Unorganised sector jobs not growing for 5 years; note ban may have just deepened the crisis

New Delhi: Demonetisation and its impact on India’s informal economy has been a subject of heated debates since November last year with no definite conclusion coming in due to the absence of data. But now, with the National Sample Survey Organisation (NSSO) releasing the 2015-16 data for jobs in the non-agricultural, non-construction non registered segment, one can get a better grip on how much this sector contributes to the overall job market. It is clear from the survey findings that this sector and its job creation potential  failed to keep up with the country’s economic growth. In five years till 2015-16, the number of Indians engaged in non-farm employment (excluding construction sector) rose by a mere three percent even when the number of such enterprises grew by almost 10 percent and wages for people working in this sector rose by over 86 percent.

In 2010-11, about 10.8 crore workers were engaged in unincorporated non-agricultural enterprise activities (excluding construction) and  this number rose to just 11.13 crore by June 2016, according to the NSSO’s ‘Key Indicators of Unincorporated Non-agricultural Enterprises (Excluding Construction) in India (73rd round)’. That means just 33 lakh people were added to this segment of India’s informal workforce in five years or an average of 6.6 lakh each year. The total number of enterprises in such category rose from 5.77 crore to 6.34 crore by 2016 and the average annual wage increased from Rs 47,016 to Rs 87,544.

 Unorganised sector jobs not growing for 5 years; note ban may have just deepened the crisis

Representative image. Reuters

According to data provided in parliament quoting another survey by the NSSO, the total employment in both organized and unorganised sector in the country in 2011-12 were 47 crore Indians. So the sector of non-agri, non-construction workers was about 22 percent or a little over a fifth of India’s total workforce in 2011-12. So the virtual stagnation in job growth we are looking at impacted at least every fifth Indian worker. Job addition being minimal in this five-year period was reflected in the fact that while the GVA (gross value added) per enterprise grew 67 percent since 2010-11, the GVA per worker rose at a faster pace–78 percent. Fixed assets per enterprise, too, didn’t grow much—just 10 percent since the 2010-11 survey, The Financial Express report said.

Were fears of demonetisation hitting this sector of the economy, the hardest, unfounded then? Remember, demonetisation was announced in November last year and immediately there was a slowdown in the economy which was supposed to have hit the informal sector the hardest since this segment of the economy runs largely on cash. So the latest NSSO data could mean that an already slowing informal sector may  have been dealt a further body blow by the sudden sucking out of over 80 percent of the currency in circulation in November last year. It is another matter that demonetisation and its impact on employment has never really been acknowledged by the government, which has consistently cited lack of data to throw up its hands on any questions about the subject.

Also, it is pertinent to note here that the category of workers in the unincorporated non-agricultural sector in India is dominated by own account workers and unpaid family members helping with household enterprises. The estimates of workers derived from the survey showed that only a quarter of the estimated number of workers in the unincorporated non-agricultural sector (excluding construction) during 2015 -16 were hired workers. The average annual emoluments per hired workers were higher in urban areas than rural areas for all broad activity categories. The average annual emolument per hired worker estimated from the survey was Rs 87,544 versus Rs 47,016.  The highest emolument per hired worker was reported for ‘other services (Rs 1,01,094) followed by trading (Rs 80,267) and manufacturing (Rs 75,595).

Another interesting factor which emerged from the latest survey was this: By the turn of the decade, female workers constituted roughly 26.4 percent of total workers in Indian unincorporated non-agricultural enterprises. That means, roughly only four workers in India’s vast unorganized or informal sector was a female in 2010-11. One would think that with the stress on women’s financial independence and an increase in their overall work participation, this statistic would have improved over five years. But findings of the same survey done in 2015-16 show women continue to be at the margins of India’s informal economy.

At all India level, only about one in five enterprises were headed by a female in 2015-16 (this leg of the survey does not talk of female workers, only how many enterprises are headed by them). Does this mean the participation of women in informal jobs, with no job security, has fallen over these five years?  It is also interesting to note that female proprietary enterprises had a share of 45 percent among the manufacturing enterprises but a mere 8.7  percent in trading and 7.4 percent in other services.

According to NSSO data, in 2015-16, Uttar Pradesh reported highest share in the number of enterprises (14.20 percent) which were non-agricultural and not engaged in construction activity and were also unregistered – all attributes of the informal sector. West Bengal was a close second with 13.99 percent of such enterprises across the country being housed in this state. In the immediate previous such survey, Uttar Pradesh was still the go-to destination for informal workers with the state’s share in all-India numbers at 15 percent on 2010-11. Liberalization of labour reform would be a significant part of Niti Ayog’s suggestions to the Yogi Adityanath government soon. With job creation in the informal sector hardly growing, when pink slips and terminations rise in the formal sector too (as Niti may prescribe), the overall job creation scenario in the country’s largest state is likely to worsen, The Times of India report said.

In 2010-11, Uttar Pradesh had the highest share in total number of workers (15 percent) engaged in non-farm. Non-construction work followed by Andhra Pradesh (11 percent), West Bengal (11 percent), Maharashtra (9 percent), and Tamil Nadu (8 percent). These five states accounted for 54 percent of total workers of the unincorporated non-agricultural sector excluding construction. The pecking order obviosuly did not change in these five years since Uttar Pradesh continued to be at the top in estimated number of workers namely at 14.9  percent, followed by West Bengal (12.2 percent), Tamil Nadu (8.7 percent), Maharashtra (8.2 percent) and Karnataka (6.4 percent) accounting for nearly 50 percent of the total number of workers engaged in unincorporated non-agricultural sector (excluding construction) at all India level.

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Updated Date: Jul 24, 2017 16:57:23 IST