Beyond the Noise: A Reading List on Employment Trends in India

To understand the context within which the current debate about employment is playing out, it is important to examine long-standing trends in employment in India. 

On 22 January 2018, in a televised interview, Prime Minister Narendra Modi claimed that an “independent agency” had found that 70 lakh Employees’ Provident Fund Organisation (EPFO) accounts were opened for persons aged 18–25 years. “Doesn’t this show new employment,” he asked?

As election season nears, jobs and employment will once again come to the forefront as topics of discussion. To understand the context within which the current debate about employment is playing out, it is important to examine long-standing trends in employment in India. 

 

1)  Did Employment Increase or Formalisation?

Modi based his claim of increasing employment on a study submitted to the NITI Aayog, which provided employment projections for the financial year 2017-18.This EPW editorial argued that the study conflated new enrolment into social security schemes in the workforce— a kind of formalisation—with the creation of new employment. Both 2016–17 and 2017–18 were unusual years for the economy, with demonetisation and the goods and services tax (GST) clamping down on informal economic activities. This left many of those in the informal sector with no option but to accept more state regulations, often on terms that proved detrimental to their enterprises. Their enrollment in these schemes did not actually mean employment had increased. 

 

2) There has been absolute decline in employment during 2013–16

The Labour Bureau has been conducting nationally representative annual Employment–Unemployment Survey (EUS) of households, the latest round being for 2015–16 with a sample size of more than a lakh households. This 2017 article by Vinoj Abraham uses the Labour Bureau’s EUS, the Quarterly Quick Employment Surveys (QES), and the revised QES to decipher labour market trends after 2011–12. He found that there was an absolute decline in employment during the period 2013–14 to 2015–16, perhaps happening for the first time in independent India. The construction, manufacturing and information technology/business process outsourcing sectors fared the worst over this period.

 

 

 

Read more about the various sources of labour statistics in India:

Data Anomalies in NSSO–EUS Figures, 2011–12 | Sona Mitra

Comparing NSSO's Employment Surveys: A Methodological Note |Abhishek Shaw

Counting Jobs in India: A Detailed Review of Labour Database | Jitender Singh, Arup Mitra

 

3) Understanding Employment Data First 

Himanshu’s 2011 paper re-examined the trends in employment and unemployment as thrown up by successive National Sample Surveys from the mid-1970s.  The analysis shows that employment data cannot be taken at face value without examining the quality of employment and the factors driving people into participating in labour markets.  He says that the euphoria about high employment growth during 1999–2004 was not justified nor did the concern about jobless growth in the subsequent years capture the changes in employment structure. 

India’s labour market is characterised by three features:

1) There is a predominance of agriculture and the informal sector in total employment, which implies that a majority of workers are self-employed in low quality employment and there has been a slow growth of labour productivity in these sectors.

2)  Large poverty and distress also lead to a situation of vulnerability where participation in the labour market is not out of choice but is governed by changes in the income level. This is true for a majority of workers classified as reserve labour and includes women, children and the elderly.

3) The decision to enter and exit the labour market is more a response to household earnings.

 

Read more about large scale employment trends:

Employment Trends in India: An Overview of NSSO’s 68th Round | Abhishek Shaw

Employment Elasticity in India and the US, 1977-2011: A Sectoral Decomposition Analysis | Deepankar Basu, Debarshi Das

Explaining Employment Trends in the Indian Economy: 1993-94 to 2011-12 | Ankita Gandhi, Jajati Parida, Santosh Mehrotra, Sharmistha Sinha

 

4) Female Labour Force Participation Rate Declines with Better Economic Conditions in India

The share of women in the labour force as well as labour participation rate of women has been declining for the last quarter of a century. However, according to this 2013 paper, women’s withdrawal from paid labour and their confinement to unpaid domestic activities is tied to the quest for social status and upward social mobility. 

Those who do enter and remain in the labour market are women from the most vulnerable households, as marginalised informal paid labour, thus feminising the most precarious forms of labour in the country.

 

Read more articles about women’s employment:

Explaining Falling Female Employment during a High Growth Period | Santosh Mehrotra, Sharmistha Sinha

Crisis in Female Employment: Analysis across Social Groups | Neetha N

Trade Liberalisation and Women’s Employment Intensity: Analysis of India’s Manufacturing Industries | Purna Banerjee, C Veeramani

Domestic Labour and Female Labour Force Participation: Adding a Piece to the Puzzle | Sirisha C Naidu

 

5) Unemployment is Higher among the Educated in India

A recent article published in February 2018, studies whether the factors responsible for unemployment among the educated differ from the uneducated. The unemployment rate among the educated is not only higher compared to the uneducated, it also increases with higher levels of education.  In both rural and urban areas, the unemployment rate among graduates and above is much higher than among those with secondary education and above.  One of the reasons is that the educated are not willing to join in low-grade informal jobs, but at the same time, sufficient regular salaried jobs are not available for them.

 

6) Manufacturing is No Longer an “Engine of Growth”

This 2016 paper examines the stagnating employment share of manufacturing in a high-growth regime in India. According to this paper, the manufacturing sector, which recorded declining employment elasticity in the organised sector, will not be able to mend the gap between growth and employment. The conflict between growth of output and growth of employment entail the age-old question of choice of techniques, an issue that has become even more constricted in the context of open economies.This means that in the context of an economy where technological frontiers are largely determined by choices suitable for labour scarce economies, there is hardly any chance of market forces instilling some self-regulation with respect to use of such technologies. 

 

Read more about the decline of the manufacturing sector as a driver of employment:

Casualisation of Urban Labour Force: Analysis of Recent Trends in Manufacturing | Jesim Pais

Growth sans Employment: A Quarter Century of Jobless Growth in India's Organised Manufacturing | G Raveendran, K P Kannan

Growth in Organised Manufacturing Employment in Recent Years | Bishwanath Goldar

Organised Manufacturing Employment: Continuing the Debate | Bishwanath Goldar

 

7) The Pace and Nature of Employment Generation in India is Not Adequate Given the Challenges on the Labour Supply Front

This 2014 paper argued that overall, the generation of non-agricultural employment in the Indian economy has fallen behind the growth in the supply of “potential” non-agricultural workers. 

  • For people in rural areas, construction has virtually been the only source of non-agricultural employment after the mid-2000s. 
  • Between 2004-05 and 2011-12, as India’s total population (aged 15 to 59 years) increased by 113 million, the population of students among them increased by 41.5 million – that is, 37% of the incremental population. 
  • Large numbers of the young in rural areas left agriculture to join educational institutions.The proportion of students to the incremental population was considerably higher at 45% in rural areas. 
  •  The growth in the population of students who are 15 years and above reduces labour supply for now, but raises the numbers of educated persons who would be demanding high quality jobs in the future. 

 

In the future, it is more than likely that with the rise in education levels, India’s rural workers will demand better quality jobs in the coming years – outside agriculture and outside even construction. Unless India’s economic policies are geared towards a significant revival in the growth of decent jobs, the country risks losing its demographic dividend.

 

Read more about non-agricultural employment in India:

Crisis in Indian Agriculture: Can It be Overcome? | M V Nadkarni

Drivers of Non-Farm Employment in Rural India: Evidence from the 2009-10 NSSO Round | Manoj Jatav, Sucharita Sen

On the Spatial Concentration of Employment in India | Ajay Sharma, S Chandrasekhar

 

 

 

The Grid

The recent attempt to pass a 4.5% sub-quota for Muslims under backward classes has drawn the community into the reservation framework. In this light, it is important to recognise castes within...
In the 1930s, for the first time in Indian politics,Ambedkar jointly addressed caste and class, unravelling the connections between caste, class, and religion in Indian society. A focus on the anti-...
The 2017 draft guidelines on the operation of unmanned aerial vehicles, or drones, indicate a reversal of the government’s earlier misgivings about drone technology. However, in a field with rapid...
A reading list assesses if Direct Benefit Transfer (DBT) is the answer to leakages in the Public Distribution system (PDS). 
Karnataka will be going to the polls this year before May. Since 1985, every government, no matter its performance, has been voted out after one term. With the ruling Congress and the Bharatiya...
Back to Top