By Santosh Mehrotra & Jajati Parida,
Unemployed youth are so disheartened they are turning to drugs, addiction to which is growing across north India and not just in Punjab. National Crime Records Bureau data shows that in 2018, three unemployed youth committed suicide every two hours; in 2022, it increased to two suicides per hour. Yet the claim of a “surge in employment” continues to mount during elections.
“Between 1983 and 2023, there has been no period that has seen jobless growth,” contends a recent piece (rb.gy/qujehy) in Indian Express, forgetting that jobless growth in India or any developing country for that matter is impossible. People must work to survive in all low- and low-middle-income countries, especially if the working age share of population is constantly rising.
Labour force surveys in India use two definitions of employment: principal status (PS) and subsidiary status (SS). PS is defined as work over 182 days in the last 365 days; so even PS work could be part-time, just as SS work (defined as 31-181 days in the past 365 days) will be part-time.
For a developing country characterised by extremely high levels of time related under-employment, it would be bizarre to leave out SS or short-duration employment. So it is a bit rich for the authors to advise labour economists, who have studied India for decades, that only PS employment should be studied. That is a recipe for completely misunderstanding an informalised economy’s labour market — 85% of India’s enterprises are actually “informal” or unorganised.
We are then informed that the “fastest increase in employment has been from 2017-18 to 2022-23 when about 80 million additional employment was reported”. What is not revealed is that 60 million of this has been in agriculture — a reversal of the process of structural change underway from 2004 to 2019, when the absolute number of workers in agriculture fell.
In an economy where 42% of the workforce was producing 15% of its GDP, agri-productivity is already so low that the last thing the farmers themselves want is to work in farming. No development economist worth his salt regards the growth of agricultural employment as “employment”. Even less if there is an increase in farm employment from 42% to 45% in just three years (2020-2023), from 200 million to 260 million.
The authors note that “the employment growth has been highest for women during this period, by more than 8% annually”. They dismiss the argument that they returned due to increasing distress. They claim: “With falling fertility rates, improved access to water, energy, etc., they are those involved in care- and home-related work.” However, such work is not employment, they forget.
The authors admit that wages have been stagnant in 2017-18. Second, the piece is devoid of any recognition of the kind of wages available in agriculture. We have shown (rb.gy/ydeaba) that wages have stagnated in real terms in the last 10 years in all sectors.
But the distress is greater than that. We estimated the number of workers with daily wages/salary in agriculture earning up to `100: they were 99.8 million in 2017-18, and had risen to 127.1 million by 2022 (at 2012 constant prices). An additional 63 million were workers in agriculture earning wages of `100-200 in 2017-18, it remained 63 million in 2022. In other words, 190 million of the 247 million workers in agriculture received these kind of wages. If such wages do not indicate distress, what must they earn to denote presence/absence of distress?
Women (and men) leaving agriculture (with mechanisation gathering momentum) had been a hugely important development in the process of structural transformation since 2004. By contrast between 1996 and 2004, agricultural output had stagnated, and so had incomes. Like earlier, a recent surge of women employment in agriculture/allied activities is purely informal and in precarious forms, characterised by low or no wages, long hours, and little job security. This not only perpetuates gender inequalities but also reinforces the cycle of poverty for women/families.
Girls and women leaving agriculture has historically been seen as a process that accompanies an economy transitioning from low- to low-middle-income status (in accordance with a U-shaped relationship observed [by Goldin and others] between per capita income and female labour force participation, across countries).
Indian enrolments of children in schools, especially of girls, increased sharply between 2004 and 2015. Child labour fell, and female labour force participation rate again fell further.
However, some women returning to agriculture are now taking up livestock rearing as an option; but all this is unpaid family labour. That is causing the so-called “surge in employment”. There has been a surge of 30 million workers in agriculture as unpaid family labour, and of 5 million in urban areas; a majority are women. Also, there is a sharp increase in own account workers among women in agriculture. By and large, this is due to reduced effective demand as remittances to rural areas fell.
India already had the highest open unemployment in 45 years in 2017-18. Worse, the pandemic-induced economic downturn led to widespread job losses, reducing effective demand. Manufacturing employment, a significant share of it unorganised and in rural areas, fell after the double shocks of demonetisation and unplanned GST. Manufacturing employed 60 million in 2012; it was down to an average 56 million for three years (2017-18 to 2019-20), before recovering above the level prevailing a decade earlier, only after Covid.
Finally, the authors repeat a claim made by many government economists: the government’s schemes are also generating jobs since 2015. This segment may benefit from the massive Pradhan Mantri Mudra Yojana loans that disbursed about `23 lakh crore among 380 million accounts between 2015-16 and 2022.
However, we should know the reality of Mudra before making such claims. First, over 80% of loans given under this scheme have been the smallest Shishu loans, of less than `50,000. Their average is only `27,000 per borrower: how useful is a loan of this size for creating new employment? Second, banks have constantly been complaining about rising non-performing assets under Mudra— hardly surprising given the low demand with limited non-farm job growth, and constant wages.
CSDS April 2024 surveys showed 62% of respondents across India said it was more difficult to get a job now compared to only a third in 2019, regardless of claimed “surges in employment”.
Author Santosh Mehrotra taught economics in JNU and was with the Planning Commission; Jajati Parida is associate professor of economics, University of Hyderabad.
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