Analysts are still assessing the implications of Key Indicators emerging from the National Sample Survey Organisation’s (NSSO’s) employment survey relating to 2009-10. Their effort has been made more difficult by the criticism from within the government that the survey has grossly underestimated female employment, which is more difficult to identify. Moreover, even with regard to the male workforce, there is an effort to discount the evidence on deceleration in employment growth during the period 2004-05 to 2009-10, when India for the first time recorded rates of growth of between 8 and 9 per cent on average (Refer Economy Watch titled No jobs out there). It has been argued that much of this deceleration in workforce expansion is the result of the substantially larger number of young people opting to educate themselves.
This is indeed partially true. In the case of the 15-24 age group, which is the one that is most likely to choose between education and work, the increase in the number of those reporting themselves as occupied with obtaining an education was much higher over the five years ending 2009-10 (16.7 million in the case of males and 11.9 million in the case of females) than was true over the previous five years (5.6 and 5.2 million respectively). This huge difference, which is a positive development from the point of view of generating a better and more skilled workforce would have reduced the size of the labour force and contributed to the deceleration in the number of workers.
To deal with the criticism that the figures on female employment are gross underestimates, and get on with the task at hand, we can restrict the analysis to movements in male employment. In the rural areas, male usual (principal and subsidiary) status employment increased by only 13.4 million between 2004-05 and 2009-10, as compared with 20.2 million between 1999-2000 and 2004-05. The corresponding figures for the urban areas were 9.8 million and 15 million respectively. Thus there is clear evidence of deceleration here as well.
As noted earlier, this decline in employment is partly explained by the sharp increase in those pursuing an education in the 15-24 age group. We, therefore, turn to an examination of the differential trends in male employment in the two main working age groups: 15-24 and 25-59. One positive signal here is that male employment in the 25-59 age group rose when that in the (education-opting) 15 to 24 age group fell. Male employment (rural and urban) in the 15-24 age group fell by 6.2 million between 2004-05 and 2009-10 as compared to an increase of 6.5 million during 1999-2000 and 2004-05. Contrary to this, the figures for the changes in the 25-59 age group were 28.8 and 26.2 million respectively. That is, there was a larger absolute increase in 25-59 age group employment in the more recent period when compared with the previous one. However, the difference here too is small and the rate is marginally lower (13.3 as opposed to 13.8 per cent) given the rising base value.
Thus, even if we restrict ourselves to the most favourable category in aggregate principal status employment in the case of males, which is the 25-59 age group, the most we can say is that employment growth has not been lower during the five years ending 2009-10, as compared to the previous period. This is despite the fact that these were the years when there was a substantial acceleration of GDP growth from the 6-7 per cent range to the 8-9 per cent range between these two periods.
There seems to be a second positive that emerges on first examination of the data relating to male, 25-59 age group employment, which is that much of the increase in employment is paid employment as opposed to self-employment. This points to a structural shift in employment generation since most of the additional male employment generated in this age group during the 1999-2000 to 2004-05 period was in the self-employment category.
Self-employment rose by 21.8 million during that period, as compared with just 4 million during the more recent period. On the other hand, during 2004-05 to 2009-10, paid (regular or casual) employment increased by 24.6 million, as compared with just 4.4 million during the previous period. Given the fact that self-employment could be substantially distress-driven, this is indeed welcome.
But that assessment needs to be moderated on two counts. First, the structural shift in the nature of additional employment occurs in a period when aggregate employment even among 25-59 years-old males has not been rising any faster. Second, around two-thirds of the increase in paid employment in the recent period is in the casual work category, which is likely to be less well-paid and volatile, leading to much lower earnings.
Moreover, the evidence points to the growing inability of the commodity producing sectors to absorb additional labour. If we consider the period between 1999-2000 and 2004-05, the increase in employment that occurred was distributed across agriculture, manufacturing construction and services, though services and construction dominated in the case of males and agriculture in the case of rural females. As compared to this, during the 2004-05 to 2009-10 period, both agriculture and manufacturing made negative or negligible contributions to the increase in employment, whereas construction played the dominant role in the case of both males and females. Clearly even the small contributions made by the commodity producing sectors to employment increases are disappearing, making the system dependent on construction and services, especially the former.
In sum, even among sections of the population who would not and have not been opting for education as activity and for whom the identification of work participation may not be difficult, the main source of employment during the high growth years seems to be casual work in the construction sector. This is likely to be among the more volatile among employment categories, with lower wages, higher uncertainty of employment and, therefore, limited earnings potential. So even if we take account of the increased participation of the young in education and the possible underestimation of the employment of women, the evidence seems to point to unsatisfactory labour market outcomes in the period when India transited to its much-celebrated high-growth trajectory.
