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Updated: July 25, 2011 15:08 IST

New trends in employment

C. P. Chandrasekhar
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Analysts are still assessing the implications of Key Indicators emerging from the National Sample Survey Organisation’s (NSSO’s) employment survey relating to 2009-10. Their effort has been made more difficult by the criticism from within the government that the survey has grossly underestimated female employment, which is more difficult to identify. Moreover, even with regard to the male workforce, there is an effort to discount the evidence on deceleration in employment growth during the period 2004-05 to 2009-10, when India for the first time recorded rates of growth of between 8 and 9 per cent on average (Refer Economy Watch titled No jobs out there). It has been argued that much of this deceleration in workforce expansion is the result of the substantially larger number of young people opting to educate themselves.

This is indeed partially true. In the case of the 15-24 age group, which is the one that is most likely to choose between education and work, the increase in the number of those reporting themselves as occupied with obtaining an education was much higher over the five years ending 2009-10 (16.7 million in the case of males and 11.9 million in the case of females) than was true over the previous five years (5.6 and 5.2 million respectively). This huge difference, which is a positive development from the point of view of generating a better and more skilled workforce would have reduced the size of the labour force and contributed to the deceleration in the number of workers.

To deal with the criticism that the figures on female employment are gross underestimates, and get on with the task at hand, we can restrict the analysis to movements in male employment. In the rural areas, male usual (principal and subsidiary) status employment increased by only 13.4 million between 2004-05 and 2009-10, as compared with 20.2 million between 1999-2000 and 2004-05. The corresponding figures for the urban areas were 9.8 million and 15 million respectively. Thus there is clear evidence of deceleration here as well.

As noted earlier, this decline in employment is partly explained by the sharp increase in those pursuing an education in the 15-24 age group. We, therefore, turn to an examination of the differential trends in male employment in the two main working age groups: 15-24 and 25-59. One positive signal here is that male employment in the 25-59 age group rose when that in the (education-opting) 15 to 24 age group fell. Male employment (rural and urban) in the 15-24 age group fell by 6.2 million between 2004-05 and 2009-10 as compared to an increase of 6.5 million during 1999-2000 and 2004-05. Contrary to this, the figures for the changes in the 25-59 age group were 28.8 and 26.2 million respectively. That is, there was a larger absolute increase in 25-59 age group employment in the more recent period when compared with the previous one. However, the difference here too is small and the rate is marginally lower (13.3 as opposed to 13.8 per cent) given the rising base value.

Thus, even if we restrict ourselves to the most favourable category in aggregate principal status employment in the case of males, which is the 25-59 age group, the most we can say is that employment growth has not been lower during the five years ending 2009-10, as compared to the previous period. This is despite the fact that these were the years when there was a substantial acceleration of GDP growth from the 6-7 per cent range to the 8-9 per cent range between these two periods.

There seems to be a second positive that emerges on first examination of the data relating to male, 25-59 age group employment, which is that much of the increase in employment is paid employment as opposed to self-employment. This points to a structural shift in employment generation since most of the additional male employment generated in this age group during the 1999-2000 to 2004-05 period was in the self-employment category.

Self-employment rose by 21.8 million during that period, as compared with just 4 million during the more recent period. On the other hand, during 2004-05 to 2009-10, paid (regular or casual) employment increased by 24.6 million, as compared with just 4.4 million during the previous period. Given the fact that self-employment could be substantially distress-driven, this is indeed welcome.

But that assessment needs to be moderated on two counts. First, the structural shift in the nature of additional employment occurs in a period when aggregate employment even among 25-59 years-old males has not been rising any faster. Second, around two-thirds of the increase in paid employment in the recent period is in the casual work category, which is likely to be less well-paid and volatile, leading to much lower earnings.

Moreover, the evidence points to the growing inability of the commodity producing sectors to absorb additional labour. If we consider the period between 1999-2000 and 2004-05, the increase in employment that occurred was distributed across agriculture, manufacturing construction and services, though services and construction dominated in the case of males and agriculture in the case of rural females. As compared to this, during the 2004-05 to 2009-10 period, both agriculture and manufacturing made negative or negligible contributions to the increase in employment, whereas construction played the dominant role in the case of both males and females. Clearly even the small contributions made by the commodity producing sectors to employment increases are disappearing, making the system dependent on construction and services, especially the former.

In sum, even among sections of the population who would not and have not been opting for education as activity and for whom the identification of work participation may not be difficult, the main source of employment during the high growth years seems to be casual work in the construction sector. This is likely to be among the more volatile among employment categories, with lower wages, higher uncertainty of employment and, therefore, limited earnings potential. So even if we take account of the increased participation of the young in education and the possible underestimation of the employment of women, the evidence seems to point to unsatisfactory labour market outcomes in the period when India transited to its much-celebrated high-growth trajectory.

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While the economic policy of liberalization though ushered in a new era of growth it also brought about a sort of jobless growth. It needs to be considered that Indian economy is a Dualistic economy which has a very large unorganised labour sector. Most of this unorganised labour is engaged in agriculture and other small scale industries. Liberalisation brought in extreme benefits to the export intensive industries but increased imports led to distress employment. I think in order to counter this jobless growth the government needs to bring in sweeping labour reforms so that wages as well as employment level picks up.

from:  Krishna Kaushal
Posted on: Sep 1, 2011 at 02:42 IST

Statistical and trend analyses of employment dynamics are meaning less ...when the per capita income dynamics is not taken into account .... when growth of exports is not taken into account... when the dynamics of value added due to generation of intellectual property is not factored; They do not provide any leads to perespective planning growth in the country. hence there is no syunthesizing of solutions possible.

from:  bds
Posted on: Aug 7, 2011 at 16:22 IST

Construction and service sectors are more promising than manufacturing with regard to generation of employment.Entry into work force also declines because of reduced birth rates-- schools in rural areas have fewer admissions than hitherto.Non traditional jobs in rural areas are increasing; non-agricultural rural GDP has reached nearly60%. Demand led activities in rural areas are likely to further increase with the expansion of MNREGA work as well as wages which is itself attached to a DA increasing along with price level increases.MNREGA work is recommended to concentrate on poor people's land upgradation or development.The productivity increase here will surely improve the incomes of ruralites.FMCG sector is witnessing accelerated sales in rural areas,surpassing the rates in urban areas.Here, employment in service sector and trade will grow. Of course milk production, emphasis on production of oilseeds and pulses will further enhance employment.India will progress.

from:  M.V.Sridhara
Posted on: Aug 6, 2011 at 01:37 IST

Since the no. of people of age group 19-24 are educating themselves is a clear indication that there will be lot many skilled people who will be expecting themselves for Job/Oppertunity, but in the current scenario the growth rate in flow of FDI has reduced drastically, some where our Government is lagging in giving a favourable environment for the flow of FDI to India, to employ these many people defenitely they should think of creating more oppertunities else it may result in huge percentage of un-employed people in India, if the oppertunities increases with the same rate as that skilled people available, the growth rate of the country and the GDP will be verymuch higher that the expectation, lets hope our ministers and the government take proper steps for the future development.

from:  Umesh Shankara
Posted on: Aug 5, 2011 at 14:08 IST

It is a matter of policy failure that even after such high growth rates, we need to have separate Employment Generation schemes and Guarantee acts. The above study shows even these attempts of the Government failed to attract the required employment to either the vulnerable or to the educated idle work force. High Growth and Guarantee acts cannot change numbers, now the shift is to Skill Development with lots of budget and schemes. Will that help change the worrying scenario ?

from:  Nikhil Pavan Kalyan
Posted on: Aug 1, 2011 at 04:41 IST

I think what the NSSO numbers show, we cannot just out rightly reject them. If we do a deeper analysis, then these numbers do point out to the fact that the employment growth is decelerating in India despite the huge growth rate. even the marginal positives which the data shows, eg. in the age group of 25-59 is not very encouraging.

from:  Akshat Agarwal
Posted on: Jul 29, 2011 at 14:06 IST

Random study of the article of C P Chandrashekhar has rightly analysed lower rate of employment in India as per sample survey organisation report on employment even after rise in growth rate. This is not new thing in new liberalised economy! Such ominous signs on employment growth were analysed in the past and it was found that new economic policy will keep low growth of employment because new economic policy has ignored education, health and sectors like agriculture in rural areas of the country. Rather economic growth has been based in urban areas and its development!Such trickel down economy will bound to reverse development of rural areas where over 80 percent population live in country.Villages are without any infrastructures. Unless education, health facilities and agriculture are not stressed in rural areas, real economy as parameter of GDP and increase in employment will not at all percolate in the country. www.kksingh1.blogspot.com

from:  Krishn Kumar Singh
Posted on: Jul 28, 2011 at 12:20 IST

While this is definitely a much appreciated analysis, I am more than disappointed by the write up accompanying it. It is confusing to arrive at what exactly Mr.Chandrasekhar is pointing out from this analysis. Some immediate trends have only been reaffirmed (like the decrease in the rate of workforce generation, decrease in self employment etc), but the statistical proof by displaying the trend in a much detailed way would be a lot better.Any further derivations from this analysis would be useful to look into regional employment specializations, employee trade, return on government schemes etc.

from:  Balaji S
Posted on: Jul 25, 2011 at 20:27 IST
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