Collapse in farm jobs reason behind rising unemployment, shows NSSO data

Farmer tilling the soil
Various opinion polls conducted recently show how better job opportunities will remain a key issue in the voters’ mind in the upcoming general elections.

But what is causing this jobs crisis? A careful examination of the National Sample Survey Office’s (NSSO’s) periodic labour force survey (PLFS) report showed a collapse in agricultural jobs as a key reason behind rising unemployment, particularly in the rural parts of the country. 

The proportion of people, in the working age group, employed in agriculture fell by 8 percentage points for rural men and 9.3 percentage points for rural women, an analysis of the NSSO’s PLFS report for 2017-18, which the government has withheld for release despite necessary approvals in place, showed. Business Standard has reviewed a copy of the report which the government has termed as a “draft”.

The NSSO report does not provide sectoral composition of employment for working age population. However, it provided a sectoral composition of employment and data on age structure of the population, which was used for this analysis to compute the ratio of people employed in different sectors to working age population.

In 2017-18, only 39.7 per cent of rural men and 17.4 per cent of rural women in the working age were employed in agriculture. “These numbers are a reflection of the agrarian crisis that plagues rural India today,” Vikas Rawal, professor at Jawaharlal Nehru University’s Centre for Economic Studies and Planning, said. The past few years have witnessed a stress in rural areas due to agrarian distress and falling wage growth.

The ratio, which was referred to as worker population ratio (WPR) in previous NSSO reports on employment and unemployment, is mentioned as employment-to-population-ratio (EPR) in the PLFS report. However, despite a change in nomenclature, the NSSO’s PLFS report itself has compared the EPR with the WPR of the previous surveys.

Though there has been a dip in farm sector jobs, which account for the highest share of workers in the country, over the past few years but it has been supported by employment in the non-farm sector, particularly construction. The data showed that between 2011-12 and 2017-18, there was a contraction of employment in almost all sectors (see chart).

For instance, between 2011-12 and 2004-05, rural females engaged in the agriculture sector contracted by 14.8 percentage points and for rural males by 9.4 percentage points. Between 2004-05 and 2011-12, construction had emerged as the main sector in which employment expanded. During this period, the share of rural females employed in construction rose from 0.7 per cent in 2004-05 to 2.4 per cent in 2011-12 and for rural males from 5.4 per cent to 10.4 per cent.

In 2017-18, the share of population in the construction sector in rural areas was stagnant for males (at 10.5 per cent) and it dipped for females (1.3 per cent), compared to 2011-12.

“Between 2004-05 and 2011-12, construction sector saw a substantial expansion and it absorbed workers but this is not happening anymore,” Rawal said.

The manufacturing sector, which has seen a contraction of employment since 2004-05 itself, continued to witness a fall after 2011-12. Share of urban females and males employed in the manufacturing sector fell by around 1 percentage points to 4.6 per cent and 15.6 per cent in 2017-18, respectively, compared to 2011-12.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel