Jobs decline for first time in six years due to agri, manufacturing: Study

Amid a debate on jobless growth, a new study has found that employment actually fell by around nine million between 2011-12 and 2017-18 for the first time in the country. 

This was so because agriculture and manufacturing saw decline in jobs, while construction and services could not offset this fall, according to a paper penned by Santosh Mehrotra and Jajati K Parida and brought out by the Centre of Sustainable Employment at the Azim Premji University.

The total employment in the economy stood at 474.2 million during 2011-12, which declined to 465.1 million during 2017-18, according to a paper on India’s Employment Crisis: Rising Education Levels and Falling Non-agricultural Job Growth.

2017-18, the concluding year of the study, was the year following demonetisation, but the study did not mention the government move to ban the high-value currency of Rs 500 and Rs 1,000.

The states that were ranked on top by employment loss numbers during 2011-12 and 2017-18 include Uttar Pradesh (3.2 million decline), Odisha (2.1 million), Gujarat (1.5 million), Andhra Pradesh (1.5 million), Rajasthan (1.5 million), Kerala (1.4 million ), Jharkhand (1 million ), Maharashtra (0.8 million) and Punjab (0.8 million).

The paper says the agriculture sector continued to register a decline in employment at the rate of 4.5 million per annum (about 27 million in total) during 2011-12 and 2017-18.

The share of employment in agriculture and allied sector also declined from 49 per cent to about 44 per cent in this period.

During this period, manufacturing also recorded a 3.5 million decline in jobs, resulting in a fall in its share of

employment from 12.6 to 12.1 per cent. 

"Falling manufacturing jobs is the opposite of the goal of ‘Make in India’, and the opposite of what is desirable if the process of structural transformation is to be sustained," says the paper.

The non-manufacturing sector (mostly construction ), which was creating about 4 million jobs per annum during 2004-05 and 2011-12, created only about 0.6 million per annum during 2011-12 and 2017-18.

Slow growth of construction jobs has negative implications for low-skilled employment, real wages and the incidence of poverty, the report says.

"Since real wages remained flat during 2011-12 and 2017-18, particularly in rural areas, it could be argued that the incidence of poverty may not have declined unlike what was anticipated by some optimists," it says.

The only sector which sustained growth of jobs -- three million per annum -- is services, although the quality of jobs in this sector is mostly poor (outside of modern services). 

The paper says while falling 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.

"To sustain the growth of income, improve standard of living, and to reduce poverty, employment opportunities in manufacturing and construction (although a transitory sector) is necessary. As this would not only sustain the structural transformation

process, it would also help sustain the growth of GDP over the long run," it says.

 

The study says due to a decline of employment in agriculture and manufacturing and slow growth of construction jobs, the process of structural transformation, which had gained momentum post 2004-5, has stalled since 2012. 

Though the share of regular and formal employment increased marginally in this period, most jobs are still generated by micro and small units of the unorganized and private sectors.

In contrast, the number and share of informal jobs within government and public sector increased. Moreover, contract jobs and jobs without any written job contract increased massively in both government and private sectors.

Not surprisingly, real wages have not increased between 2011-12 and 2017-18 in neither rural nor urban areas.

A comprehensive employment policy combined with an industrial policy is necessary to address agrarian transformation and boost real wages in rural areas, say authors.