India's employment perspective

Overview

• Economic reforms may have given a boost to industrial productivity and brought in foreign investment in capital intensive areas. But the boom has not created jobs. This was not unexpected. According to a report by the Washington-based Institute of Policy Studies (IPS), the combined sales of the world's top 200 MNCs is now greater than the combined GDP of all but the world's nine largest national economies. Yet, the total direct employment generated by these multinationals is a mere 18.8 millions -one-hundredth of one per cent of the global workforce.

• India's Ninth Five-Year Plan projects generation of 54 million new jobs during the Plan period (1997-2002). But performance has always fallen short of target in the past, and few believe that the current Plan will be able to meet its target.

• India's labour force is growing at a rate of 2.5 per cent annually, but employment is growing at only 2.3 per cent. Thus, the country is faced with the challenge of not only absorbing new entrants to the job market (estimated at seven million people every year), but also clearing the backlog.

• Sixty per cent of India's workforce is self-employed, many of whom remain very poor. Nearly 30 per cent are casual workers (i.e. they work only when they are able to get jobs and remain unpaid for the rest of the days). Only about 10 per cent are regular employees, of which two-fifths are employed by the public sector.

• More than 90 per cent of the labour force is employed in the "unorganised sector", i.e. sectors which don't provide with the social security and other benefits of employment in the "organised sector."

• In the rural areas, agricultural workers form the bulk of the unorganised sector. In urban India, contract and sub-contract as well as migratory agricultural labourers make up most of the unorganised labour force.

• Unorganised sector is made up of jobs in which the Minimum Wage Act is either not, or only marginally, implemented. The absence of unions in the unorganised sector does not provide any opportunity for collective bargaining.

• Over 70 per cent of the labour force in all sector combined (organised and unorganised) is either illiterate or educated below the primary level.

• The Ninth Plan projects a decline in the population growth rate to 1.59 per cent per annum by the end of the Ninth Plan, from over 2 per cent in the last three decades. However, it expects the growth rate of the labour force to reach a peak level of 2.54 per cent per annum over this period; the highest it has ever been and is ever likely to attain. This is because of the change in age structure, with the highest growth occurring in the 15-19 years age group in the Ninth Plan period.

• The addition to the labour force during the Plan period is estimated to be 53 millions on the "usual status" concept. The acceleration in the economy's growth rate to 7 per cent per annum, with special emphasis on the agriculture sector, is expected to help in creating 54 million work opportunities over the period. This would lead to a reduction in the open unemployment rate from 1.9 per cent in 1996-97 to 1.47 per cent in the Plan's terminal year, that is, by about a million persons - from 7.5 million to 6.63 million.

• In other words, if the economy maintains an annual growth of 7 per cent, it would be just sufficient to absorb the new additions to the labour force. If the economy could grow at around 8 per cent per annum during the Plan period, the incidence of open unemployment could be brought down by two million persons, thus attaining near full employment by the end of the Plan period, according to the Plan.

• However, there appears to be some confusion about the figure of open unemployment. The unemployment figure given in the executive summary of the Ninth Plan, gives the figure of open unemployment at 7.5 million while the annual report of the Labour Ministry, for 1995-96, puts the figure for 1995 at 18.7 million. An internal government paper prepared in 1997 put the unemployment figure at the beginning of the Eighth Plan at 17 millions and at 18.7 million at the end of 1994-95. Perhaps the Planning Commission referred to the current figure while the Labour Ministry figure referred to the accumulated unemployment backlog.

  Top
  

  Underemployment

• Open unemployment is not a true indicator of the gravity of the unemployment problem in an economy such as India, characterised as it is by large-scale underemployment and poor employment quality in the unorganised sector, which accounts for over 90 per cent of the total employment. The organised sector contributes only about 9 per cent to the total employment.

• Underemployment in various segments of the labour force is quite high.
  For instance, though open unemployment was only 2 per cent in 1993-94, the incidence of under-employment and unemployment taken together was as much as 10 per cent that year. This, in spite of the fact that the incidence of underemployment was reduced substantially in the decade ending 1993-94.

• According to the Planning Commission, the States which face the prospect of increased unemployment in the post-Ninth Plan period (2002- 2007) are Bihar, Rajasthan, Uttar Pradesh, Kerala and Punjab.

  Top
  

Top

Table 1 : Age structure of population: 1997-2002

Table 2 : Trends in  Labour Force Participation Rates
(Per Thousand of Population)

Note: Constituent shares in labour force in 1993-94 are Rural Male 0.499, Rural Female 0.270,
Urban Male 0.182 and Urban  Female 0.049.

Table 3: Participation in Labour Force by Age Group and by Sex: 1997 - 2012
(per thousand of population)

Note: (a) No change in labour force participation in age groups above 20 years.

Table 4 : Labour Force Projections by Age Groups

Table 5: Population and Labour Force: 1997 - 2012
(million - 1st April)

Table 6 :  Projections of Work opportunities 1997-2002

Table 7 : Population, Labour Force and Employment
(Million)

Notes:
1. Estimates of labour force and employment are on usual status concept and pertain to 15 years
and above.
2. Figures in brackets are compound growth rates in the preceding period.

(a) As on 1st January
(b) As on 1st July
(c) Population at the terminal year of the plan
(d) Required to attain near full employment.
(e) Unemployment reduces to negligible level by the year 2007 	  
(f) Labour force, employment and unemployment are stated as annual averages during the Plan period.

 Top
Home