There is a gradual shift of surplus rural workforce from being employed in agriculture to finding work in the services sector, and a research report has termed it as a positive phenomenon. With the Periodic Labour Force Survey finally and officially released by the government, it has become evident that employment in agriculture, the largest work provider, is shrinking at the hands of services and manufacturing sectors. This is good news as now, the surplus workforce in agriculture can contribute to other areas, primarily services, a Kotak Institutional Equities report said.
People are finding better employment opportunities in the non-agriculture sectors due to easier access to credit and improved infrastructure in rural India, added the report co-authored by Kotak Institutional Research MD and co-head Sanjeev Prasad. From the year ending June 2005 to the year ending June 2018, the rural male population employed in agriculture has seen a decline of 12 percentage points from 67% to 55%; while the same witnessed a spike in the manufacturing sector by 8 percentage points from 15% to 23%. In the tertiary sector as well, rural male employment has increased by 4 percentage points from 18% to 22%.
Agriculture: Largest employment giver, lags in GVA
Employment in agriculture accounts to 44% of the overall employment but still contributes only 16% of Gross Value Added (GVA), according to the recent PLFS survey conducted by National Sample Survey Office (NSSO). Further, services amount to 31% of total employment yet it provides over 54% of the GVA. Industry share of the employment stands at 28% and its contribution to GVA is about 30%.
Salaried employment up; formalization in process
Another encouraging shift is happening in the informal work setting which is down by 510 bps while there has been an increase in salaried employment by 480 bps. Employment in informal settings is on a steady decline. However, the casual employment percentage is still more than formal employment by 2%.
The recent PLFS survey also found that the education levels and employment levels are inversely proportional, i.e, higher education levels meant lower employment. “Employment data worsens with education levels paradoxically,” the Kotak report observed. According to the survey, illiterate rural and urban have unemployment level of 1.7% and 2.1% while the same stood at 10.5% and 9.2% for rural and urban males who have education above secondary level. “In fact, the unemployment rate is highest for youths with education until diploma (37%), graduate (36%) and post-graduate & above (36%) suggesting the lack of opportunities for a higher skilled workforce,” the Kotak report observed.