01 Feb NO clear and consistent patterns in INDIA’S employment trend
CONTEXT: The third periodic labour force survey (PLFS) data for the year 2019-20 have recently been released.
Background: The two important indicators of structural transformation in any economy are-
- Rates of growth
- Changes in the structural composition of output and the workforce
After the 1991 reforms, India has experienced a consistent change in the growth rates, but the trend in employment has not revealed any consistent or clear pattern.
The economic growth rate (gross value added at constant prices)-
- GVA accelerated from 4.27% in the 20 years before 1991-2 economic reforms
- To 6.34% in the 20 years following the reforms and
- To 6.58% between 2010-11 and 2019-20 at 2011-12 prices.
With this growth, there was a decline in agriculture share→ From 30% in 1990-91 to 18% in 2019-20
A steady increase in the share of non-agriculture output in total economic output.
Two major sources of data on workforce and employment –
- The decennial population census
- The National Sample Survey Office (NSSO)
- The Periodic Labour Force Survey (PLFS), started in 2017-18 on an annual basis → available for three consecutive years i.e., 2017-18, 2018-19 and 2019-20.
PLFS data→ show an increase in the worker to population (WPR) ratio from 34.7% in 2017-18 to 38.2% in 2019-20.
- The employment has increased at a much faster rate than growth in population.
- The increase in WPR has been reported in the rural and urban population and in the male and female population.
- This increase in WPR has occurred in the midst of an increase in the labour force participation rate.
Another positive indication from PLFS data is that the gap between the male and female worker participation rate is narrowing down.
- As against 100 male workers, 32 female workers in the workforce in 2017-18.
- The number increased to 40 in 2019-20.
Women constituted 24% of the workforce in the country in 2017-18 and 28.8% in 2019-20.
- The unemployment rate in the female labour force in rural areas is far lower than the male labour force; while in urban areas, its vice-versa.
- The female LFPR in rural India is 33% higher than the rate in urban areas.
The unemployment scenario
As per, PLFS data :
- the unemployment rate based on principal status plus subsidiary status declined from 6.1% in 2017-18 to 4.8% in 2019-20.
- The number of unemployed persons has increased by 2.3 million between 2017-18 and 2018-19
- 45.6% of the workers in India are engaged in agriculture and allied activities
- 30.8% in services and 23.7% in industry
- There is no increase in the share of industry and services in total employment.
It means that the labour shift out of agriculture is not happening.
- Out of 56.4 million new jobs created between 2019-20 and 2017-18, 57.4% were created in the agriculture and allied sectors
- 28.5% in services and 14.5% in industry
Within the industry group-
- Employment in the manufacturing sector → increase of 1.8 million in two years
- Construction activity → an addition of 6.4 million new jobs
The young and educated labour force, sought more remunerative work outside agriculture but only a few succeeded as :-
Industry and services sectors → adopted capital-intensive, labour-displacing technologies plus production strategies, with the adoption of Artificial Intelligence and Internet of Things.
A well-established fact for post-liberalisation India is that → there is a dichotomy between the rising share of industry and services in national income without the increase in employment.
NOW, THE QUESTIONS INFRONT OF INDIA ARE :-
- To question the conventional economic development models and their applicability ?
- To rethink India’s strategy of striving for an industry-led growth model and explore a more relevant agri-centric model of economic transformation ?
- Need of a new model to create more attractive, more remunerative and more satisfying employment in and around agriculture?
TO SUM UP :-
Apart from Agriculture and allied sectors, India also has an urgent need to generate much more employment in the manufacturing and services sector alongwith the :-
(i) changes in labour laws discouraging industry to adopt labour-intensive production
(ii) employment-linked production incentives
(iii) special assistance for labour-intensive economic activities