EMPLOYMENT PERSPECTIVE
 

I. The Approach

6.1.1 Expansion of employment opportunities has been an important objective of development planning in India. There has been a significant growth in employment over the years. However, a relatively higher growth of population and labour force has led to an increase in the volume of unemployment from one plan period to an- other. The Eighth Plan aims at bringing employment into a sharper focus in a medium-term perspective with the goal of reducing unemploy- ment to negligible level within the next ten years. Such an approach is now considered necessary also because it is realised that larger and efficient use of available human resources is the most effective way of poverty alleviation, reduction in inequalities and sustenance of a reasonably high pace of economic growth.

6.1.2 While approaching employment as an objective of the Plan, employment generation and economic growth are to be treated as mutu- ally complementary rather than conflicting processes. Employment has, therefore, to be generated in the process of, and contribute to the acceleration of, economic growth. Employment, to be gainful and sustainable, has, therefore, to be productive in character; it should be able to yield a reasonable level of income to the worker and also generate surplus for further growth and employment generation.

6.1.3 Improvement in the productivity of work-force assumes particular significance in our economy where low productivity and low incomes of a large mass of employed persons constitute a problem of much higher dimension than unemployment, measured conventionally in terms of involuntary idleness. Incidence of poverty is much higher than that of unemployment. An overwhelming majority of the poor are thus not apparently unemployed, but are engaged for a major part of their time in some activity, albeit, at very low levels of productivity and earnings. The Plan strategy would, therefore, focus not only on the creation of new 'jobs', but also on the augmentation of the existing employment in terms of productivity and incomes through suitable technological, market and institutional in- terventions.

6.1.4 It must be recognised that the demand for labour cannot always be created to suit the characteristics of labour supply. Shortages and surpluses are found to coexist in the labour market due to the mismatch between skill and other requirements of new employment opportunities and the attributes of available workers. This phenomenon is likely to be more marked in a situation of rapidly changing technologies and work organisation. It would also, therefore, be necessary to intervene on the supply side of the labour market with a view to improving the employability of workers in general, and promoting such institutional structures and arrangements for training and skill upgradation which could speedily respond to rapidly changing requirements of productive activities, in particular. In order that the training and skill formation systems are closely aligned with the trends in labour demand, it would be essential that the users, that is, the employers, have a major role and involvement in planning and running them.

6.1.5 An important aspect that would need careful scrutiny in the Eighth Plan, particularly in the context of economic reforms, is the impact of macro-economic, sectoral and labour policies on employment. It has been pointed out that certain policies, such as credit and labour policies, are not always employment-friendly. Policy of concessional credit for several sectors tends to distort the factor price relativities against labour use; and the labour policy, as manifest in certain labour laws, and labour market ridigities rendering wage mechanism ineffective, it is contended, have introduced a degree of inflexibility in labour use, thus discouraging employment expansion, particularly in the large scale industries. On the other hand, in the unorganised sector, which absorbs an overwhelmingly large majority of workers, employment is not only completely insecure, but is also devoid of any social security provisions. To the extent this sharp dichotomy in the labour market, characterised by a high degree of pro-

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tection for a miniscule proportion of the workforce and complete lack of protection for the majority of workers, is coming in the way of a larger and more efficient use of labour, ways would have to be devised to reduce this gap. Similarly, other policies - credit, fiscal and sectoral, would need to be reviewed with a view to making them more employment-friendly.

II. Employment : Growth and Structure

6.2.1 For an assessment of growth and structural changes in employment, the quinquennial surveys of the National Sample Survey Organisation (NSSO) provide the most comprehensive source. Using that source, changes in employment situation have been described here for the 10-year period ending with 1987-88, the year in which the last NSSO survey on employment and unemployment was conducted. The main features of employment growth during the decade 1977-78 to 1987-88 are summarised as follows:

(i) Employment has grown at about 2 per cent per annum during the 10 year period. [Table 6.1]. (This growth, which has been about the same as the rate of growth of labour force, has not been able to absorb the backlog of unemployment of about 10.8 million that existed in 1977- 78.)

(ii) Growth rates of employment has been relatively high in urban areas, but low in rural areas.

(iii) Employment of males and females has grown more or less at the same rate, with the rate for males slightly above that for females.

(iv) All major sectors except agriculture, experienced over 3.0 per cent growth of employment per annum over the period 1978-88 [Table 6.2]. Agriculture registered an annual growth of only 0.92 per cent. (and this rate has been just about the same in the two quinquennia)

(v) A deceleration in growth has been observed during 1983- 1987-88 over 1977-78 - 1983; this trend is seen in all sectors, except, agriculture, trade and construction. [Table 6.2]. In manufacturing, the rate of growth has declined sharply from 3.76 per cent to 2.18 per cent; and in services from 4.49 per cent to 2.06 per cent.

(vi) Deceleration in the rate of employment growth has been particularly sharp in the organised sector; it has declined from 2.48 organised sector; it has declined from 2,48 per cent during 1983-1987-88; [Table 6.3]. Employment in the organised manufacturing sector has virtually stagnated during 1983 -- 1987-88; and thus, an increasingly larger contribution to employment growth in manufacturing has been made by the unorganised sector in recent years.

(vii) Growth in employment in the organised sector, has primarily been contributed by the public sector.

(viii) Despite a slow and declining rate of em- ployment growth in the aggregate, employment of the educated has shown a relatively high and accelerating growth, particularly among women [Table 6.41.

6.2.2 Differential rates of employment growth in different sectors and of different kinds have led to certain notable changes in the structure of employment over time. First, there have been some sectoral shifts away from agriculture in the last decade. In 1977-78, 71 per cent of the workers were engaged in agriculture and allied occupations, but by 1987-88, the proportion had declined to 64 per cent [Table 6.5]. Corresponding figure revealed by the 1991 census, though not strictly comparable with NSS estimates, is 64.9 per cent, showing a marginal decline from 66.5 per cent in 1981. Second, there is a change in the structure of the workforce by employment status. The proportion of casual labour increased while that of the self-employed declined over the period 1977-78 to 1987-88 [Table 6.61 a change which is largely a reflection of the occupational shifts from agriculture to non-agriculture, in rural areas. Third, the share of the unorganised sector in non-agricultural employment has increased from 72 per cent in 1977-78 to 77 per cent in 1987-88, although the share of unorganised sector in overall employment has remained more or less stationary at 90 per cent.

III. Unemployment : Trends and Structure

6.3.1 Unemployment, according to the conventional and most commonly used concept, measures involuntary idleness, that is, the time for which individuals are available for and willing to, but are not able to find work. It does not include 'invisible' unemployment or underemployment,that is, a situation of work with very low levels of productivity and income. The latter, as noted earlier, is a problem of much larger magnitude in India than conventionally measured unemployment. Persons belonging to low income households can hardly afford to remain unemployed, and, therefore, may engage themselves in any work that is available, even if it yields a very low income. For that reason, the rates of unemployment in India are observed to be relatively low.

6.3.2 The structure of workforce with dominance of self- employment and primary sector, where work sharing is common, also tends to depress unemployment rates, in general, and chronic, long period unemployment rates, in particular. Inadequacy of the measure of unemployment in terms of open unemployment has, therefore, been well recognised in the measurement and analysis of unemployment in India. The National Sample Survey Organisation (NSSO) which provides estimates of the rates of unemployment on the basis of its quinquennial surveys, therefore, uses three different concepts. A person is considered unemployed on Usual Status (US) basis, if he/she was not working, but was either seeking or was available for work for a relatively longer time during the reference year. On the basis of a week as the reference period, a person is considered unemployed by Current Weekly Status (CWS), if he/she had not worked even for one hour during the week, but was seeking or available for work. Then, there is an estimate of Current Daily Status (CDS) unemployment, in terms of the total persondays of unemployment, that is, the aggregate of all the unemployment days of all persons in the labour force during the week.

6.3.3 The "Usual status' unemployment rates could be regarded as a measure of chronic unemployment during the reference year; the CWS unemployment rates also measure chronic unemployment but with the reduced reference period of a week. The CDS is a comprehensive measure of unemployment including both chronic unemployment as well as underemployment on weekly basis. Unemployment rates are found to be the lowest on UPS basis and the highest on CDS basis. For example, unemployment as percentage of labour force worked out to be 3.77, 4.80 and 6.09 percent according to usual, weekly and daily status respectively, in 1987-88. In absolute terms, the unemployment in that year was estimated to be 11.53 million persons, 14.35 million persons and 6508 million persondays, according to the three concepts, respectively.

6.3.4 A few salient features of the unemployment situation in India may be noted. First, the incidence of unemployment is much higher in urban than in rural areas. Second, unemployment rates for women are higher than those for men. Third, a larger difference between the "usual" and "weekly" status unemployment rates, on the one hand, and "daily status" unemployment rates, on the other, in the case of women than of men suggests that underemployment is of much higher proportion among the former than the latter. Fourth, the incidence of unemployment among the educated is much higher at about 12 percent than the overall usual status unemployment of 3.77 percent. In fact, unemployment rates rise with every successive higher level of education.

6.3.5 The unemployment rates by the three alternative concepts of the "usual status", the "weekly status" and the "daily status" as re- vealed in the various rounds of NSSO surveys during 1972-73 to 1987-88 are presented in Table 6.7. No clear and consistent trends are discernible in the rates of unemployment over the 15 year period. Considering the short period in the recent past, namely, 1983 -- 1987- 88, however, certain changes in the structure of unemployment are observed. Open unemployment as measured by UPS has increased from 2.77 in 1983 to 3.77 in 1987-88 and according to weekly status from 4.51 to 4.80 per cent. However, unemployment rate by daily status has declined from 8.28 to 6.09 per cent over this period. These trends suggest that there has been a shift from the state of widespread underemployment towards greater open unemployment.

6.3.6 Within the broad trend towards an increasingly open and chronic character of un-

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employment, the following features may be considered of special significance. One, this trend is seen to be particularly strong in rural areas, where the usual status unemployment has increased from 1.91 per cent of labour force in 1983 to 3.07 per cent in 1987-88 and the "daily status" unemployment has declined from 7.94 per cent to 5.25 per cent. In the urban areas, only a small change of a similar pattern was observed. Second, the open unemployment rates increased much faster in the case of women than of men. The "usual status" rate of unemployment increased from 2.14 in 1983 to 4.19 per cent in 1987- 88 among women workers but the increase in the case of male workers was from 3.02 to 3.60 per cent.

6.3.7 There are wide variations in the unemployment rates among different States [Table 6.81. In terms of usual status, the unemployment rates vary between 1.51 percent in Madhya Pradesh and 17.07 percent in Kerala amongst the major States. Other major States with higher than all-India average of 3.77 per cent are West Bengal (6.06 per cent), Haryana (5.86 per cent), Assam (5.62 per cent), Tamil Nadu (5.25 per cent), Orissa (4.66 per cent), Punjab (4.04 per cent) and Andhra Pradesh (3.90 per cent). Poorer States like Bihar, U.P., Madhya Pradesh and Rajasthan have relatively lower rates of open unemployment. With some exceptions like Orissa at the one end, and Maharashtra on the other, there appears to be a positive relationship emerging between the level of literacy and education and/or of economic development and incidence of open unemployment, across the States.

6.3.8 Even the aggregate of open unemployment and under- employment, in terms of persondays of unemployment, shows a similar pattern across the States. Incidence of unemployment measured in these terms was again highest (21 per cent) in Kerala followed by Tamil Nadu, West Bengal, Haryana, Andhra Pradesh and Orissa, each with higher than average figure. On the other hand, Madhya Pradesh with 2.86 per cent, Uttar Pradesh with 3.44 per cent and Bihar with 4.04 per cent were the States with the lowest "daily status" unemployment rates. These low unemployment rates present a rather intriguing picture when juxtaposed with the incidence of poverty, which is found to be amongst the highest in these States. To a certain extent, this phenomenon may be attributed to the limitations of the concepts and measures used in gauging unemployment. But, at a substantive level, it only suggests that the nature of the problem in these States is different. Low income work, rather than involuntary idleness, is the main form of the affliction from which the poor suffer. It obviously calls for a strategy with augmentation of employment' as its main ele- ment.

6.3.9 The above brief review of the trends in the structure of unemployment suggests that over the years, the problem of open unemployment is gaining and that of underemployment is declining in importance. In 1977-78, underemployment as reflected in the difference between unemployment by the "usual status" (4.23 per cent) and the "weekly status" (4.48 per cent) on the one hand, and the "daily status" unemployment (8.18) was much larger than in 1987-88, when the two open unemployment rates were 3.77 per cent (UPS) and 4.80 per cent (CWS) and the daily status rate only 6.09. These fea- tures suggest that the strategy of employment generation would have to lay greater emphasis on augmentation of productivity and income levels of the working poor and the creation of new full time employment opportunities on wage or self employment basis, rather than on schemes for short-term employment generation.

IV. Towards the Goal of Full Employment

Requirements of Employment Generation

6.4.1 For the purpose of estimating additional employment needed to achieve the goal of "employment for all" over a period, an assessment of the backlog of unemployment in the base year and the likely additions to the labour force during the reference period is needed. For this exercise, the backlog is estimated in terms of open unemployment with some adjustments for those who are severely underemployed and therefore, are very likely to be looking for alternative new full time employment opportunities. In other words, unemployment measured in "usual" or "weekly" status terms would be relevant. "Weekly status" is preferable because the unemployed, according to this concept, were clearly without work for the entire period under reference (i.e. did not have work even for one

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hour during the week). Use of this concept also enables an assessment of the magnitude of severely underemployed as those having work for half or less than half the time during the reference week.

6.4.2 The latest survey based estimates available for this purpose, are for 1987-88 only, when the last quinquennial survey was conducted by NSSO. In order to arrive at a figure of unemployment in the beginning of the Eighth Plan, that is on April 1, 1992, independent estimates of labour force and employment on that date have been made, the difference between the two yielding the magnitude of unemployment. Total employment at the beginning of 1992-93 is estimated to be 301.7 million on "weekly status" basis. The Labour force is estimated to be 319 million. Thus backlog of open unemployment according to "weekly status" is estimated to be 17 million on April 1, 1992. According to the NSS, about 2 per cent of those recorded employed by "weekly status" had work for half or less than half the time. 'raking them as 'severely underemployed', they are included in the estimates for backlog for purpose of employment planning. Thus the number of persons in the labour force on April 1, 1992, who will be looking for full time new employment opportunities is estimated to be around 23 million.

6.4.3 The labour force is projected to increase by about 35 million during 1992-97 and by another 36 million during 1997- 2002. Thus, the total number of persons requiring employment will be 58 million during 1992-97 and 94 million over the ten year period 1992- 2002. The employment growth in the aggregate will have to be about 4 per cent per annum if the goal of providing employment to all is to be achieved by the end of the Eighth Plan, and around 3 per cent per annum if it is to be attained by 2000 AD.

6.4.4 Experience in the recent years suggests that the goal of a 4 per cent rate of employment growth will be rather unrealistic. But, an average employment growth of around 2.6 to 2.8 per cent per annum may be within the realm of feasibility, which if achieved over the next ten years will bring the economy to a near full employment situation by 2002 AD. This itself will be contingent upon the attainment of a higher average rate of growth of GDP than achieved in the past, derived to a larger extent from sectors and areas which are inherently more employment-intensive.