Labour migrates to its last resort

Estimates from the January-April 2019 Consumer Pyramids Household Survey show that there were 404.25 million people employed in India. This was 1.5 million less compared to the 405.77 million estimated to be employed during January-April 2018 and 4.7 million lower than the 408.91 million employed during January-April 2017.

During January-April 2019, 36.6 per cent of the total employed persons were engaged in agricultural activities. Ninety per cent of these were into crop cultivation. The rest were engaged principally in horticulture, livestock, fishing, forestry or allied activities.

Over the past one year, while the total number of persons employed in some manner or the other declined by 1.5 million, the number of persons employed in agricultural activities increased by 5.1 million -- from 142.8 million to 147.9 million. This implies a rather substantial 3.6 per cent increase in employment in agriculture in the comparable rabi months of 2019 and 2018.

Most of the increased employment in agriculture has come from crop cultivation. Of the aforementioned 5.1 million increase, 3 million have gone into crop cultivation. Crop cultivation has seen a 2.3 per cent increase in employment in the 2019 rabi season. Livestock saw an increase of 1.9 million in the number of persons employed or a hefty 87 per cent.

Given that farm prices have been depressed and the livestock business has not been particularly attractive because of restrictions on meat consumption and cattle trade, there is no good reason for people to throng to these sectors for employment.

There are two possible explanations to this odd migration to tend to farms and livestock.

First, it is likely that employment did not actually increase in agriculture, but the sector merely absorbed the excess labour as it had no other place to go to. Farmers did not actually call out for more labour. But, family labour landed up in farms when they had no other place to go to. As we shall see further below, all non-agricultural sectors have seen a fall in employment.

A family farm always has scope to absorb some unpaid labour although such additions may not increase any production or profit. There is always an extra patch of the farms to tend to or the need to take the cattle to graze a little farther. Farm work can be spread thinly over available labour and keep everyone "employed" when there is no alternate work available to them.

Evidently, the extra hands on the farms did not serve much purpose. Rabi sowing in 2019 was four per cent lower than it was in 2018. Foodgrain sowing was down 4.5 per cent, pulses were down nearly six per cent and oilseeds were down marginally too.

The second reason could be that the PM-KISAN scheme that promises a unilateral payment of Rs 6,000 per family per year could have drawn some people back to the farms. The scheme was announced on February 1, 2019 and was to be implemented immediately.

Mining and manufacturing together accounted for 10 per cent of the total employment. In both these sectors, employment declined, albeit by a whisker. So, there were no additional jobs in these sectors.

The real estate and construction sector, which is usually a provider of employment to low-skilled farm labourers who try to move out of the labour surplus farmlands, shed 4.6 million jobs between January-April 2018 and January-April 2019. This failure of the construction industry to absorb farm surplus labour is, possibly, the biggest reason why there is an increase in employment under agriculture. Even the orders of magnitude of the loss of employment in construction and the addition of employment in agriculture match at around 5 million.

Finally, the services sectors shed 1.7 million jobs. Here, three segments are responsible for the fall in employment in services are -- retail trade, hotels and restaurants and the IT industry.

Retail trade employs 56 million people and it has been a big absorber of labour in recent times. But, its rate of absorption of labour has been falling. In 2017, it absorbed an additional 10.4 million persons. In 2018, this fell to 3.7 million. And, in January-April 2019, this sector absorbed only 3 million additional persons over the employment a year ago.

The travel and tourism industry provided employment to an estimated 20 million persons during January-April 2019. But, this was 2 million lower than the 22 million jobs it provided a year ago.

The IT industry lost an estimated 1.4 million jobs in 2018. And in early 2019, it lost another 0.2 million jobs. 

The fall in employment in the services sector is new and worrisome. It strengthens the view that consumption expenditure growth is slowing. And, the broad sectoral fall in employment strengthens the view that the economy's growth has slowed down in 2019.

The author is the MD & CEO of CMIE