Business Standard on 28th Oct 2021.