Employment Growth in India 2014 PDF

COMMENTARY distress, that is people were driven to find The Demographic Challenge and wor...

COMMENTARY distress, that is people were driven to find The Demographic Challenge and work to supplement household incomes during a difficult period (Table 1). On Employment Growth in India the other hand, between 2004-05 and 2009-10, agricultural employment de- clined absolutely by 20.4 million, leading Jayan Jose Thomas also to the deceleration in overall employ- ment growth. This decline in agricultural T The working-age population he recent survey on employment employment was, at least partly, a reversal of India is growing in size, the and unemployment in India, con- from the “distress employment” created ducted by the National Sample during the previous five-year period labour force is shifting away from Survey Office (NSSO), has attracted (Thomas 2012). Agricultural employ- agriculture and, with higher considerable media attention. This was ment declined further by 12.9 million education, workers are also mainly due to the wide fluctuations in between 2009-10 and 2011-12 (Table 1). seeking better-quality overall employment growth as shown by The creation of non-agricultural em- these surveys. Overall employment in the ployment in India was at the rate of 8.4 non-agricultural jobs. However, country rose markedly by 59.4 million million a year between 1999-2000 and the trends between 2004-05 and between 1999-2000 and 2004-05. But 2004-05, which slowed down to five 2011-12 indicate that employment during the next five years, 2004-05 to million a year between 2004-05 and generation in the country has 2009-10, net employment generated fell 2009-10, but rose again to 11.5 million sharply to only 4.7 million, leading to a year between 2009-10 and 2011-12. been inadequate to meet this the suggestion that this was a period of Notably, the rate of generation of non- challenge. Construction has “jobless growth”. Employ ment growth agricultural employment in the country virtually become the only source recovered subsequently, with 10 million improved from 5.9 million a year between of incremental employment in new jobs registered between the surveys 1993-94 and 2004-05 to 6.9 million held in 2009-10 and 2011-12. (All esti- a year between 2004-05 and 2011-12 rural India. In the urban areas, mates in this article, unless otherwise (Table 1). Therefore the suggestion, based men have been able to obtain a specified, are based on the usual principal on trends in overall employment, that disproportionate share of and the usual subsidiary status (UPSS) of India’s employment growth decelerated high-productivity employment. worker.) (see Table 1) after the mid-2000s is without basis. However, an exclusive focus on the However, a more pertinent question is growth of overall employment – which whether the pace and nature of employ- is the sum of employment in agriculture ment generation in India is adequate and the non-agricultural sectors – can given the challenges on the labour supply be misleading for a developing country front. This question is addressed in the like India. With economic development, rest of the article. employment in agriculture is expected to decline, both in relative terms as well Demographic Transition as in absolute numbers. Estimates by the World Bank show that However, agricultural employment in the population aged 15 to 59 years is set India increased by 17.4 million between to increase dramatically in India from 1999-2000 and 2004-05, and some studies around 757 million in 2010 to 972 million have attributed this increase to rural in 2030. This could potentially translate Table 1: Net Increase in the Number of Workers in India, 1983 to 2011-12 (numbers in million) Period Net Increase Net Annual Increase All Workers Agricultural Workers Non-Agricultural Workers All Workers Non-Agricultural Workers 1983 to 1993-94 71.1 32.4 38.7 6.8 3.7 1993-94 to 2004-05 83.4 18.2 65.2 7.9 5.9 2004-05 to 2011-12 14.7 -33.3 48 1.4 6.9 1993-94 to 1999-2000 24 0.8 23.2 4.0 3.9 The author is grateful to Seema for useful 1999-2000 to 2004-05 59.4 17.4 41.9 11.9 8.4 suggestions and assistance in research. 2004-05 to 2009-10 4.7 -20.4 25.1 0.9 5.0 2009-10 to 2011-12 10 -12.9 22.9 5.0 11.5 Jayan Jose Thomas (jayanjthomas@gmail. Refers to the usual principal and usual subsidiary status (UPSS) workers. Size of the workforce (in any year) is obtained by com) teaches Economics at the Indian Institute multiplying workforce participation rate (WPR) from the NSSO reports with the population figures from the Census of India. of Technology Delhi, Delhi, and is currently There are some differences between the estimates of workers reported in this article and those in Thomas (2012). This is working on a fellowship from the Indian because the population figures for 2004-05 and 2009-10 used in Thomas (2012) were projections based on the Census of Council of Social Science Research. India data until 2001. In this article, these population figures have been revised using data from the Census of India 2011. Source: Estimates based on the Survey on Employment and Unemployment, NSSO, 38th, 50th, 55th, 61st, 66th and 68th rounds. Economic & Political Weekly EPW february 8, 2014 vol xlIx no 6 15 COMMENTARY into an addition of over 200 million employment created through the Mahatma There has been a remarkable im- workers over the next two decades. On the Gandhi National Rural Employment Guar- provement in the ratio of students to other hand, during the same period, the antee Act (MGNREGA), which accounted population (SPR) among persons aged working-age population is expected to for 2.4 million in 2009-10 and 2.9 million 15 to 19 years in India after the mid- decline in most developed regions of the in 2011-12. Notably, casual employment 2000s, pointing to an expansion of world and even in China (where it would in public works accounted for 69% (3.7 higher education in the country. SPR fall from 913 million to 847 million). In million out of 5.4 million, as per the UPSS) among rural males and females in this other words, India will contribute a sub- of the incremental non-agricultural em- age group increased by 20 percentage stantial chunk of the increase in the glo- ployment generated for rural females points between 2004-05 and 2011-12, bal labour supply over the coming years. during the 2004-05 to 2011-12 period. and reached the levels of 64% and 54%, Further, between 2004-05 and 2011- respectively, by 2011-12. Shift Away from Agriculture 12, 20.5 million new jobs were generated Between 2004-05 and 2011-12, as India’s In India, the share of agriculture and allied in rural areas in the construction sector total population (aged 15 to 59 years) activities in gross domestic product (GDP) (Table 2). Almost 50% of this job crea- increased by 113 million, the population declined from 35.1% in 1983 to 14% in tion occurred in the less-developed and of students among them increased by 2011-12. The share of these sectors in the chiefly agrarian states of Uttar Pradesh, 41.5 million – that is, 37% of the incre- country’s total employment also fell dur- Rajasthan, Bihar and Madhya Pradesh. mental population. The proportion of stu- ing this period, from 68.2% to 47.5%. The shift of the workforce away from dents to the incremental population was An absolute fall in the size of the agri- agriculture in India has occurred almost considerably higher at 45% in rural areas cultural workforce was witnessed for entirely among the younger age groups. (Table 3). As noted earlier, large numbers the first time in India in the NSSO survey Between 2004-05 and 2011-12, male of the young in rural areas left agricul- held in 2009-10. But then this decline agricultural workers in the age group of ture to join educational institutions. was observed only in the case of females. 5-24 years declined by 10.3 million, even The growth in the population of It was in the NSSO survey in 2011-12 that as male agricultural workers who are 25 students who are 15 years and above the size of the male agricultural work- years and older increased by 5.6 million. reduces labour supply for now, but raises force registered an absolute decline for A part of the reason for this shift is the the numbers of educated persons who the first time in the country (Table 1). rising enrolment of the young in educa- would be demanding high quality jobs Of course, there have been strong factors tional institutions. in the future. that may have pushed workers out of low- Table 3: Population in the 15-59 Age Group India by Activity Status – Estimates for 2011-12 and the productivity agriculture, which in recent Incremental Change between 2004-05 and 2011-12 (Numbers in millions) years has become non-remunerative in 2011-12 Net Increase, 2004-05 to 2011-12 RM RF UM UF RM RF UM UF many parts of the country. At the same Employed in agriculture 120.9 69.6 5.2 2.7 -5.7 -24.6 0.4 -1.5 time, there have been “pull” factors too Employed in non-agriculture 89.9 23.5 97.9 23.2 21.1 4.6 16.3 3.8 that caused workers to move away from Employed, total 210.9 93.1 103.1 25.8 15.5 -19.9 16.7 2.3 agriculture. Important among the latter is Unemployed 4.0 1.7 3.3 1.5 0.6 -0.5 -0.2 -0.4 the expansion of casual employment in Labour force 214.9 94.8 106.4 27.3 16.1 -20.5 16.5 1.9 public works, which (as per the current Students 37.1 24.1 21.9 16.9 16.4 11.9 7.1 6.1 Attending domestic duties 1.0 128.2 0.3 76.8 0.2 39.3 0 17.6 weekly status) rose from only 0.9 million Population 257.3 250.4 131.5 123.0 32.9 30.7 23.7 26.0 in 2004-05 to 6.6 million in 2009-10 and See notes under Tables 1 and 2. 6.7 million in 2011-12. These included Source: Same as Table 2. Table 2: Employment in India by Sectors: Estimates for 2011-12 and the Net Increase between 2004-05 and 2011-12 (numbers in millions) 2011-12 Net Change – 2004-05 to 2011-12 Sectors RM RF UM UF All RM RF UM UF All (1) Agriculture and allied activities 139.1 76.2 6.2 3.0 224.4 -5.6 -26.7 0.6 -1.6 -33.3 (2) Manufacturing 19.1 10.0 24.4 7.9 61.3 1.9 -0.4 2.9 0.7 5.1 (2a) Textiles, garments, leather 4.3 3.7 8.5 4.3 20.9 -0.2 0.3 1.1 0.5 1.6 (3) Construction 30.5 6.7 11.6 1.1 49.9 15.7 4.8 3.2 0.1 23.9 (4) Trade, repair, hotels 20.1 3.0 29.9 3.6 56.6 2.3 0 4.3 0.4 7.0 (5) Transport, communication 9.8 0.1 11.1 0.3 21.3 1.5 -0.1 1.2 0 2.6 (6) Financing, insurance, real estate, business services 2.4 0.2 9.1 1.6 13.5 0.9 0.3 3.7 0.9 5.8 (6a) Computer and related 0.1 0.0 2.0 0.4 2.6 0.1 0.0 1.2 0.3 1.7 (7) Community, social and personal services 11.4 5.0 14.4 9.6 40.4 0.1 0.4 1.4 1.5 3.4 (7a) Public admnistration and defence 2.4 0.3 4.9 0.7 8.3 -0.2 0 -0.4 -0.1 -0.7 (7b) Education 4.3 2.7 3.9 3.6 14.5 0.8 0.6 0.7 0.7 2.8 (7c) Other services and private households 2.7 1.3 2.5 3.8 10.4 -0.4 -0.4 0.3 0.4 -0.2 Total non-agricultural 95.3 25.5 102.9 24.4 248.1 22.4 4.9 17.0 3.8 48.0 Total employment 234.4 101.6 109.1 27.4 472.5 16.8 -21.8 17.6 2.1 14.7 RM, RF, UM and UF refer to rural males, rural females, urban males and urban females, respectively. Also see under Table 1. Source: Estimates based on the Survey on Employment and Unemployment, NSSO, 61st, 66th and 68th rounds. 16 february 8, 2014 vol xlIx no 6 EPW Economic & Political Weekly  COMMENTARY Growth of Labour Demand On the other hand, for people in rural exceeds the demand. For instance, be- Between 2004-05 and 2011-12, total non- areas, construction has virtually been tween 2004-05 and 2011-12, the popula- agricultural employment in India in- the only source of non-agricultural tion of urban females (aged 15-59 years) creased by 48 million. Jobs in construc- employment after the mid-2000s. For in India increased by 26 million, out of tion, which rose by 24 million, account- rural males it accounted for 70% of the which six million were students. Includ- ed for half of this increase (Table 2). net increase in non-agricultural employ- ing the 1.5 million who exited from agri- These construction jobs, which were ment (15.7 million out of 22.4 million) culture and allied activities, the number of overwhelmingly in the rural areas, were during 2004-12 (Table 2). urban females who could potentially work likely to be of poor quality. Women, including urban women, rec- for industry and services increased by In contrast, employment in manufac- eived only a marginal share of the better 21.5 million in India during 2004-12 (26 turing increased by just 5.1 million in India quality employment generated in India. million + 1.5 million – 6 million) (Table 3). during the seven years after 2004-05 The share of females in incremental On the other hand, industry and services (Table 2). And the rate of job creation in employment (between 2004-05 and sector together generated a meagre 3.7 this sector decelerated from 1.2 million 2011-12) was only 21% in finance, real es- million new jobs for urban females jobs a year between 1993-94 and 2004- tate and business services, 18% in com- between 2004-05 and 2011-12. During the 05 to 0.7 million jobs a year bet ween puter and related activities, and 3% in same period (2004-12), as many as 17.7 2004-05 and 2011-12. Manufacturing trade, repair, hotels, transport and com- million out of the incremental population employment had, in fact, declined in ab- munication combined (Table 2). of 26 million urban females were attend- solute numbers, by three million, between ing domestic duties in India (Table 3). 2004-05 and 2009-10. However, staging Demographic Dividend Lost? The low rate of female labour force a recovery, eight million manufacturing Overall, the generation of non-agricultural participation is a severe obstacle to jobs were added in the country during employment in the Indian economy has India’s social and economic development. the next two years (2009-12). fallen behind the growth in the supply of Highlighting this issue, Thomas (2012) The traditional service sector activities “potential” non-agricultural workers. showed that the proportion of females – comprising trade and repair services, Additions to the pool of potential non- attending to domestic duties was rela- hotels, transport and communication, and agricultural workers come from two tively high among the better educated community, social and personal services – sources: the growth of the working-age and among those belonging to the richer together generated 13 million jobs in India population and the shift of the workforce households. While a variety of social and between 2004-05 and 2011-12 (Table 2). away from agriculture. At the same time, economic factors could be attributed to The rate of employment generation in the growth in the number of students, the low levels of female labour force these sectors, combined, declined from who are not part of the labour force, tends participation in India, the discourage- 3.2 million a year between 1993-94 and to reduce the size of this pool. ment effect arising from the low demand 2004-05 to 1.9 million a year between Between 2004-05 and 2011-12, the for labour is clearly the most important 2004-05 and 2011-12. population of rural males aged 15 to 59 among them. Other than construction, the only sec- years in India increased by 32.9 million, To sum up, the generation of non- tor in which job creation accelerated in almost half of whom (16.4 million) were agricultural employment in India has the country after the mid-2000s was in students (Table 3). Including the 5.7 mil- accelerated after the middle of the first finance, insurance, real estate and busi- lion who shifted out of the primary sector, decade of this century. At the same time, ness services, which also include com- the net addition to the potential non- the pace of this job creation has been puters and related activities. This rela- agricultural workforce on account of rural inadequate to absorb the rising supply of tively high productivity sector added 5.8 males during 2004-12 was 22.2 million potential workers, especially females. million new jobs between 2004-05 and (32.9 million + 5.7 million – 16.4 mil- With the movement of workers away 2011-12 (Table 2). lion). During the same period (2004-12), from agriculture, with their rising edu- 21.1 million new non-agricultural job cation levels this challenge will grow Quality Only for Urban Males opportunities were generated in the bigger in the coming years, particularly Men in urban areas benefited dispropor- country for rural males (Table 3). in the rural areas. Unless India’s eco- tionately from the growth of non- Thus, in the case of rural males, the nomic policies are geared towards a sig- agricultural employment in India in sectors demand seems to be broadly in line with nificant revival in the growth of decent other than construction. Urban males the supply of non-agricultural workers, jobs, the country risks losing its demo- accounted for only 16% of India’s total but this may not be so in the future. With graphic dividend – the female part of population, but 77% of all jobs in computer the rise in education levels, India’s rural this dividend in particular. and related activities in 2011-12, and 60% workers will demand better quality jobs or even more of the incremental employ- in the coming years – outside agricul- Reference ment (between 2004-05 and 2011-12) in ture and outside even construction. Thomas, Jayan Jose (2012): “India’s Labour Market during the 2000s: Surveying the Changes”, manufacturing and in finance, real estate In the case of females, the supply of Economic & Political Weekly, Vol 48, No 51, and business services (Table 2). potential non-agricultural workers far pp 39-51. Economic & Political Weekly EPW february 8, 2014 vol xlIx no 6 17