The recent QES estimates are unreliable 

Synopsis: New Quarterly Employment Survey, its key findings, various challenges associated with the survey and the way forward 

Introduction 

Recently, the Ministry of Labour and Employment released the results of a new Quarterly Employment Survey (QES) for April-June 2021 for the organized (formal) sector. 

It represents establishments employing ten or more workers. The surveyed sectors were manufacturing, construction, trade, transport, education, health, accommodation and restaurant, Information Technology/Business Process Outsourcing (IT/BPO), and financial services. 

What are the key findings of the survey? 

First, it estimated a growth of 29% in the total employment in the nine selected sectors as compared to Sixth Economic Census (2013-14). 

Secondly, employment fell post the lockdown on July 1, 2020. But 24 lakh jobs that was lost during the lockdown in 2020 came back by the first quarter of 2021. 

What are the various issues/concerns associated with the survey? 

The new QES will help generate timely employment estimates for the larger units. However, the analysis suffers from various issues and calls for caution in its interpretation.

Limited coverage- formal establishments account for a small proportion of all non-agricultural establishments (merely 1.66% as per the Economic Census (EC) of 2013-14). Also, a large share of workers (81.3% as per the Periodic Labour Force Survey (PLFS, 2018-19)) worked in the unorganized sector. With its limited coverage, the QES based on data for formal sector enterprises cannot provide a total picture of employment dynamics.  

Major deviation from the other reports– Data from the Centre for Monitoring Indian Economy (CMIE) showed that during April 2020, 12.1 crore workers lost their jobs (mostly informal workers). 9.1 crore job losses occurred amongst small traders and casual labourers. The unemployment rate by current weekly status in urban areas increased from 9.1% (before the lockdown) to 20.8% (Post lockdown). 

Methodological shortcomings– The new QES data suffers from methodological shortcomings like outdated sample frame (QES used EC-2013 sample frame), non-comparability of employment numbers and differences in methods used for gathering the information. Hence, instead of rushing to produce new QES based on outdated sample frame, it was required to wait for the release of the newly updated frame in the EC-2020. 

– Sample frame: The list of units (e.g., persons, households, businesses, etc.) in the survey population

Did not include latest units- the new QES has a sample of approximately 11,000 establishments. But sample frame implies that QES does not include units set up after 2013.  

Primarily a telephonic survey- which shows lack of verification of responses of establishments 

Sample collected with a short reference period– The questionnaire of the QES asks establishments about employment details for a specific quarter. In contrast, the EC-2013 questionnaire asks establishments about the number of persons working on the last working day prior to the date of fieldwork in the establishment. 

Conceptual problem- in comparing employment numbers of the Economic Census (EC) with the QES. Although the former asks questions about the number of persons working in an enterprise, it is not a good instrument for estimating the size of the workforce or for analysing employment trends as the principal objective of the EC is generating a frame, not estimating employment.

What is the way forward? 

We need to produce quarterly employment data for selected industries in the organised sector. Simultaneously, we cannot compromise on data quality and its reliability, in a rush to generate high-frequency estimates. 

Source: This post is based on the article “The recent QES estimates are unreliable” published in The Hindu on 7th October 2021.