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India’s economy has been slowing down since 2017-18. Three successive years of dropping GDP growth rate, followed by a contraction last year. Given this context, the big question is what’s happened in the job market? On Monday, GoI unveiled a quarterly report on employment for April-June, which estimates the labour demand of nine handpicked non-farm sectors by surveying establishments with 10 people or more. Release of demand side estimates has been patchy and the latest one has many gaps. The takeaway is not that job creation grew by 29% in seven years, but that only a million jobs have been added annually over the last seven years.
This is troubling. When the demand side estimate is juxtaposed with supply of labour estimated by GoI through household surveys, the overarching trend is one of inadequate non-farm jobs. The periodic labour force survey (PLFS), both annual and quarterly, also shows a marked deterioration in the quality of jobs. While demand and supply side estimates are not strictly comparable because of differing dates, they do provide an overview of the jobs scenario. The annual PLFS (July 2019-June 2020) shows that there is a shift in employment pattern since 2018 towards agriculture and informality.
The quarterly PLFS captures only urban trends and the last available one (October-December 2020) confirms the shift away from salaried jobs. The percentage of salaried jobs in October-December 2020 was 48.7%, lower than the 52.7% during the intense lockdown phase of April-June 2020. The unemployment rate of 10.3% in October-December 2020 was higher than the 7.9% of the corresponding period in 2019. And even more indisputable is the hit female participation in the workforce has taken. GoI’s latest report also confirms that. India has a jobs problem. The first step to dealing with it is releasing data consistently and also reducing lags. The urban PLFS is released with a lag of nine months and the combined one takes longer. This ensures policy-making while flying blind. Second, we need a far bigger industrial manufacturing sector. The second solution GoI recognises. It should recognise the first one, too.
This piece appeared as an editorial opinion in the print edition of The Times of India.