Economy
In charts: Big shifts in India’s jobs market in last 40 years
Summary
The labour market has seen a structural shift away from farm jobs, but mainly to construction and not to high-value sectors such as manufacturing or services. Nor has the pace of job creation kept pace with economic growth, a new report has found.Solving the problem of joblessness has been a daunting matter for successive governments. In the past 40 years, economic growth has aided a structural shift away from agricultural jobs, but it hasn’t necessarily led to a proportionate growth in the workforce. Disparities have reduced, but not enough. On the bright side, more families are now in better jobs than their previous generations, showing greater upward mobility, a key indicator of progress. These are the findings of the latest State of Working India (SWI) report, released last week by the Centre for Sustainable Employment at Azim Premji University.
1. Jobless growth?
India has grown impressively in the past 25 years but views are divided on whether this has created enough new jobs and uplifted people, especially those from marginalized groups, to a satisfactory level. The SWI report analyzed respondent-level data from various government surveys since the 1980s—including the erstwhile Employment and Unemployment Surveys, the Periodic Labour Force Surveys, and the National Family Health Surveys—to map the changes in the jobs market in this period. It found that in the non-farm sector, the link between the GDP growth and the pace of job creation has weakened over time. With the exception of the period 2017-2021, the rise in employment in past periods lagged the pace of growth, suggesting that policies aimed to achieve faster GDP growth “will not necessarily speed up job creation", the report noted. (The change of trend in 2017-2021 could partly be explained by a move to self-employment in distress during the pandemic.)
2. Structural shifts
Nevertheless, economic prosperity has drawn millions of workers out of agriculture since the 1980s and the share of salaried and regular-wage workers has risen. The shift from the agricultural sector has been to construction the most, while the manufacturing sector has failed to make any significant gains. Ideally a shift from agriculture to higher value-addition sectors such as manufacturing or modern services would have yielded better results, but India has proved to be a “strong outlier when it comes to the share of the workforce engaged in construction", the report said. The construction sector became the main source of casual workers across caste groups, but it worked differently along gender lines. For men, an exit from agriculture meant a large increase in the share of construction, while for women it meant an exit from the workforce, the report said. The decline in India’s female labour force participation rate over the years despite its economic growth has been well-documented.
3. Deep divides
Despite the decline, there has been a “dramatic change" in the composition of the female workforce. Older, less-educated women working in agriculture have exited the labour force, and younger and more-educated women are making an entry. At the same time, growth created regular-wage jobs for all caste groups but at very different rates. The pay divide remains deep across gender, caste and religion. The gap was acute for those from scheduled castes and tribes (SC/ST) compared to the rest of the population: they earned just 67% of what dominant communities earned in 2021-22. Women in these marginalized communities earned 54% of what other women earned. For women overall, the pay ratio with men improved from 70% in 2004, but only to 76% in recent years. The scenario is worse for self-employed women, where the ratio was 40%. The divide is narrower (79%) for Muslims and those from other backward classes.
4. Pandemic paradox
When the covid-19 pandemic and subsequent lockdowns brought the economy to a halt, workers were forced to rely on agriculture or on self-employment in order to survive. As a result, the share of employment accounted for by these two sectors rose sharply in the lockdown quarter (April-June 2020). This also led to a rise in female employment, which had been either falling (rural) or had been stagnant (urban) since 2004, due to the distress-led increase in self-employment, the report observed. From about 50% in April-June 2019, the share of self-employed male workers increased to 58.2% in April-June 2020 but began coming down after that. For female workers, it rose from the same level to 57.8% but increased further to 61% in April-June 2022. While the last few years saw more formal salaried jobs, women were compelled to enter self-employment due to distress caused by the growth slowdown and the pandemic, the report noted.
5. The gains and the pains
Overall, India did take a leap in creating more regular jobs, up to 5 million per year between 2017 and 2019 from about 3 million per year between 2004 and 2017, with the share of salaried workers rising to 25% by 2018, the report said. However, since 2019, the pace of regular-wage jobs creation has decreased due to the growth slowdown. Moreover, for graduates below the age of 25, the jobs market had little to offer, with 42.3% being unemployed. Women were often limited by societal norms. In urban areas, those with husbands who earned more were less likely to be employed, although it was only till a threshold: the likelihood of being employed rises once the husband’s salary crosses ₹40,000 per month, the analysis found. For women with unemployed mothers-in-law present in the same home, the likelihood of being employed was lower by 20% (rural) and 30% (urban), compared to households where no mother-in-law is present.
