Govt schemes aren’t the real solution to the job creation issue

A central public policy challenge in India is to meaningfully absorb those whose roots lie in the farm sector but who are discouraged by the returns or aspire to climb the income and social ladder. This calls for massive and continuous job creation in non-farm sectors, a challenge that has been highlighted by the Periodic Labour Force Survey (PLFS) in its 2017-18 report. As much as 44% of India’s workforce was engaged in agriculture and allied activities in 2017-18, according to PLFS. In rural areas, this figure was 59% while in urban areas it was 6%. Given its weather dependency, there’s always been an element of uncertainty in agri returns. With returns falling steadily in recent years, those working in India’s fields are desperately searching for non-farm jobs.

This transition is a struggle. Among non-farm employment opportunities, manufacturing leads in employment share, with 22% of all non-farm employment, followed by construction (21%) and wholesale and retail trade (18%). When one breaks it up by location, there are differences. While 11% of urban workers in non-farm jobs are employed in construction, the figure is at 30% for rural workers.

In rural areas, employment in construction is driven by the government. In 2017-18, about 78% of all construction workers in rural areas were deployed in government programmes. Another 12% were employed under the Mahatma Gandhi National Rural Employment Guarantee Scheme, which does not solve the long-term demand of rural workers of regular and remunerative employment.

The sector that needs to step up is manufacturing. This sector involves skilled and semi-skilled jobs, and represents a move up the employment value chain. In that sense, it is better than construction, where the demand is for unskilled labour. Employment opportunities in manufacturing vary across states. In only the five states of Gujarat, Haryana, Punjab, Tamil Nadu and West Bengal, does manufacturing account for more than 25% of non-farm employment.

Another difference between manufacturing and construction is the quality of employment. In construction, 84% of jobs are of the nature of casual labour. These do not come with job security, paid leave or social security. Only 6% of jobs in construction are regularized. By comparison, about 42% of jobs in manufacturing offer regular wages. The figure for casual labour in manufacturing is 16%. The remaining 42% are self-employed, another job description with high vulnerability and volatile income flow.

Tertiary sectors (or services), while being relatively smaller employers, have a larger share of their workforce regularized (51%). These are characteristics that need to seep into other major non-farm sectors, along with greater job creation.

Vaidik Dalal works at howindialives.com.

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