Welcome but inadequate increase in jobs

During the eleventh comprehensive household survey of labour markets conducted by CMIE during May-August 2019, an estimated 405 million were found to be employed in India.

The total sample size was 174,405 households. Of this, 110,975 households were from 7,920 enumeration blocks in 322 towns. The rural sample consisting of 63,430 households were spread over 3,965 villages.

The sample households yielded 567,070 members who were of 15 years of age or more. Estimates presented here are based on the appropriately weighted averages of the employment / unemployment status of these individuals. 358,194 members were from the 322 towns and 208,876 were from the 3,965 villages surveyed.

Of the 405 million employed during the May-August 2019 months, 129 million were residents of urban India. The remaining 276 million were rural folks. 

This was the eleventh such survey and we therefore have a time-series of the trends in employment in India since 2016.

The time-series suggests a recovery in employment. The 405 million estimated to be employed during May-August 2019 were 0.6 million higher than the employed during January-April 2019 which in turn were 3.9 million higher than the preceding survey conducted during September-December 2018.

Cumulatively, the count of the employed has risen by over 4 million over the past three surveys. This marks an apparent turnaround in employment from a steep falling trend to a gradually rising trend.

It may be recalled that 10 million jobs were lost in 2018. The September-December 2017 survey had estimated the total employed to be 411 million. This fell in each of the three subsequent surveys to 401 million in September-December 2018. This decline in employment has stopped.

It makes sense to compare the May-August 2019 survey to earlier surveys conducted in similar months. Doing so removes the effects of seasonality in employment, if any. Such a comparison shows that employment in May-August 2019 was 2.5 million higher than it was a year ago.

This is a big relief given the sharp fall in employment recorded in 2018 and also the lack of growth in employment even earlier in 2017. Employment had fallen by 5.5 million between May-August 2017 and May-August 2018. Earlier, it had fallen by 0.6 million between May-August 2016 and May-August 2017.

Given this past record of declines, the surge of 2.5 million jobs in the past one year is a welcome reversal.

But, this expansion is far from sufficient. The 2.5 million accretion of jobs could absorb only 22 per cent of the increase in people looking for one during this period. While the labour force expanded by 11.3 million, jobs grew by only 2.5 million. The remaining 8.8 million merely inflated the stock of unemployed.

The count of unemployed has risen to 32.6 million. Besides, there is another 12 million that is also willing to work if a job becomes available although they were not actively looking for a job.

Counter-intuitive as it may sound, there is reason to celebrate the increase in the unemployed. Their increase is an indication of an increase in the hopes for finding jobs. Earlier, post demonetisation, this hope had dried up. As a result, in 2017, while the working age population increased by nearly 23 million, employment declined by half a million; the count of the unemployed declined by 9 million and those willing to work but not actively looking for jobs decreased by 13 million. Effectively, the increase in the working-age population made no contribution to labour supplies in 2017.

In 2018, labour did return to look for jobs. As a result, count of the unemployed rose by 8 million. But, the jobs market was bad as 10 million jobs were lost during the year.

The results for 2019 so far show that the count of the unemployed continues to grow, but employment has also started rising.

A recovery from the deep disruptions of demonetisation (effects seen in 2017) and introduction of the goods and services tax (effect seen in 2018) seems to be underway. But, this recovery, particularly in jobs, is extremely fragile and tentative.

Note that the estimated count of the employed increased from 402.4 million in May-August 2018 to 404.9 million in May-August 2019. But, employment during May-August 2017 and May-August 2016 was of the order of 408 million. The Indian economy is unable to provide employment at the same scale again. In the meanwhile, the working-age population has been rising and numbers of the unemployed are rising correspondingly.

The working-age population seems to be growing at the rate of a little less than 2 million per month. Of these, less than a million join the labour force looking for jobs. For two years, in 2017 and 2018, the labour force did not increase. But now, it is increasing. It is important that this surge in the labour force finds adequate good jobs. Else, the unemployment rate will keep rising or labour will shift back to agriculture to undertake extremely low quality jobs, largely in distress.


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