Low-skill jobs dominate

During May-August 2019, an estimated 404.9 million persons were employed in India. This implies that 2.5 million more people were employed during these months compared to a year ago, when employment was of the order of 402.4 million.

This is a healthy sign because during the preceding two May-August periods, employment had fallen in similar year-over-year comparisons. Employment during May-August 2018 was 5.5 million lower than it was in May-August 2017 which, in turn, was 0.6 million lower than it was in May-August 2016.

May-August 2019 is also the second consecutive complete Consumer Pyramids Household Survey to have recorded a sequential increase in employment. One comprehensive survey is conducted over a four-month period. The January-April 2019 survey recorded an increase of 3.4 million jobs over the September-December 2018 survey. And now, the May-August 2019 survey has recorded an increase of 0.6 million jobs. This is noteworthy because jobs had declined sequentially in all the preceding three surveys, i.e. in all the three surveys of 2018.

While all this is good news, the not so good news is that the increase in employment in the latest May-August 2019 survey is distributed more in favour of sectors that should be seeing a fall in employment. We study the distribution of the 2.5 million jobs that increased between May-August 2018 and May-August 2019. Note that this period in 2019 included the 2019 Lok Sabha elections in May.

Agriculture saw an increase of 8.4 million jobs. This is surprising because monsoon rains were running behind schedule and by the end of August 2019, kharif sowing was 1.7 per cent lower than it was by the end of August 2018. The increase was largely in crop cultivation. This saw employment go up from 133 million to nearly 139 million. Poultry farming and animal husbandry also saw an increase in employment from 1.8 million to 4.3 million.

An increase in employment in agriculture during a year in which agricultural activities had shrunk is odd. One explanation is that as jobs in other avenues had shrunk, labour had no recourse but to revert back to their farmlands and claim that they were employed in agricultural activities.

Construction, which is known to be the first place for unskilled and surplus workers from the farmlands to be employed, shed 2.4 million jobs. The sector is estimated to have employed 62 million during May-August 2018 and this fell to 60 million in May-August 2019. These workers are likely to have repaired with the farmlands.

The stress in the construction sector is not new. While it shed 2.4 million jobs in May-August 2019, it had shed 7 million jobs in May-August 2018. During this year even agriculture had shed a massive 11 million jobs. The saviour during 2018 was retail trade services which absorbed an additional 6 million jobs and the services sector as a whole that absorbed a total of 10 million jobs.

But, absorption of additional labour in retail trade is declining sharply. The sector could absorb only 1.4 million additional persons in May-August 2019 compared to May-August 2018. And, the services sector as a whole shed 2.3 million jobs.

Travel and tourism is the biggest contributor to the decline. It shed 2.2 million jobs. Several other services sectors have shed jobs. These include IT  and financial services. These shed 0.6 million and 0.5 million jobs respectively in May-August 2019 compared May-August 2018.

The share of easily identifiable low-skill jobs is quite high. While all sectors have low-skill jobs, the sectors that have largely low-skill jobs are agriculture, construction, retail trade and personal non-professional services. The share of these jobs in total jobs is over 70 per cent. The share of these jobs in the total employment has also been creeping up. It was about 68.7 per cent in 2016. Then it rose to 72.1 in 2017 and 72.2 in 2018. In the first eight months of 2019, it was higher at 73 per cent.

In May-August 2019, these relatively low-skilled jobs were of the order of 296 million. A year ago, these were of the order of 289 million. Therefore, these low-skill jobs saw an increase of over 7 million during the span of a year. Note that the total increase in jobs during this period was only 2.5 million jobs. So, it is possible that jobs have moved out from relatively better sectors.

Employment in the manufacturing sector declined by 0.9 million between May-August 2018 and May-August 2019. The textiles industry is estimated to have shed 2.2 million jobs and non-metallic mineral products shed another 0.4 million. Non-metallic mineral products include cement, tiles, bricks, glass. This ties up with the finding that employment in construction has declined. Food industries and machinery manufacturers added labour. Even utilities added labour.

The fall in manufacturing jobs, IT and financial sector jobs is worrying. And, an increase in farmhands is not a solution to the jobs challenge.