Official employment data masks India's jobs problem, say economists

India's growing employment stems largely from self-employed individuals, unpaid workers and temporary farm hires, whose jobs are not equivalent to formal positions with regular wages, private sector economists said on Wednesday.

The comments follow labour department figures released this week showing 20 million new employment opportunities generated each year since 2017/18, countering a Citibank report that said only 8.8 million jobs were added each year since 2012.

"What is clear is that there is a large increase coming from agriculture and from self-employment, which includes own account work or unpaid family work," said Amit Basole, head of the Centre for Sustainable Employment at the Azim Premji University.

 

The jump in employment cannot be equated to the creation of formal jobs with regular wages, Basole said, going by detailed data available up to the financial year 2022/23.

In the fiscal year that ended in March 2024, employment in the economy rose by 46.7 million for a total of 643.3 million, up from 596.7 million a year ago, the central bank said in a statement on Monday.

The Reserve Bank of India database showed agricultural work opportunities contributed 48 million of the 100 million jobs generated between financial years 2017/18 and 2022/23, Basole said.

"I wouldn't call them jobs," he added. "They're just people working in agriculture or in non-farm self-employment because of lack of adequate demand for workers from businesses."

While the central bank gave a provisional estimate of the increase in employment in 2023/24, it did not detail the sectors that saw these additions. That data was only available up to the previous year.

The central bank and government did not respond to emails from Reuters seeking comment.

Prime Minister Narendra Modi, whose party lost its absolute parliamentary majority in elections last month, having to turn to allied parties to retain power, first won power in 2014, on a promise of creating 20 million jobs a year.

However, he has since faced criticism from analysts and political rivals for failing to deliver.

"The Modi government's only mission is to make sure youth are jobless," Mallikarjun Kharge, president of the main opposition party Congress said this week, after the Citibank report reignited the jobs debate in India.

Modi's party manifesto for this year's general election promised to create jobs through investments in sectors such as infrastructure, pharmaceuticals and green energy.

But the party's failure to win an absolute majority on its own was blamed on voters' disenchantment with lack of jobs and high inflation.

"Yes, there has been an enormous increase in the number of people who are, quote-unquote, employed," said India's former chief statistician, Pronab Sen. "But the bulk of this increase has come in agriculture and in casual work."

Growing farm employment was "extremely regressive" as it went against the nation's goal of moving more Indians away from agricultural work, he added.

"Look, the question is, do you really believe there's so much employment happening?" Sen said. "It seems unlikely."

The debate over India's employment data was "muddying the water," he added.

Government data shows just 20.9 per cent of India's overall workforce earned regular wages in the form of salary, as of 2022/23.

Economists have pointed to weak consumption in the economy, which grew by just 4 per cent in 2023/24, or half the pace of gross domestic product (GDP) which expanded at a world-beating 8.2 per cent.

"We can have disputes on the numbers but ultimately, what we should go by is the outcome," said Rupa Rege Nitsure, an independent economist.

"If enough employment is being generated, then enough income should get generated and that should get translated into higher consumption at a broad-based level. Why are we seeing so much unevenness in consumption spending?"