Rosy employment data from PLFS must not lead to policy-level complacency

Yet, in assembly poll campaigns, joblessness was a big issue, with every political party vying to provide cash benefits to the unemployed and promising millions of new jobs if voted to power. While PLFS data is at variance with ground reports, it also appears to have no relationship with economic growth. This has been the case for some time now. The last time India’s economy saw employment grow faster than the population was from 1999-00 to 2004-05. This was a period of extreme economic distress, as observed from aggregate data as well as sectoral data on agriculture and wage records.

The past half-decade or so is similar. We had a ‘great Indian slowdown,’ with our GDP growth rate halving between 2016-17 and 2019-20, followed by two years of reeling from the pandemic’s impact. Compare this with the period between 2004-05 and 2011-12, arguably the years of our fastest economic growth and poverty reduction. Employment barely rose by 14 million, with less than 2 million new workers added on every year. Or even the period between 2011-12 and 2017-18, when the economy did better than the phase after it. The total number of workers contracted by 14 million in the six years after 2011-12 despite an average growth rate much higher than the subsequent five years.

This inverse relationship between growth in aggregate employment and economic growth raises questions on the reliability of the former estimates as a proxy for the latter. However, trends disaggregated by gender, location (rural/urban), sector of employment (farm/non-farm) and status of employment offer some clarity on India’s employment response to economic changes. For example, many labour market changes are driven by female employment, particularly in rural areas and agriculture. As against male employment, which has been steady in the past three decades irrespective of GDP growth, female employment responds to economic changes faster.

A rise in female employment must not be mistaken for women’s empowerment. A realistic understanding is that it is women who bear the brunt of massive economic changes, including shocks to the economy. They step out to supplement household incomes in times of distress, but tend to retreat when the situation improves for child care and other work at home. Let’s compare Period I (2004-05 to 2011-12) to Period II (2017-18 to 2022-23). The first saw rapid expansion, while growth flagged in the second. Male employment increased at 1.5% per annum in Period I compared to 1.9% in period II. However, female employment actually declined at 2% per annum in Period I compared to an impressive growth of 11% per year in Period II. While women shoulder the larger burden of our care economy, they are also pushed to seek jobs in tough times. And it is usually in the worst kind of employment, with low productivity. Even though women constitute less than a third of India’s workforce, they accounted for two-thirds of its incremental headcount in the last five years. And where did they find employment? In agriculture, despite our total cultivable area declining, labour needs dropping even faster (as a result of mechanization) and farms paying such meagre wages. Women saw their share of regular employment shrink.

While women have shown the way by bearing an additional burden of work when households are hard pressed for money to get by, it is also a grim reminder of the poor employment avenues available to most of them. With precarious work conditions, and with women even in regular work getting discriminatory pay packets that are often lower than official minimum wages, our policy focus should move towards creating decent, gainful and remunerative work opportunities for them. Women have emerged as a distinct political constituency. Hopefully, politics will also move towards looking at them as equal partners in economic growth, rather than workers of last resort. That will require creating more non-farm opportunities, improving their work environment, providing safe work spaces, and, above all, equal wages and not just cash transfers.