Editorial of the Day (12 July): Job Loss in Formal Sector

Context: The latest Annual Survey of Unincorporated Enterprises (ASUSE) for 2021-22 and 2022-23, was released by the Ministry of Statistics and Programme Implementation (MoSPI).

Key Findings of ASUSE Report

• Employment Decline in the Informal Sector
  • In 2022-23, the number of workers in the informal sector dropped by 16.45 lakh (1.5%) to 10.96 crore from 11.13 crore in 2015-16.
  • Data from the Annual Survey of Unincorporated Enterprises (ASUSE) for 2021-22 and 2022-23 by the Ministry of Statistics and Programme Implementation (MoSPI).

• Growth in Unincorporated Enterprises: The number of unincorporated enterprises rose by 16.56 lakh to 6.50 crore in 2022-23 from 6.33 crore in 2015-16.
• Regional Variations in Informal Employment
  • Top Ten States: Account for nearly three-quarters of informal sector workers.
  • States with Increased Employment: Maharashtra, Bihar, Gujarat, Madhya Pradesh, and Odisha recorded an increase in informal employment between 2015-16 and 2022-23.
  • States with Declined Employment: Uttar Pradesh, West Bengal, Tamil Nadu, Karnataka, and Andhra Pradesh saw a decline in the number of informal sector workers.
    • These five states account for 42% of all informal workers.
• Gross Value Added (GVA) in the Informal Sector:
  • Real GVA of unincorporated sector enterprises (USE) grew by 6.9% in 2022-23 but was still 1.6% lower than in 2015-16.
  • CAGR of real GVA for USE contracted by 0.2% between 2015-16 and 2022-23, compared to a 7.4% CAGR between 2010-11 and 2015-16.

Impact of Major Exogenous Shocks

• Demonetization (November 2016): Sudden withdrawal of cash from the system significantly impacted the informal sector.
• Goods and Services Tax (GST) Rollout (July 2017): Introduction of new regulatory compliances and inclusion in the tax net affected informal enterprises.
• Covid-19 Pandemic (March 2020): National lockdown led to significant disruptions in the informal sector employment.

Sharing is caring!