4 min read.Updated: 01 Aug 2019, 10:45 PM ISTHimanshu
Stagnant wages and jobless growth are a recipe for political instability in the Indian countryside
Most indicators of the Indian economy in recent months confirm that it is slowing. There is also a consensus that the economic slowdown is largely a result of weakening demand, most notably in rural areas. While slowing demand has obviously affected the overall growth rate, it has also contributed to declining availability of jobs in an economy already struggling with the spectre of jobless growth.
How serious is the employment problem in India? Official economists and politicians shrug off any such idea of jobless growth with claims of jobs having been created during the previous term of the National Democratic Alliance (NDA) government. However, evidence from multiple sources points to a far more serious crisis of employment generation than is accepted.
The most authoritative source on employment in the country remains the employment-unemployment surveys of the National Sample Survey Office (NSSO). The latest in this series is the Periodic Labour Force Survey (PLFS), the results of which were withheld by the NDA government until the Lok Sabha elections were over. These were released soon after the incumbent NDA won the election. Like most other data, the government tried to tarnish the credibility of the surveys that had been initiated by it and were approved by an expert committee on this matter at several levels. It is important to reiterate that the PLFS estimates are fully comparable to the estimates of employment-unemployment based on NSSO surveys earlier.
The PLFS estimates, like their counterparts in earlier years, only provide estimates of the workforce, labour force and the unemployed. These are then blown up using population estimates from the census to arrive at an absolute number of workers. The population estimates were usually provided by the office of Registrar General of India (RGI), which also conducts the census. However, as has been happening with most official statistics, this is the first time that the RGI office has not released population projections for the years after 2011. However, several private estimates using the same methodology have been published. Accordingly, the population of India on 1 January 2018 was 1.31 billion, comprising 858 million rural and 457 million urban inhabitants. These, incidentally, are similar to the population estimate provided by the Central Statistical Office (CSO) for 2018 in its national accounts publications.
What do these numbers tell us? First, the total number of workers in the economy was 472.5 million in 2011-12, which fell to 457 million in 2017-18. The absolute number of workers declined by 15.5 million over six years. This is the first time in the history of employment measurement by the NSSO that the total number of workers declined in absolute terms. However, this is not surprising, with almost a similar estimate of a 16-million decline in the number of workers reported by the Labour Bureau’s Annual Employment Surveys of the fourth and fifth rounds. The government, shocked by these estimates, quickly decided to abandon the release of the labour bureau reports. However, a confirmation of the decline in absolute number of workers from two official government sources clearly points to the severity of the jobs crisis.
Most of the decline in employment has happened due to the fall in the number of workers in agriculture and a sharp fall in the absolute number of female workers. Roughly 37 million workers left agriculture in the last six years. During the same time, 25 million women workers were out of the workforce. While the trend of workers moving out of agriculture is seen since 2004-05 and is welcome, it also points to the rising vulnerability of farm production. The crisis in agriculture in the last six years has only accelerated the process. What is surprising is the trend of declining women workers, which has absolutely no parallel in any developing or developed country of similar per capita income. In most East Asian countries, the period of rapid growth was also accompanied by a rising number of women workers.
The movement of workers out of agriculture is a welcome trend, but also raises questions on where they will go. Along with the fact that the number of people aged 25-64 years increased by around 47 million during the six-year period, it also means that the economy should have created at least 83 million jobs between 2012 and 2018 to accommodate those who have entered the labour force and those forced out of agriculture. As against these, the economy witnessed a decline in the number of workers by 15.5 million. These are hard facts and no effort at criticizing and demonizing the NSSO will provide answers to these problems.
No doubt, the problem is not new and even earlier governments are to be blamed for the mess that the economy is in. Unfortunately, blaming the data or earlier governments does not make people who are looking for jobs vanish from the country. Stagnant wages and jobless growth are not just indicators of a weakening economy, but also a recipe for political instability and a crisis in the countryside. The least that is expected of the government is an acknowledgement of the extent of the problem and then try to address it.
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