Explained: Population grows at double pace than jobs in India; rural employment remains stagnant

A new study uses NSSO data to show that between 2004 and 2017, employment grew at less than half the rate of population growth; the number of women and young people in jobs fell; rural employment stagnated.

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  • Udit Misra

Ever since the results of the Periodic Labour Force Survey (PLFS) 2017-18 became public — they showed that unemployment in India was at a 45-year high — there has been a vigorous public debate about the true state of unemployment in the country. What has fueled this debate — and allowed different people to arrive at differing conclusions about the state of unemployment — has been the long delays in the availability of past employment data, even though PLFS tracks employment annually.

Now, a new study, commissioned by the Economic Advisory Council to the Prime Minister (EAC-PM), and undertaken by Laveesh Bhandari of Indicus Foundation and Amaresh Dubey of Jawaharlal Nehru University, has highlighted the broad trends for employment in India between 2004 and 2018. (The Indian Express, October 26)

A key feature of this study is that instead of focusing on unemployment, it focuses only on the “employment” data. It does so by looking at three comparable surveys conducted by the National Sample Survey Organisation (NSSO) — the Employment-Unemployment Surveys (EUS) of 2004-05 and 2011-12, and the PLFS of 2017-18.

So how is mapping employment different from mapping unemployment?

The NSSO surveys divide the entire population into three categories. Broadly speaking, Category 1 consists of people who were involved in economic activity (or work) during the reference period of the survey. These individuals are labelled as “Employed” — and Category 1 can be subdivided into categories such as self-employed, salaried employees, and casual labourers.

Category 2 consists of people who were not engaged in any economic activity during the reference period of the survey, but were looking for work if work was available. These individuals are labelled as “Unemployed”.

Taken together, categories 1 and 2 form the country’s “labour force”.

Category 3 constitutes people who are neither engaged in work nor available for it. This category — labelled as “Not in the labour force” — would have a large number of people, including those who have retired, those studying, those unable to work due to disability, and those attending “only” to domestic duties.

The new study focused on the level and trends of the ‘Employed’ — that is, Category 1.

What are the main findings of the study?

On the whole, the study found that the total employment in the country grew by 4.5 crore in the 13 years between EUS 2004-05 and PLFS 2017-18. What puts this absolute number in perspective is that this represents a growth of just 0.8 per cent — less than half the rate at which the overall population grew, which was 1.7 per cent.

What was the urban-rural spread of employment?

Of the 4.5 crore increase in employment, 4.2 crore happened in the urban areas while rural employment either contracted (by 0.01 per cent between 2004 and 2011) or was stagnant (grew by 0.18 per cent between 2011 and 2017).

And what was the male-female spread of employment?

Over the 13 years, male employment grew by 6 crore but female employment fell by 1.5 crore. In other words, while there were 11.15 crore women with jobs in 2004, only 9.67 crore were employed 13 years later. Women’s share in employment has fallen from an already low level of 27.08% in 2004 to 21.17 per cent in 2017.

What about youth employment?

India is one of the world’s youngest nations, but employment data according to age groups shows that youth employment (those between the ages of 15 and 24) has fallen from 8.14 crore in 2004 to 5.34 crore in 2017.

However, employment in the 25-59 age group and the 60 years and above group has gone up. The sustained schooling reforms seem to have shown their impact in the employment of children below 14 years of age reducing from 61 lakh in 2004 to 27 lakh in 2011, and just 11 lakh in 2017.

And employment by education level?

The emerging economy appears to be leaving behind the illiterates and those with incomplete primary education. Employment in this category has gone down from 20.08 crore in 2004 to 14.2 crore in 2017, and their share in those employed has gone down from 48.77 per cent in 2004 to 31.09 per cent in 2017.

Employment has risen for all other categories of education from primary, secondary, to postgraduate and above.

Has the organised sector grown?

Yes, the rate of employment growth in the organised sector — that is, in firms that are registered with regulatory authorities and are bound by a variety of labour laws — has been the fastest, and its share in the total employed has risen from 8.9 per cent in 2004 to 14 per cent in 2017.

The unorganised sector, too, has grown. In fact, while its rate of growth has been slower, its overall share in the economy has gone up from 37.1 per cent in 2004 to 47.7 per cent in 2017. However, the pace of growth of the unorganised sector has moderated since 2011.

Both these sectors have grown at the expense of the agri-cropping sector, where employment has fallen from 21.9 per cent in 2004 to 17.4 per cent in 2017. In essence, the results show that those who are poor, illiterate, and unskilled are increasingly losing out on jobs.

Has the rise of the organised sector led to an increase in contractual employment?

Typically, it is expected that those who work in the organised sector would be employed on some formal contract. The presence of a contract makes all the difference when it comes to job security, minimum wages, equal pay for equal work, safe working conditions, etc. Without a contract, even a worker employed in the organised sector would not have any means of seeking recourse for any injustice. Non-contractual labour also earns less in general than contractual labour. That is why the unorganised sector almost entirely employs workers on a non-contractual basis.

However, the NSSO data show a sustained trend of even the organised sector in India preferring to employ workers without a contract. Indeed, between 2011 and 2017, this resulted in the organised sector coming to employ more people without a contract.

That firms — whether organised or unorganised — prefer non-contractual employment is bad news for India’s bid to make the economy more formal. In all likelihood, firms are doing so to cut the extra costs that come with complying with inflexible and stringent labour laws. This is more likely to be the case when firms are stressed for money and struggling to grow.

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First published on: 30-10-2019 at 10:47 IST