Special Correspondent

`Need to step up employment in organised private sector'

  • Tap the manufacturing sector
  • Decline in share of agriculture in GDP

    NEW DELHI: The Economic Survey has expressed concern over the increasing rate of unemployment, despite the economy expanding rapidly, and asked the Government to tap the manufacturing sector for creating more jobs.

    The Survey, tabled in Parliament on Tuesday, points out that while rightsizing of the public sector, whose primary objective is to deliver essential services such as education, health, roads and irrigation and not providing direct employment, is a welcome development and should continue, there is an urgent need to step up employment in the organised private sector.

    Indicating a reversal of the declining trend in employment growth - from an annual 2.1 per cent in the 10 years ending 1993-94 to 1.6 per cent in the five years ending 1999-2000 to 2.5 per cent in the five years ending 2004-05, it calls this an encouraging development. There is a need for faster employment growth for not only absorbing the addition to the labour force, with the ongoing demographic changes, but also reducing the unemployment rate. It says while employment has grown faster than before, the rate of unemployment also went up marginally from 2.8 per cent to 3.1 per cent during 1999-2000 to 2004-05.

    The Survey attributes this to the slowing down of the growth of agriculture. The share of agriculture in total employment has come down from 61.67 per cent in 1993-94 to 54.19 per cent in 2004-05.

    With the declining share of agriculture in the Gross Domestic Product (GDP), the scope for absorbing the additional labour force appears limited. Construction and services, particularly transport, storage and communication, contributed to maintaining employment growth in the economy. In the case of the manufacturing sector it fell short of its potential.

    The Survey, however, finds it disturbing that there has been a marginal decline in employment in the organised sector between 1994 and 2004, which has raised some disturbing issues of optimal regulation and incentives.

    The annual employment growth in the organised sector decelerated from 1.2 per cent during 1983-94 to - 0.38 per cent per annum during 1994-2004. This happened despite an acceleration in annual employment growth in the private sector from 0.44 per cent to 0.61 per cent during the reference periods as this acceleration was not enough to make up for corresponding decline of employment in the public sector.