For the first time in the country's history, total employment declined by 9 million between 2011-12 and 2017-18 revealing an unprecedent trend. According to a recently released academic paper titled: India’s Employment Crisis: Rising Education Levels and Falling Non-agricultural Job Growth by Santosh Mehrotra and Jajati K Parida and published by the Centre of Sustainable Employment at the Azim Premji University, employment fell from 474 million in 2011-12 to 465 million in 2017-18.
The Indian economy is passing through an unprecedented phase in its employment history, in which total employment (Workforce) is declining, and open unemployed and disheartened Not-in-Labour Force-Education-Training” (NLET) youth (a reserve army) are rising massively, the study said.
Mehrotra is Professor of Economics at Jawaharlal Nehru University while Parida teaches at the Central University of Punjab.
The paper is based on both the recent 'Employment and Unemployment' and 'Unincorporated Non‐Agricultural Enterprise' survey data of the National Sample Survey (NSS). The unit data collected during 2004-05 and 2011-12 employment and unemployment rounds and the annual Periodic Labour Force Survey (PLFS), 2017-18 have also been used for obtaining various labour market indicators: the Labour force, workforce, unemployment and Not in Labour force Education and Training (NLET), the study added.
Here are its key findings:
Rise in share of informal jobs: The share of regular and formal employment increased marginally due to the growth of formal jobs in the private sectors. At the same time, the share of informal jobs within government/public sector increased, the study said. A dominant share of jobs is still generated by micro and small units in the unorganised sectors without any formal or written job contract.
Service sector is driving job growth: The service sector is driving growth of jobs in the non-farm sectors, while employment growth in construction has decelerated along with a fall in manufacturing employment between 2011-12 and 2017-18. While the job market is showing sluggish demand conditions, on the supply side the increasing influx of youth, who recently have completed education and training, has resulted in a massive rise in the number of open unemployed and disheartened labour force.
Fall in employment in agriculture, manufacturing across states: The agriculture sector continued to register decline in employment at the rate of 4.5 million per annum (about 27 million in total) between 2011-12 and 2017-18. The share of employment in agriculture and allied sector also declined from 49 percent to about 44 percent. Manufacturing also recorded a 3.5 million decline in jobs, which resulted in a fall in its share of employment from 12.6 to 12.1 percent.
Falling manufacturing jobs is the opposite of the goal of ‘Make in India’, and the opposite of what is desirable if the process of structural transformation is to be sustained.
The non-manufacturing sector (mostly construction ) which was creating about 4 million jobs per annum between 2004-05 and 2011-12, created only about 0.6 million per annum between 2011-12 and 2017-18.
Mounting youth unemployment causes an upsurge in the disheartened labour: The labour force (those looking for work) increased only by about 10 million to reach 495 million between 2017-18, because both Labour Force Participation Rate (LFPR, or share of those in working age looking for work) and Work Participation Rate (WPR, or share of those looking for work actually finding work) declined from 39.5 percent to about 37 percent, and 38.6 percent to about 34.7 percent respectively between 2011-12 and 2017-18. For youth, LFPR fell from 44.6 percent to 38.3 percent, and WPR fell from 42 percent to 31.4 percent between the same period.
Massive increase in unemployment among educated youth: Overall unemployment rate (based on CWS) increased to an all-time high of 8.8 percent in 2017 -18 from 3 percent in 2011-12 (Table 1) . For each level of education (see Figure 3), the unemployment rate increased between 2011-12 and 2017-18—among illiterates from 1.7 percent to 7.1 percent, youth having primary education from 3 percent to 8.3 percent, middle education from 4.5 percent to 13.7 percent, secondary education from 5.9 percent to 14.4 percent, higher secondary education 10.8 percent to 23.8 percent, graduates 19.2 percent to 35.8 percent and from 21.3 percent to 36.2 for postgraduates. Moreover, for the graduates with technical education degree the unemployment rate was the highest (37.3 percent). In the case of formally vocationally trained this rate was 33 percent. The incidence of unemployment almost doubled from 6.1 percent between 2011-12 to 17.8 percent in 2017-18 across all education categories.
Rising disheartened labour force, a potential threat for the economy: The slow growth (or scarcity) of non-farm jobs and the rising open unemployment together have
resulted in a massive increase of disheartened youth. Youth “Not in Labour Force, Education and Training (NLET)” increased in India by about 2 million per annum between 2004-05 and 2011-12,
which further increased by about 3 million pa 2011-12 and 2017-18. About 100.2 million youth declared themselves as NLET between 2017-18. The states in which incidence of unemployment is higher, they also have reported a large number of the disheartened labour force in the form of NLET youth. Uttar Pradesh ranked top among the states having about 21 million NLET youth in2017-18. It is followed by Bihar, West Bengal, Maharashtra, Madhya Pradesh, Andhra Pradesh, Rajasthan, Gujarat, Karnataka, Tamil Nadu, Odisha, Jharkhand and Assam.
Micro and small enterprises still hold the key role in creating jobs: The overall growth in non-farm sector employment is driven by enterprises which hire less than
10 workers in India. These enterprises contributed about 68 percent of the total non-farm employment between 2017-18. In manufacturing, their share is 61 percent, while in nonmanufacturing and services their share is about 66and 71 percent respectively between 2017-18. This result shows why the share of informal and unorganised sector employment is still so high in India, despite a rise in the number of registered enterprises. Because even though these enterprises might have registered themselves under GST to continue their business (and pay sale tax), they could not provide employment with social security benefits to their employees because of the size of their business.
Updated Date: Nov 01, 2019 11:24:08 IST