Blurred picture on employment in India

Two important indicators of structural change in any economy are the rate of growth and changes in the structural composition of production and workforce. India has experienced fairly consistent changes in the first indicator, especially after the 1991 reforms, but employment trends have not shown any consistent or clear pattern.

The growth rate of the economy, as measured by Gross Value Added (GVA) at constant prices, increased from 4.27% in the 20 years before the economic reforms to 6.34% in the 20 years after the reforms and to 6.58% between 2010-11 and 2010-11 . 2019-20 at 2011-12 prices. This growth trajectory was accompanied by a steady decline in the share of agriculture from 30% in 1990-91 to 18% in 2019-20 and a steady increase in the share of non-agricultural production in total economic output.

employment pattern

But when it comes to understanding trends in employment patterns in India, there is a wide gap between the findings drawn by experts and studies on employment. This is partly due to economic, social and technological factors that have brought about changes in the workforce and employment and partly due to gaps in data on various aspects of employment.

The two major sources of data on workforce and employment are the decadal population census by the National Sample Survey Office (NSSO) and the nationwide five-year survey on employment and unemployment. The last available census figures refer to 2011. Similarly, five-year NSSO data on employment and unemployment is available up to 2011-12. This was replaced by the Periodic Labor Force Survey (PLFS) launched in 2017-18 on an annual basis. The PLFS data set is now available for three consecutive years i.e. 2017-18, 2018-19 and 2019-20. The PLFS is based on a different sampling framework and uses a different analytical approach than the NSSO surveys on employment. Consequently, time series data on employment and unemployment available from NSSO surveys are not comparable with PLFS data. At the most, NSSO data can be used as a reference point.

Although the PLFS data cannot be used to predict the underlying trend, as they are available only for three years, they can be used to reveal the impact of various policies and developments during the current NDA regime as well as the employment scenario. to be understood and shaped. Based on solid data.

PLFS data The worker to population (WPR) ratio increased from 34.7% in 2017-18 to 38.2% in 2019-20. This is a reversal of the previous trend which saw a decline in WPR after 2004-05. Change also implies that employment has increased much faster than the increase in population. Increase in WPR has been recorded in rural and urban population and male and female population. This increase in WPR is even more significant as it comes in the midst of an increase in the labor force participation rate.

It is interesting to note that data from PLFS surveys does not support the claim that women are leaving the workforce. The female WPR ratio increased from 17.5% to 24% between 2017-18 and 2019-20. When this ratio is multiplied by the female population, it shows an annual growth of 17% female workers. Another positive sign from the PLFS data is that the gap between male and female worker participation rates is narrowing. As against 100 male workers in 2017-18, there were 32 female workers in the workforce. In 2019-20, this number increased to 40. Women constituted 24% of the country’s workforce in 2017-18 and 28.8% in 2019-20.

Also, the unemployment rate in the female labor force in rural areas is much lower than that of the male labor force, while the opposite is true in urban areas. This is despite the fact that the female labor force participation rate in rural India is 33% higher than in urban areas. This may be because gender discrimination is less in informal jobs, which dominate rural areas, than in the formal sector that dominates urban areas.

unemployment scenario

The PLFS data shows that the unemployment rate on the basis of parent status and subsidiary status declined from 6.1% in 2017-18 to 4.8% in 2019-20. This shows that the number of jobs has increased faster than the increase in the number of job seekers between 2017-18 and 2019-20. But despite this, the number of unemployed persons increased by 2.3 million between 2017-18 and 2018-19, mainly due to the increase in the number of job seekers (52.8 million) in these two years.

The sectoral composition of the workforce shows that 45.6% of the workers in India are engaged in agriculture and allied activities, 30.8% in services and 23.7% in industry. As per PLFS data, there is no increase in the share of industry and services in total employment. This means that there is no shifting of laborers out of agriculture. 56.4 million new jobs were created between 2019-20 and 2017-18. Of this, 57.4% were made in agriculture and allied sectors, 28.5% in services and 14.5% in industry. Within the broader industry group, employment in the manufacturing sector saw a modest increase of 1.8 million over two years; And construction activity added 6.4 million new jobs.

The majority of new entrants to the labor force between 2017-18 and 2019-20 were absorbed into the agriculture sector, with serious implications. The young labor force, which was increasingly educated, sought more gainful work outside agriculture, but few were successful. This is because the industry and service sectors have adopted capital-intensive and in many cases, labour-displacing technologies and production strategies. It is growing even more with the adoption of modern technologies like Artificial Intelligence and Internet of Things. This raises a big question about the future of newcomers to the labor force.

That there is a dichotomy between the increasing share of industry and services in national income without a significant increase in employment share is a fairly well established fact for post-liberalisation India. This puts a serious question mark on the relevance of traditional models of economic growth and development (e.g. Arthur Lewis’s dual-sector model focuses on the large-scale shift of the labor force from agriculture to industry. Perhaps it is fair to question traditional economic growth models). and their applicability to emerging economies like India. Instead, should we reconsider our strategy of striving for an industry-led growth model and more relevant to economic transformation to make agriculture more attractive, more profitable and more- Focused model should be explored.Satisfactory employment in and around agriculture?

In addition, there is an urgent need to create a lot more jobs in the manufacturing and services sector than what has been offered in recent times. This should include (i) changes to labor laws that discourage industry from adopting labor-intensive production (ii) employment-linked production incentives and; (iii) Special assistance for labor intensive economic activities.

Ramesh Chand is a member of NITI Aayog and Jaspal Singh is an advisor to NITI Aayog. thoughts are personal