Discerning the long-term pace and patterns of employment in India

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.