If there is a single issue that has dominated the election discourse over the past two months, it has been India’s crisis of jobs. But what exactly is this so-called employment challenge? While one hears anecdotal stories of educated youth not finding employment, jobs mean different things to different people.
If it means any engagement in gainful productive activity, then the growth of employment since 2017-18 has been the highest in recent years, with the total number of workers in the economy increasing from 458 million in 2017-18 to 563 million in 2022-23, as reported by Periodic Labour Force Surveys (PLFS).
Last week, the National Statistical Office (NSO) released estimates from quarterly surveys for urban areas for January-March 2024; these confirm the trends reported earlier. Urban males aged above 15 years have seen their workforce participation increase from 67.7% in January-March 2022 to 69.8% in January-March 2024. The increase is greater for urban females, whose workforce participation rate rose from 18.3% to 23.4% over the same period.
But then, why is employment an issue? Primarily because in an economy like ours, with significant economic distress, getting jobs is almost a necessity. Most people in the working age-group need some means of earning a livelihood, with only a few able to survive on accumulated wealth. For India’s vast majority, joblessness is an unaffordable luxury.
Which also implies that unemployment statistics are not the only way to understand the challenge. While useful, this data represents only one aspect of the problem. A nuanced look would show that rising employment data may mask increasing distress in the economy.
Most employment gains have been in agriculture and among women workers; this suggests distress-induced job seeking over the last five years. Also consider that rising economic growth is usually associated with a declining share of workers in agriculture, but this trend held firm only till 2017-18 and saw a reversal after that, raising questions about non-farm job creation.
Anxiety over jobs extends to those who want superior employment, a significantly large group. Among those who are employed, the last decade has seen a deterioration in job quality and also a decline in earnings from such work. While casual wage labourers in rural areas continue to suffer declining real wages for farm and non-farm work, the decline has been sharper for regular employees.
PLFS data suggests a decline in rural regular wages by 1.3% per annum in the last five years, with urban regular wages declining at 2.7% per annum. In fact, regular worker wages have been declining since 2011-12, with real wages in rural areas declining at 0.6% per annum since 2011-12 while urban wages declined at 1.2% per annum since 2011-12.
Quality of employment has been a bigger challenge. The only thing that distinguishes a regular worker from a casual wage worker is the regularity of employment. But this scenario is bleak. Almost two-thirds of India’s regular workers do not have a written contract, while only one-fourth have one that is longer than 3 years. Both these indicators have worsened since 2011-12.
The decline in real earnings from regular employment has led to a situation where the earnings of the bottom quintile of regular workers is no different from the bottom quintile of casual workers. In 2022, both received average monthly earning of about ₹3,000 per month or ₹100 per day.
Earlier this year, while releasing the India Employment Report 2024 of the International Labour Organisation (ILO) and Institute for Human Development, the chief economic advisor (CEA) was criticised for saying that the government cannot create jobs for everyone.
The CEA may be right in a general sense, given the limitations of the government in creating public-sector jobs, but the administration’s responsibility is not just to create government jobs, but also to create enabling conditions for the private sector to employ people in good jobs.
It is also the duty of the government to provide an enabling framework of regulations for decent work, including provisions of social security to those who are either employed as regular workers or are self-employed. Instead of political promises of creating millions of jobs, a better way to deal with the employment challenge is to initiate structural reforms that can encourage labour-intensive sectors as well as small and medium enterprises. India must improve the quality of employment to assure people social security as well as better earnings.
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