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Discerning the Long-Term Pace and Patterns of Employment in India

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Abstract

This study examines the pace and pattern of employment in India during the last four decades using the Employment-Unemployment Survey (EUS) (1983 to 2011–12) and Periodic Labour Force Survey (PLFS) (2017–18 to 2020–21). The estimates reflect that, notwithstanding the impressive economic growth, aided by demographic dividend, the economy has witnessed a low sustained employment generation. The present analysis reflects a notable increase in both output growth and employment between the years 1983 and 2004-05. However, subsequent to this period, there exists a distinct phase of economic development characterised by a lack of job creation from 2004–05 to 2017-18 and a rebound thereafter. The concerning divergence between Gross Value Added (GVA) growth and employment growth is reflected in the continued dominance of agriculture in terms of employment share even when its GVA share is dismal. Besides, the low employment elasticities of non-farm sectors including industry and services indicate the inability of the non-farm sector to absorb additional labour force and hence sluggish employment opportunities. The slow rate of employment growth during the period of high economic growth failed to bring down overall unemployment. Consequentially, the findings serve as a rebuttal to the claim of ‘slow’ structural transformation. Not only that the labour market is characterising by significant gender disparity, but there is also a growing level of unemployment for the highly educated youth than the less educated. Apparently, economic growth rather than creating more jobs has resulted in net labour displacement as can be seen from the disaggregated analysis of Labour Force Participation Rate (LFPR), Work Force Participation Rate (WFPR), and unemployment rate. The discourse of falling and lower employment elasticities and strong GVA growth painting a discordant picture of the economy calls for an urgent policy redressal in expanding the human capacity to participate in the new economic and social opportunities.

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Fig. 1

Source: Computed from the unit level datasets of different NSSO and PLFS

Fig. 2

Source: Computed from the unit level datasets of different NSSO and PLFS

Fig. 3

Source: Computed from the unit level datasets of different NSSO and PLFS

Fig. 4

Source: Computed from the unit-level datasets of different NSSO EUS and PLFS

Fig. 5

Source: Computed from the unit-level datasets of different NSSO EUS, PLFS, and from MOSPI

Fig. 6

Source: Computed from the unit level datasets of different NSSO EUS, PLFS rounds

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Notes

  1. See for details (Chadha & Sahu 2002; Sundaram 2001, 2013; Mehrotra et. al, 2012, 2013; Papola & Sahu 2012; Unni & Raveendran 2007; Sahu 2013; Padhi & Sahu 2016, Padhi & Triveni 2021; Hirway 2012; Mitra 2013; Nagraj 2008; Kumar & Sahu 2013; Majid 2021).

  2. The percentage of unemployed people in the entire labour force is known as the unemployment rate (UR).

  3. Please see Report No. 554, the 68th NSSO Employment and Unemployment Survey, for more information on how population projections were calculated. “The census adjustment has been done on the basis of census and NSSO employment data sets. First the weighted NSSO population figure is estimated from the concerned NSSO employment and unemployment rounds both for rural-urban and male and female differently after that the given figures are divided by the concerned census population figures. After getting the ratios, they are multiplied with the multiplier figures to get the census adjusted weights.”

  4. “In this approach the status of activity on which a person spent relatively longer time of the preceding 365 days from the date of survey is considered as the principal usual activity of the person (MOSPI, 2012). Accordingly, a person is considered working or employed, if the person was engaged for a relatively longer time during the past year in one or more work related activities”. Details can be found in the NSSO employment and unemployment reports that are issued afterwards. The employment and unemployment numbers from the NSSO are directly used in this approach.”

  5. Employment elasticity of output measures the responsiveness of employment with responsiveness change in output.

  6. In the case \(Ee\) <o, employment falls as the economy grows. Having \(Ee\) =1, indicates that employment is growing at the same rate as the economy, when \(Ee\) = zero, employment does not grow at all even during an economic boom.

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  1. BITS Pilani, Pilani Campus, Rajasthan, India

    Balakrushna Padhi

  2. Business Environment Area, Indian Institute of Management Lucknow, Lucknow, Uttar Pradesh, India

    D. Tripati Rao

  3. Economics Statistics & Evaluation Division, Ministry of Agriculture & Farmers Welfare, Krishi Bhawan, New Delhi, India

    T. Triveni

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Padhi, B., Tripati Rao, D. & Triveni, T. Discerning the Long-Term Pace and Patterns of Employment in India. Ind. J. Labour Econ. 66, 975–1004 (2023). https://doi.org/10.1007/s41027-023-00462-5

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