Ahead of Budget 2025, the imperative of generating more productive jobs dominates the policy discourse despite optimistic statements that the employment situation has dramatically improved since the National Democratic Alliance came to power in 2014 vis-à-vis the previous United Progressive Alliance (UPA) regime. Interestingly, the Union minister for labour and employment used the Reserve Bank of India’s (RBI) KLEMS data for this purpose — rather than the official Periodic Labour Force Surveys (PLFS) — although this does not provide details of where the employment has been generated or, for that matter, the quality of jobs. Last year, the labour ministry used KLEMS data together with the PLFS to counter a Citigroup report that India will struggle to create sufficient jobs even with a 7% growth rate by stating that 80 million-plus employment opportunities were generated from 2017-18 (July-June) to 2021-22 despite the economy being hit by Covid-19. As organised sector employment is sluggish, there are fewer opportunities for those who move from the countryside to cities for work. The brunt of adjustment is borne by the unorganised sector that includes self-employment and casual labour. Even these opportunities have dwindled, due to shocks like demonetisation in November 2016, the introduction of goods and services tax, and lockdown to battle Covid-19, triggering reverse migration.
The quality of jobs again comes to fore with the labour minister’s statement that India created 172 million jobs between 2014 and 2024, of which 46 million were generated in 2023-24 (July-June). “The main reason for the fall in unemployment in the past decade has to do with the rise in employment in agriculture in the rural areas. Most of these jobs are unpaid family labour,” said professor R Ramakumar, Tata Institute of Social Sciences. “This is not quality employment, it’s not meaningful productive employment in any form,” he added, according to a report in FE. This is indeed a reversal of the process of modern economic development which is associated with a shift in population away from agriculture. The PLFS shows a substantial increase in employment in agriculture from 44% of total employment in 2017-18 to 46.1% in 2023-24, amounting to 76 million going back to the farms. The labour minister, however, thinks this is an impressive performance under the current dispensation — in contrast to the UPA regime — as its policies focused on the holistic development of agriculture, which is now evidenced in the data.
The upshot is that while employment is up, its quality is in question. Experts and statisticians believe that KLEMS is not the ideal source for assessing employment as the RBI doesn’t collect any data but only make estimates based on data sourced from official sources. According to former member of the National Statistical Commission PC Mohanan, KLEMS estimates are only as good as the population number they use for their projections. “The worker population ratio number from the PLFS is inflated with the (India’s) population estimate, and is then used to give employment estimates,” he added. KLEMS thus indicates that 46 million jobs were added in 2023-24 while the PLFS data shows only 14 million. The fact that reverse migration continues only reinforces an observation of the late historian Eric Hobsbawm that India still remains “one of the few examples left in the world of an enormous population still largely dependent on agriculture”, as less than half of the workforce still lives off the land. The continuing reverse migration reflects distress and has serious distributional consequences.