Why India's Labour Market needs a mix of traditional and alternative data: CEIC

PRNewswire
Mumbai (Maharashtra) [India], July 12: India is notorious for the lack of comprehensive labour market data. Traditional indicators like participation rate, unemployment rate and worker population ratio are released in quarterly frequency with a substantial, two-month lag, which has paved the way for alternative data in the employment segment in India. In a country with abundant labour, predominantly young working population and large informal sector, the importance of timely data is an imperative for proper policymaking. In order to understand employment in India, CEIC offers a great mix of traditional and alternative indicators.
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Under formal employment markets, job postings data can be used to fill in the gaps, created by the traditional indicators being too few and not timely enough. The Naukri JobSpeak index and the Foundit Insights Tracker (formerly the Monster Employment Index) are both monthly indicators and can serve as a predictor of the job market dynamic in India because of their timeliness. The JobSpeak indicator has virtually no lag, while the Foundit Insights Tracker is published two weeks after the reference month. Both indicators are based on job listings on the respective employment websites, focused on white-collar hiring in India.
Traditional indicators like the participation rate point to an improvement since June 2022, reaching its highest in Q1 2023, at 38.1%, while the job postings data signal a moderating job market since the beginning of 2023. However, despite the volatility displayed by the Naukri JobSpeak Index, averaging around 2,900 between June 2022 and May 2023, it still remains above the pre-pandemic levels, signalling a continued moderation of the labour market. The Foundit Insights Tracker, on the other side, has been more pessimistic, plunging from 292 in February 2023, to 265 in May 2023, unable to match up to the pre-pandemic trends. The discrepancy between the two can be explained by a superior market share of Naukri as compared to Foundit, which also help build stronger correlation with real GDP movements. In addition to these, the weekly data from Revelio labs also reaffirms that the job market in India reached a turning point in February 2023, as active job postings dropped to 191,270 units, the lowest since July 2022. The indicator has moved sharply and consistently downwards since the week of May 8, 2023, its pace exacerbated by simultaneous drops in new and removed job postings.
However, India's job market has a much bigger prevalence of informal jobs, which is difficult to measure. In some ways, data from Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) helps understand the direction unskilled jobs market may be moving. Both work demand and employment generated under MGNREGS have generally decreased since June 2022, although they have yet to reach pre-pandemic levels in absolute terms. Work demand has been experiencing annual declines since June 2021, with a 9.3% year-on-year drop in April 2023. On the other hand, generated employment in the same month experienced a more significant decline of 27.3% year-on-year. Additionally, while the average national MGNREGS wage has steadily increased, the real growth (adjusted for inflation) has significantly dropped since November 2021, with the average yearly wage declining by 1.5% year-on-year in FY2022 and 1.8% year-on-year in FY2023.
India is making progress towards the much-needed formalisation of its extensive labour market, as evidenced by MGNREGS data, available within CEIC. This popular social security program guarantees 100 days of unskilled manual work or equivalent pay to eligible rural households and played a crucial role in supporting vulnerable groups during the COVID-19 outbreak.
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The current moderation in work demand reaffirms that as the pandemic recedes, a significant portion of the rural population is returning to cities for work. This change can also be attributed to the government and private enterprises implementing greater skilling programs, which drive the formalisation of India's job market. Informal jobs currently account for almost 80% of India's total workforce, and increased formalisation would greatly contribute to improving the understanding of the economy through reliable macroeconomic data. India is notorious for its lack of comprehensive labour market figures.
The government is also allocating fewer resources to MGNREGS, which not only reflects the temporary nature of the scheme but also potentially incentivizes job seekers to pursue more formal employment where remuneration is generally higher compared to the informal sector. For FY2023, total allocations were reduced by 9.2% year-on-year, and for FY2024, allocations are expected to drop by 32.9% year-on-year. The lower allocation is likely to result in a greater disparity between job demand and employment generated, further shifting some of the demand towards formal employment. This divergence has already been visible and pronounced since the beginning of 2023.
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 macroeconomic, industry and financial data platform that curates the highest quality and most timely economic data from traditional and high frequency alternative sources enabling economists and investment professionals to understand the development and near real time performance of the markets they cover.
Data is available for over 200 countries and territories but with a specific focus on emerging markets through deep country-specific databases. High frequency and alternative datasets supplement traditional data sources to provide early insight into what is happening now to facilitate the best possible investment and strategic decision-making for clients.
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