For The First Time In India’s History, Employment Drops By 9 Million In 6 Years: Study

A recent paper published by the Centre for Sustainable Employment, Azim Premji University has shown an “unprecedented” fall in total employment from 2011-12 to 2017-18.

The study conducted by Santosh Mehrotra and Jajati K. Parida, says youth employment “for the first time in India’s history” has dropped by 9 million between these years. Mehrotra is Professor of Economics at Jawaharlal Nehru University while Parida teaches at the Central University of Punjab.

By youth, the study refers to people in the age group of 15 to 29 years of age. The total number of unemployed youth went up marginally from 8.9 million in 2004-05 to 9 million in 2011-12 and later shot up to 25.1 million in 2017-18.

Though the share of regular and formal employment increased marginally, most jobs are still being occupied by micro and small units of the unorganised and private sectors (68% of the total non-farm employment during 2017-18), the study found. The share of informal jobs has increased in the public sector as well, pointing at a lack of decent government jobs.

The study also shows a trend of increasing contractualisation in both government and private jobs.

The agricultural sector witnessed a decline in employment at a rate of 4.5 million per annum (about 27 million in total) during 2011-12 and 2017-18. The share of employment in the agricultural and allied sector declined from 49 per cent to about 44 per cent.

According to Mehrotra, while the total jobs in the agricultural sector have fallen massively from 232 million in 2011-12 to 205 million in 2017-1, the rate of new job creation in the other sectors of the economy has not been sufficient to absorb the excess labour.

The jobs have gone up in the services sector and the non-manufacturing sector from 55 million to 59 million, yet, manufacturing saw total employment fall from 60 million to 56 million between 2011-12 and 2017-18.

The labour-intensive manufacturing sector recorded a decline of 3.5 million jobs and the share of manufacturing in total employment has slipped from 12.6 to 12.1 per cent.

There has been a massive slowdown in the growth of construction jobs and non-manufacturing created only 0.6 million jobs per year during 2011-12 and 2017-18 as compared to four million jobs every year from 2004-05 to 2011-12.

The only sector with sustained job growth was that of services (3 million per annum). There has been a 17.3 million rise in regular salaried workers in this sector during 2011-12 and 2017-18. However, the quality of jobs is mostly poor in this sector.

“While falling total and youth employment in agriculture is good news from the structural transformation point of view, falling manufacturing employment and decelerating construction employment growth is bad news for the economy, which moved up to lower-middle-income status just over a decade ago,” the study said.

“The slow growth (or scarcity) of non-farm jobs and the rising open unemployment together have resulted in a massive increase of disheartened youth,” state the authors.

“A reflection of this is that the number of youth declaring themselves as Not in Labour Force, Education, or Training rose to over 100 million in 2017-18 from 83 million in 2011-12. These are young people who are disheartened by the state of affairs and are neither looking for jobs nor are they interested in studying or training themselves,” Mehrotra told The Wire.

Two Contrasting Reports

According to The Indian Express, the study is “in stark contrast to the recent study by Laveesh Bhandari and Amaresh Dubey, which was commissioned by the Economic Advisory Council to the prime minister.”

This study had stated that total employment grew from 433 million in 2011-12 to 457 million in 2017-18. The latest study by Mehrotra and Parida, however, says that employment fell from 474 million in 2011-12 to 465 million in 2017-18.

A major reason for this difference could be because the estimates for 2004-05 and 2011-12 in the study by Bhandari and Dubey are much lower than that in Mehrotra and Parida. Mehrotra said that they have used only Usual Principal Status (UPS) and not Usual Principal and Subsidiary Status (UPSS) in their calculations.

Under UPS, a person is considered part of the labour force if he or she works for 183 days or more in a year. Under UPSS, a person who has worked even for 30 days in a year is considered employed.

In conclusion, the authors suggest a comprehensive employment policy combined with an industrial policy “to address agrarian transformation, boost real wages in rural areas, ensure industrial development, taking skill issues into consideration.”

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