Employed but Unhappy?

A report by the Institute of Applied Manpower and Research indicates that the country witnessed job creation at an unprecedented rate over the past twelve years

Creating more jobs has been a constant refrain among party manifestos for the Lok Sabha elections. However, according to the latest report by the Institute of Applied Manpower Research, in spite of the slow rate of growth, the number of jobs has gone up manifold between 2000 and 2012. It’s an important document that not only analyses the trends in employment across different sectors, but also points out the shortcomings in policy based on the findings.

The paper also studies the effect of the contribution of women in the labour force. Between 1999 and 2005, there had been a sudden spurt in the labour force by almost 20 million. It was found that such an increase was largely due to women joining the workforce, in what came to be known as ‘distress employment’. In fact, women joining and withdrawing from employment has been responsible for some of the biggest fluctuations in the employment statistics over the past ten years, and the paper advises policymakers to factor in their return to employment in the future while striving to create more jobs.

Another important reading of the paper has been about the consequences of the rise in real wages of the bottom pyramid. This has resulted in increased consumption and decline in poverty levels. Lastly, the report also points out the difficulty faced by small and micro enterprises when they’re looking to expand their capital. Most firms like to confine themselves within the small and micro category even if they wish to expand, as government schemes cease to apply to a firm the moment it crosses over into the medium category. The same applies to labour laws; there is a strong disincentive for firms to limit their worker strength to 100, owing to the constraining aspect of the Industrial Disputes Act.

What’s also baffling is that the incumbent UPA government has not yet used these statistics to stem the tide of accusations about slowing down growth and lowering the employment rate in the country. Perhaps the government thinks it’s already too late to rescue the mother ship.

Following are the key trends in employment over 2000-2012, and the paper attempts an explanation of each. Executive summary of IAMR's Occasional Paper No.1/2014 titled, "Why a jobs turnaround despite slowing growth?" authored by Santosh Mehrotra, Sharmistha Sinha, Jajati K Parida and Ankita Gandhi

• A shift away from agriculture to non-agricultural employment has gained momentum. Prior to 2004-05, only the share of agriculture in the workforce was falling (from 60 to 49 percent between 1999-2000 to 2011-12). For the first time in India’s post independence economic history, there has been an absolute fall in the numbers employed in agriculture – by 36.7 million during 2004-05 to 2011-12 – because the number of non-agricultural jobs is growing.

• Non-agricultural employment grew by 52 million to reach 242.3 million in 2011-12, as against 190 million in 2004-05. While non-agricultural employment grew by 7.5 million per year over 1999-2000 to 2004-5, it also grew by 7.5 mn. pa over 2004-5 and 2001-12. However, the numbers joining the labour force during 2000-2005 was 12 million pa., but fell to 5.5 million between 2004-05 to 2011-12. The result was that the rate of open unemployment fell.