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Photo: Mint
Photo: Mint

What’s the average number of employees at a workplace in India?

Average workplace employs 2.24 people; more than two-thirds do not have any hired labour

With election season in West Bengal and Kerala underway, many would be interested in knowing why the Indian Left is in such dire straits. One could offer a cheeky answer to this question. An overwhelming majority of Indian workers do not come across a capitalist worthy of committing class exploitation, which would have made them gravitate towards trade unionism and Left politics in their professional lives. According to the findings of the sixth economic census—conducted between January 2013 and April 2014—the average employment size of an economic establishment in India was 2.24. An economic establishment is defined as an enterprise or part of an enterprise that is situated in a single location in which one or predominantly one kind of economic activity is carried out.

The decline in average employment size of an economic establishment is not a new development, shows data from the last four such censuses. Also, the decline has been greater in urban areas than rural areas.

The average employment size figures should not be used to infer that all workplaces in India have less than three people working. According to the latest economic census, around 30% of India’s employment is in establishments with six employees and above. However, economic census data shows that the share of employment in establishments of large employment size class has come down during the reform period in the country.

Himanshu, an associate professor of economics at Jawaharlal Nehru University, attributes this change to an increase in informal sector employment during the reform period.

These figures are drastically different from the picture for the organized sector in the country, where more than 70% of the jobs are located in factories with employment size of more than 100, as was shown in a Plainfacts published last year, based on analysis of Annual Survey of Industries data. This gives us an idea about the huge gap between India’s formal and informal economy.

To be sure, economic census figures might not give a complete picture of the employment situation in India. In a 2014 paper published in the Economic and Political Weekly, R. Krishnaswamy and S.L. Shetty of the EPW Research Foundation raised doubts on the economic census’s ability to capture the employment scenario for the entire economy. The authors provide a table to show that the economic census excludes roughly 65 to 80 million workers in comparison to National Sample Survey Organisation (NSSO) estimates in India. This gap has been arrived at after taking into account workers employed in crop production and plantation and other activities excluded from the purview of the economic census.

Krishnaswamy and Shetty argue that one of the reasons for this gap might be due to the fact that the economic census is designed to look at economic establishments and, hence, misses those who are pure wage earners, such as MGNREGA (Mahatma Gandhi National Rural Employment Gurantee Act) workers in rural areas.

The discrepancy in employment figures given by economic census and NSSO does not mean that the former has no importance in understanding India’s economy. Economic census numbers underline the extent of unorganized economic activity and employment in India’s economy. More than half of India’s economic establishments are run from within households or without any fixed premise. A comparison with 1990 economic census shows that the share of establishments without fixed premises has gone up by four percentage points in urban areas, while it has been stagnant in rural areas. More than two-thirds of total establishments do not employ any hired labour, and such establishments provide a little less than half of the total employment.

A Mint editorial published this week has correctly suggested that this is indicative of lack of quality jobs in the Indian economy. It is the lack of quality employment which is forcing more and more Indian workers to eke out a living by setting shop on the road in the literal sense of the term.

To return to the Left, it might be worthwhile to reproduce a sentence from the classic text Economic Philosophy, written by British economist Joan Robinson, “The misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all."

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