Explaining Surge in Employment
Asia News Agency
Employment numbers have always been surrounded by many disagreements made worse by opinions rather than robust research that can identify the underlying causality.
Using NSSO data from 1983 to 2023, Laveesh Bhandari and Amaresh Dubey (work with CSEP) focused on analysing employment figures and their changing nature, as well as disaggregating and unpacking them. “We find that since 1983 for every sub-period under consideration, principal employment has grown. There has been no period that has seen any jobless growth. Principal employment measures those working for the bulk of the year as opposed to subsidiary employment, which is predominantly part-time, of shorter duration and is in addition to the principal activity of a person.”
From 2017-18 to 2022-23, 3.3% growth, spread evenly
In that period, the “fastest increase in employment has been from 2017-18 to 2022-23 when about 80 million additional employment was reported. This translates to about 3.3 per cent growth annually, much higher than population growth during the period. We also find that this growth is very well spread — rural and urban sectors, manufacturing, agriculture, construction and services, age segments, women, etc.”
Interestingly, “the growth has been highest for women during this period, by more than 8 per cent annually. Also, we find that older citizens (age 60 plus) are entering employed status in larger numbers, at about 4.5 per cent annually.” The reason is “that there is increasing distress and women and older people have no choice but to work. But there are other possibilities as well…”
Among economic sectors, though manufacturing and construction grew well at 3.4 and 5.9 per cent annually, higher growth has been achieved in earlier years as well. However, the greatest success has been in agriculture and services. Within agriculture, we obtain results that suggest it is not so much the cropping sector but livestock and fisheries that may have seen the greatest rise.
Total growth in employment is 80 million: causes
A characteristic of this growth, “is that of total growth in employment of 80 million, a large part or 44 million is for own account workers and unpaid family workers. These are typically self-employed and this form of employment is not necessarily seen as entrepreneurial but a fallback option for those who do not have any other avenues. But note that this is the same segment that was the beneficiary of the massive PMMY scheme that disbursed slightly less than Rs 23 lakh crore among 380 million accounts in the period starting 2015-16 until the end of 2022. Therefore, if there is growth in self-employment, some of it presumably is due to the large government transfers to this cohort. At the same time, such a large increase in Direct Cash Transfers in this period may have also contributed to greater employment opportunities….”
Relative stagnation in aggregate wages and salaries
The two authors also find a “relative stagnation in aggregate wages and salaries in recent years. For the period 2017-18 and 2022-23, the average annual growth of salaries and wages is at 6.6 per cent in nominal terms but barely 1.2 per cent over five years after being corrected for inflation. In other words, while in the aggregate we don’t find any wage distress, we also do not see a great improvement in living conditions. This could be for many reasons — if such large numbers enter the workforce, some dampening of wages and salaries is to be expected. At the same time, it could also reflect a deeper issue of stagnating labour productivity.”
Simplistic narratives don’t work: In conclusion “it is evident that there are many contradictory stories playing out simultaneously where employment growth is concerned. Simplistic narratives will do us all a disservice."
