The country’s economy is witnessing a stagnating employment growth rate, weakening employment elasticity, slow structural transformation, and brewing structural problems in the labour market such as low female labour force participation and a rise in the unemployment rate (UR) with education levels, according to a study by D. Tripati Rao of the Indian Institute of Management (IIM), Lucknow. Prepared in collaboration with researchers from Birla Institute of Technology and Science, Pilani and the Union Ministry of Agriculture and Farmers Welfare, the study points to a surge in output growth and employment from 1987–88 to 2004–05, followed by ‘jobless growth’ from 2004–05 to 2018–19 and a subsequent trifling rebound thereafter.
In an academic paper based on the study published in the Indian Journal of Labour Economics, the researchers prescribed that a conscious effort to identify and promote the labour-intensive manufacturing sector will help in accomplishing inclusive growth. The researchers analysed data from the National Sample Survey Office (NSSO) Employment and Unemployment Survey, and Periodic Labour Force Survey Dashboard for the study. It examines the evolving employment and output growth scenario, and labour market situation in the country’s economy between 1983 to 2020–21.
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They found that the agricultural sector, though employing the most youth, contributed low value-added to the overall economy, resulting in significant employment challenges. “Apparently, economic growth, rather than creating more jobs, has resulted in net labour displacement. Alongside the number of jobs created, it is equally important to examine the quality and decency of jobs, as there is a strong linkage between productivity and job decency,” Prof. Rao said. Key policy interventions such as a conscious effort to make the manufacturing sector more labour-intensive for inclusive growth will create high linkage effects, uplifting various industries, the researchers said.
The study also points to significant gender disparity in the labour market and a growing level of unemployment for the highly educated youth than the less educated. In 2020–21, the total labour force in India stood at an estimated 556.1 million. “Out of this total, 292.2 million (54.9%) were self-employed, 121.1 million (22.8%) were in regular employment and an estimated 118.6 million (22.3%) were in casual employment. The number of unemployed people declined from 26.4 million in 2019–20 to 24.3 million in 2020–21 in India, while an additional 119 million people were not added to the potential labour force during the same. The estimates show that self-employment has been the chief driver of the Indian job market,” the paper said.
There is a persistence of gender-based disparity in the Labour Force Participation Rate (LFPR) in rural and urban areas and the decline of LFPR is higher for females as compared to males from 1983 to 2020–21. “The overall female Work Force Participation Rate (WFPR) for those aged 15–59 in 2020–21 stood at 32.46%, a full 44.55 percentage points below that of men. Further, the total percentage of male WFPR (81.10%) in the same year for aged 15–59 years is more than twice the rate for female adults (33.79%),” the study said.
The study said the unemployment rate (UR) in the country rises with education level. “The UR for the illiterate and less educated class (below primary) was 0.57% and 1.13% respectively while, for the highly educated class (graduates and above), it was 14.73% in 2020–21 for the age group ‘15–29 years’. This pattern follows across the years,” the report said.
Citing studies, it said the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), public works projects, and poverty alleviation measures have a favourable influence on the lives and livelihoods of rural people. “MGNREGA type of public projects tend to drive out private sector employment while raising wages in rural areas by 5%, increase in LFP among female, improvement in low-caste working bargaining power, increasing rural wage levels, and fall in reliance on high-caste employers,” the report said.
