A study conducted by the Indian Institute of Management (IIM), Lucknow, in partnership with researchers from Birla Institute of Technology and Science (BITS), Pilani, and the Ministry of Agriculture and Farmers Welfare, has revealed that despite India’s remarkable economic growth from 2004-05 to 2017-18, employment generation has failed to keep up with the country’s expanding working-age population. The study, titled Discerning the Long-Term Pace and Patterns of Employment in India, highlights the decline in employment that began in the 1990s, recovered in 2004-05, and then reached near-stagnation in 2011-12.
The analysis conducted as part of the study points to a phenomenon called jobless growth, where workers are underutilized despite the increase in the working-age population (ages 15 to 64). The study suggests that a crucial policy intervention is required to make the manufacturing sector more labor-intensive, thus promoting inclusive growth. It also mentions that recent improvements in health and education in India could contribute to the transformation of unemployed youth into a skilled and high-quality workforce.
Published in the Indian Journal of Labour Economics, the study emphasizes the importance of identifying labor-intensive sectors, particularly within the manufacturing industry, to address the slowdown in employment rates. It notes that sectors with substantial potential have experienced lower employment growth, leading to significant challenges despite the availability of a larger workforce.
By analyzing data from the National Sample Survey Office (NSSO) Employment and Unemployment Survey, as well as the Periodic Labour Force Survey Dashboard, the researchers found that the agricultural sector, which employs a significant number of young individuals, contributes limited value-added to the overall economy, resulting in significant employment hurdles. Non-farm sectors, on the other hand, possess greater economic potential but display a reluctance to hire, despite their capacity to uplift the economy.
The research team, led by Prof D Tripati Rao from IIM Lucknow, Dr T Triveni from the Ministry of Agriculture and Farmers Welfare, and Prof Balakrushna Padhi from BITS Pilani, suggests that economic growth has led to net labor displacement instead of creating more jobs. The study identifies several contributing factors to the stagnation in employment generation, including a high percentage of self-employed workers in India compared to other countries like the United States. It also highlights the persistence of gender disparity in employment patterns, as well as the growing unemployment among highly educated youth.
Another significant reason for the lack of employment growth in the study’s findings is the reliance on non-standard employment types such as casual, contract, and fixed-term jobs. These new forms of employment, combined with social hierarchy and discrimination, have resulted in increased precariousness and further disparity in the labor market.
While the short-term gig and platform economy are growing, expected to reach 23.5 million by 2030 according to NITI Aayog, the study reveals that workers in the informal sector lack job security.
The study emphasizes the need for a comprehensive approach that not only focuses on the number of jobs created but also examines the quality and decency of those jobs. It highlights the strong link between productivity and job decency.
As India aims to address the employment challenges posed by its growing working-age population, the study serves as a valuable resource for policymakers and stakeholders. It underscores the importance of targeted interventions, particularly in labor-intensive sectors, to unlock the full potential of economic growth and create meaningful employment opportunities for the country’s youth.
Overall, the study’s findings shed light on the complex dynamics between economic growth, employment generation, and the need for inclusive and sustainable measures to address the current employment challenges faced by India.
