Jobs getting added faster than population growth casual workers see rise in wages: Virmani

The trend rise in worker population ratio shows that jobs are getting added faster than population growth during the recent past. (HT)
The trend rise in worker population ratio shows that jobs are getting added faster than population growth during the recent past. (HT)

Summary

  • The worker-population ratio, or the share of those employed in the total population, has risen from 46.8% in agriculture year (July to June) 2017-18 to 56% in 2022-23, said the paper titled ‘Viksit Bharat—unshackling job creators, empowering growth drivers'

New Delhi: Jobs are getting added faster than the rise in population and real wages of casual workers have risen in the last six years, according to Arvind Virmani, member NITI Aayog.

“The ratio of workers to population is rising. That shows the trend is clear that the job creation is rising faster than the population," Virmani said in an interview, quoting official figures and his analysis for a NITI Aayog working paper.

The worker-population ratio, or the share of those employed in the total population, has risen from 46.8% in agriculture year (July to June) 2017-18 to 56% in 2022-23, said the paper titled ‘Viksit Bharat—unshackling job creators, empowering growth drivers'.

The trend rise in worker population ratio shows that jobs are getting added faster than population growth during the recent past, the report said. While population growth averages about 1.1% a year during these six years, employment has grown at an average of 4.4% per year during 2018-19 to 2022-23, the report said.

Also Read: 'Youth unemployment declines from 17.8% in 2017-18 to 10% in 2022-23’

While India remains the fastest growing major economies in the world with an 8.2% growth in FY24, the extent of job creation and whether it is adequate for the most populous country has been a subject of debate. The government last month contested a report from Citi Group which said India will struggle to create enough jobs for its growing workforce over the next decade even if the economy grows at a rapid 7%.

Virmani also said that the monthly wages of casual workers have risen from 2017-18 to 2022-23, which included the two pandemic years of 2020-21 and 2021-22. Casual work is the only segment to see notable growth compared with salaried work and the self-employment.

The NITI paper showed that the monthly average wage of casual workers at constant 2017-18 prices improved from 5,964 in 2017-18 to 6,862 in 2022-23, a 2.8% growth. The same for salaried workers saw a 0.4% contraction, while that for self-employed saw a modest 0.6% growth.

During this six-year period, jobs havegrown by an average 4.4% per year, while the weighted average real wage of the three segments—casual workers, salaried workers and the self employed—has grown 0.6% per year.

Also Read: Unemployment rate in India doubles among educated youth: Former CEA Kaushik Basu says, ‘Change is coming’

Experts said that scaling up employment generation is linked to both economic growth rate as well as the propensity of the growth in adding new jobs.

“As job creation hinges on the pace of economic growth, we need to have faster, consistent 8% plus economic growth rate," saidSachchidanand Shukla, group chief economist at Larsen & Toubro Ltd.For the current fiscal, the projections range from the conservative estimate of 6.5-7% in the Economic Survey and the RBI’s estimate of 7.1%, saidShukla.

“Secondly, the elasticity of job creation with respect to GDP growth, which has declined over the last few decades, has to be increased by focusing on labour intensive sectors like infrastructure, construction, food processing, textiles, leather and garments. The union budget for FY25 has taken steps to accelerate job creation and skilling. Thirdly, Centre and states have to go hand in hand in boosting economic activity, business dynamism and adding more jobs," saidShukla.

'Productivity increase in casual labour'

The NITI report also suggested that there is a productivity increase in casual labour. Job growth is calculated taking into account share of the employed in population and the population growth.

Real wages of casual workers have increased across all education categories, industries and occupations, except clerks and professionals, it noted.

The report also said that the ratio of wages of casual workers to that of salaried workers has increased from 38% in 2017-18 to 45% in 2022-23.

Virmani said that the income inequality scenario is also improving. Official data shows poverty is coming down and that the Gini coefficient, a measure of inequality, has been improving, Virmani said.

The report pointed out that absolute poverty as defined by the World Bank—having to live at less than $1.9 a day—has been virtually eliminated in India. The poverty rate for middle-income countries—having to live at less than $3.2 a day—has declined sharply since 2011-12 and will be eliminated by 2035.

“Poverty as defined in upper middle-income countries will be eliminated by the time India becomes a high income country, through a combination of higher per capita GDP and a more efficient tax-transfer system," the report said.

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