Two developments have been taken as confirmation of
the view that India has transited to a virtuous, high
growth trajectory in recent years. One is the evidence
of near sustained 8-9 per cent rate of GDP growth
since 2003-04 and the rather quick and sharp recovery
of GDP growth after the deceleration triggered by
the global financial and economic crisis. The second
is the evidence of a significant pick up in employment
growth rates between the 55th and 61st Rounds of the
National Sample Survey Organisation relating to 1999-2000
and 2004-05.
These
developments are seen as evidence that India is now
not only placed on a high-growth trajectory, but that
this trajectory is beneficial from an employment and
social development point of view. However, there are
some who still find the need to raise two sets of
questions. The first set relates to the sustainability
of this growth given the factors that are responsible
for the traverse to this higher growth trajectory.
The second relates to the interpretation of the evidence
on the employment and distributional outcomes associated
with this growth. This article is concerned with the
fall-out of high growth for the level and pattern
of employment.
The quinquennnial large sample rounds of the NSSO
provide the most exhaustive data on employment trends
and conditions in India. Unfortunately, the results
of the latest survey on this subject– the 66th Round,
covering 2009-10 – are yet to be released, making
it difficult to assess the actual impact on employment
of the transition to high growth since 2003-04, since
the previous large sample round relates to 2004-05.
However, the 64th Round of the NSS which had migration
as its focus and includes the annual 'thin' sample
coverage of employment and unemployment does provide
us with an additional source of data. Since the 60th
Round, the annual thin sample rounds covering employment
have used a separate schedule (Schedule 10) on employment
and unemployment which is canvassed over a separate
set of sample households. Moreover, the overall sample
size for the NSS 64th round is seen as comparable
with that of the large sample NSS 61st round and both
were oriented towards households and persons as opposed
to being enterprise based. The real difference is
that the second stage stratum (SSS) in NSS 64th round
was designed to net more migrants and remittance recipient
households since migration was the main focus of this
round. On the other hand, the SSS in the NSS 61st
round was tailored to give adequate representation
to different strata of the population to study their
employment characteristics. This difference notwithstanding,
it could be argued that we have a reasonably comparable
set of estimates for the years till 2007-08.
The availability of the 2007-08 estimates is of significance
because of the important changes that had occurred
with respect to employment during the first five years
of this decade relative to earlier periods. The first
important change from the previous period related
to aggregate employment growth itself. The late 1990s
was marked by a dramatic deceleration of aggregate
employment growth, which fell to the lowest rate recorded
since such data began being collected in the 1950s.
However, the period 1999-2000 to 2004-05 witnessed
a significant recovery, as shown in Chart 1.
Chart
1 >> Click
to Enlarge
While aggregate employment growth
(calculated at compound annual rates) in both rural
and urban India was still slightly below the rates
recorded in the period 1987-88 to 1993-94, it clearly
recovered sharply from the deceleration of the earlier
period. The recovery was most marked in rural areas,
where the earlier slowdown had been sharper.
What is noteworthy, however, is that if we include
another relatively high growth year 2007-08, the rate
of growth over 1999-00 to 2007-08 hardly points to
much acceleration in employment growth, with the increase
in the growth rates in urban areas being marginal
from 2.27 per cent to 2.64 per cent. What is more
striking is that the annual rate of growth of rural
employment, which had risen from 0.66 per cent between
1993-94 and 1999-2000 to 1.97 per cent between 1999-2000
and 2004-05 (which was a year of indifferent agricultural
performance), was at significantly lower 1.27 per
cent over the period 1999-00 to 2007-08 (which was
a good agricultural year). To recall, the period between
2004-05 and 2007-08 was the period when India had
moved to the much higher, close-to-9 per cent GDP
growth trajectory. A slower rate of employment expansion
in this period points to a significant fall in the
elasticity of employment with respect to output.
The importance of the years concerned being good or
bad agricultural years comes through from an examination
of labour force participation rates. There was an
increase in labour force participation rates for both
men and women in 2004-05 relative to 1999-00 (Table
1). This includes both those who were actively engaged
in work and those who were unemployed but looking
for work. The significant increase in female participation
may have been because of the need (in the lands cultivated
by individual households) for women to substitute
for male workers who were looking for better opportunities
outside agriculture in a poor agricultural year. Or
it may be a reflection of the need to augment household
earnings in a bad year.
These possibilities are corroborated by the fact that
in the good agricultural year 2007-08, male participation
rates increased marginally, while that of women fell
significantly. This could have been because the compulsions
operating in a bad year were not as operative. This
suggests that higher participation rates as in 2004-05
need not necessarily be a reflection of improved employment
performance. In fact, the increase in aggregate LFPRs
in 2004-05 incorporates declining rates of labour
force participation among the youth, that is the age
group 15-29 years, and a rise for the older age cohorts.
|
|
Usual
status (PS+SS) |
Current
daily status |
|
|
1993-94 |
1999-2000 |
2004-05 |
2007-08 |
1993-94 |
1999-2000 |
2004-05 |
2007-08 |
|
Rural males |
56.1 |
54 |
55.5 |
55.9 |
53.4 |
51.5 |
53.1 |
53.6 |
|
Rural females |
33 |
30.2 |
33.3 |
29.2 |
23.2 |
22 |
23.7 |
20.4 |
|
Urban males |
54.3 |
54.2 |
57 |
57.6 |
53.2 |
52.8 |
56.1 |
56.8 |
|
Urban females |
16.5 |
14.7 |
17.8 |
14.6 |
13.2 |
12.3 |
15 |
12.5 |
Table
1 >> Click
to Enlarge
Chart 2 >>
Click
to Enlarge
The changes in work force participation, provided
in Chart 2, mirror the changes in labour force participation
for 2004-05, but to a lesser extent. The biggest change
here was for urban males, many more of whom described
themselves as working in some fashion than did so
in the two preceding survey periods. On the other
hand in 2007-08, there was no similar significant
increase in male work force participation, as well
as a significant fall in the case of female participation
in work in both rural and urban areas. This partly
corroborates the argument advanced above.
One
of the more interesting features that emerge from
the data for 2004-05 was the shift in the type of
employment. There had been a significant decline in
wage employment in general. While regular employment
had been declining as a share of total usual status
employment for some time (except for urban women workers),
wage employment had continued to grow in share because
employment on casual contracts had been on the increase.
But the results of the 2004-05 round point to a fall
even in casual employment as a proportion to total
employment, as indicated in Chart 3.
Chart
3 >> Click
to Enlarge
Going
by the evidence for 2004-05 it appears that for urban
male workers, total wage employment was at the lowest
that it had been in at least two decades, driven by
declines in both regular and casual paid work. For
women, in both rural and urban areas, the share of
regular work had increased but that of casual employment
had fallen so sharply that the aggregate share of
wage employment has fallen. So there clearly appeared
to be a real and increasing difficulty among the working
population, of finding paid jobs, whether they were
in the form of regular or casual contracts. However,
by 2007-08 there were clear signs that this decline
in the share of casual labour in total was being partially
reversed especially in the case of females. Clearly
high growth had facilitated an increase in wage employment,
though this was still in the casual and not regular
category.
Chart
4 >> Click
to Enlarge
The fallout of these trends
was visible in the trends in self-employment (Chart
4). In 2004-05 there was a very significant increase
in self-employment among all categories of workers
in India. The increase was sharpest among rural women,
where self-employment accounted for nearly two-thirds
of all jobs. But it was also remarkable for urban
workers, both men and women, among whom the self-employed
constituted 45 and 48 per cent respectively, of all
usual status workers. What seems to have occurred
in 2007-08 was that the rise in the share of casual
employment had been accompanied by a fall in self-employment,
with the fall being sharpest again in the case of
females. Even so, all told, around half of the work
force in India currently does not work for a direct
employer. This is true not only in agriculture, but
increasingly in a wide range of non-agricultural activities.
|
Per
cent of Usual status employment (PS+SS) |
|
|
1993-94 |
1999-2000 |
2004-05 |
2007-08 |
|
Agriculture |
|
Rural males |
74.1 |
71.4 |
66.5 |
66.5 |
|
Rural females |
86.2 |
85.4 |
83.3 |
83 |
|
Urban males |
9 |
6.6 |
6.1 |
5.8 |
|
Urban females |
24.7 |
17.7 |
18.1 |
15.3 |
|
Manufacturing |
|
Rural males |
7 |
7.3 |
7.9 |
7.7 |
|
Rural females |
7 |
7.6 |
8.4 |
7.4 |
|
Urban males |
23.5 |
22.4 |
23.5 |
23.5 |
|
Urban females |
24.1 |
24 |
28.2 |
27.5 |
|
Construction |
|
Rural males |
3.2 |
4.5 |
6.8 |
7.7 |
|
Rural females |
0.9 |
1.1 |
1.5 |
2 |
|
Urban males |
6.9 |
8.7 |
9.2 |
9.5 |
|
Urban females |
4.1 |
4.8 |
3.8 |
4.3 |
|
Trade,
hotels & restaurants |
|
Rural males |
5.5 |
6.8 |
8.3 |
7.6 |
|
Rural females |
2.1 |
2 |
2.5 |
2.3 |
|
Urban males |
21.9 |
29.4 |
28 |
27.8 |
|
Urban females |
10 |
16.9 |
12.2 |
12.8 |
|
Transport,
storage & communications |
|
Rural males |
2.2 |
3.2 |
3.8 |
4 |
|
Rural females |
0.1 |
0.1 |
2 |
2 |
|
Urban males |
9.7 |
10.4 |
10.7 |
10.9 |
|
Urban females |
1.3 |
1.8 |
1.4 |
1.8 |
|
Other
services |
|
Rural males |
7 |
6.1 |
5.9 |
5.7 |
|
Rural females |
3.4 |
3.7 |
3.9 |
4.3 |
|
Urban males |
26.4 |
21 |
20.8 |
21 |
|
Urban females |
35 |
34.2 |
35.9 |
37.8 |
Table
2 >> Click
to Enlarge
Table
2 provides the details of the industry workers are
engaged in. As is to be expected given the short period
of time involved, there have been no major changes
in the structure of employment between 2004-05 and
2007-08, except for a rise in the share of construction
among rural males. Thus the trends in the structure
of employment prior to 2004-05 have been more or less
sustained. An important feature of this was the significant
decline in agriculture as a share of rural employment,
even as the share of manufacturing employment did
not go up commensurately for rural male workers. The
share of manufacturing employment has stagnated in
the urban areas as well. While there has been some
shift to construction, the share of trade, hotels
and restaurants seems to be stagnating.
Interestingly, the big shift for urban women workers
has been to manufacturing, the share of which has
increased by more than 4 percentage points in 2004-05
and remained more or less there in 2007-08. A substantial
part of this is in the form of self employment.
Thus, overall, the traverse to a high growth trajectory
does not seem to have delivered much on the employment
front. The growth rate of employment remains depressed,
even if not as low as during 1993-94 to 1999-2000.
Employment increases seem to occur when workers, especially
female workers, are pushed into the workforce by economic
circumstances like a bad agricultural year. The elasticity
of employment with respect to output increases seems
to have deteriorated with accelerated growth. Casual
wage labour and self-employment dominate the employment
scenario. And the non-agricultural sectors appear
to contribute inadequately to additions to employment
though these were the sectors that were expected to
take up the employment slack once neo-liberal policies
succeed in delivering growth.
