EMPLOYMENT AND MANPOWER
I
ANALYSIS OF THE PROBLEM EMPLOYMENT has been a major objective of planning in India; it was so in the first two Plans and has assumed a special urgency in the Third. Full utilisation of the available manpower resources can be achieved after a considerable period of development. However, expansion of employment opportunities commensurate with the increase in the labour force over the Plan period is conceived as one of the principal aims of the Third Plan. In view of the numbers involved, provision of adequate employment opportunities is among the most difficult tasks to be accomplished during the next five years.
2. In the rural areas, both unemployment and underemployment exist side by side; the distinction between them is by no means sharp. In the villages, unemployment ordinarily takes the form of under- employment. In many parts of the country, during the busy agricultural seasons, shortages of labour are frequently reported, but over the greater part of the year, a large proportion of agricultural labour and others engaged in allied activities are without continuous employment. The consequent drift of workers from villages to towns only serves to shift the focus of attention from rural areas to the urban. Though recent surveys show a somewhat higher rate of unemployment in the towns, this itself is a reflection of the lack of adequate work opportunities in rural areas. Urban and rural unemployment in fact constitute an indivisible problem.
In the urban areas, employment is linked with fluctuations in the state of business, transport and industry. Any change in conditions is reflected in an increase or decrease in employment figures. While this is generally true, towns-large and small-share with villages a measure of distress caused by under-employment.
3. The existing data are inadequate for building up a sufficiently detailed picture of the state of employment for the country as a whole and in its regional, urban and rural aspects. But statistics apart, there is a general belief, which is strengthened by the limited number of employment opportunities reported to the em- ployment exchanges and the pressure of employment seekers on them, that in terms of unemployment the economy suffered significant deterioration in the last five years. The high rate of growth of population, as reflected by the limited 1961 Census data, now available, would indicate that the problem is one of increasing complexity. This has been broadly confirmed by the findings of the Second Agricultural Labour Enquiry, the National Sample Survey and the studies undertaken by the Programme Evaluation Organisation. This, however, is not a complete statement. Development programmes have provided additional employment opportunities to a significant extent ; but these are not being created fast enough to absorb the numbers who enter the labour force each year. If any further deterioration in the employment situation is to be avoided, the goal of planning must be to absorb in gainful employment in each five-year period at least the equivalent of new entrants to the labour force.
4. It is not easy to measure unemployment in an under-developed country. There is a tendency, specially among the self-employed, to share work between members of the family or the group. Where the available work opportunities are spread too thinly even to provide tolerable means of livelihood, a part of the population migrates in search of paid employment. It is in relation to this section of the population that the term "unemployed" can be used with some exactness. For the rest, one can only speak of under-employment for varying periods. An important factor in planning for larger employment within the present occupational structure is that, for lack of employment opportunities, a considerable proportion of self-employed persons have to function below capacity and do much less work than in fact they are willing to. Statistics about under-employment depend very much on how the term is defined. At the present stage of development, it is difficult to determine the volume of Underemployment with reference to 'norms' of hours per day to be worked by individuals or other similar criteria. It is more meaningful to judge the amount of under- employment by the extent of additional work an individual may be willing to take up. This is the concept which has been adopted in the more recent rounds of the National Sample Survey.
5. The limited data at present available may be considered in relation to the following aspects of the employment problem; (a) numbers unemployed at the end of the Second Plan, (b) addition to the labour force during the Third Plan, and (c) assessment of additional employment likely to be secured through the implementation of the Plan as formulated. It is also necessary to take into account such mea- sures as would help to step up the employment effect of development schemes with a significant labour component, such as construction and
80
EMPLOYMENT AND MANPOWER 81
small industries. Even if the full employment potential of the Plan is achieved, it will be necessary to think of special employment pro- grammes to cover the residual employment gap.
6. In the course of the Second Plan the additional employment opportunities created amounted to about 8 million, of which about 6.5 million were outside agriculture. The backlog of unemployment at the end of the Second Plan is reckoned at 9 million. This estimate is admittedly rough. It takes account of the estimate of unemployment as at the beginning of the Second Plan (5.3 million), the larger increase in labour force during the Second Plan period than had been visualised earlier (1.7 million), and the estimated shortfall in the employment target originally proposed for the Second Plan (about 2 million). In addition, under-employment in the sense of those who have some work but are willing to take up additional work cannot be precisely estimated, but is believed to be of the order of 15-18 million.
7. Increase in the labour force during a given period is calculated with reference to the proportion of men and women in the age group 15-59 years who are estimated as being gainfully employed or seeking employment. In the Draft Outline of the Third Plan, the increase in labour force had been worked out at 15 million, and it was pointed out that, if deterioration in the employment situation was to be avoided, additional employment opportunities of this order would have to be found during the Third Plan. Information for the 1961 Census regarding the age composition of the population and changes in the extent of participation in the labour force by men and women is not yet available and, at this stage, certain general assumptions on these aspects have to be made on the basis of the latest reports of the National Sample Survey. On such estimates as are at present possible, it appears that during the Third Plan the addition to the labour force may be of the order of 17 million, about a third of the increase being in the urban areas. When fuller data become available, it will be necessary to work out the increase in the labour force in relation to different States, so that each State may endeavour to realise the employment potential of programmes and projects under the Plan and consider the extent to which these could be supplemented by other measures. In a growing economy, mobility of labour, specially among skilled workers, is of great importance and should be encouraged and facilitated. However, in relation to the numbers involved, the effects of such mobility as Can be achieved in the next few years will be necessarily limited and will not affect the total size of the task to be undertaken in each State or region.
8. The employment objectives of the Third Plan need to be viewed in the perspective of a longer period. Increase in the labour force over the next 15 years may be of the order of 70 million. This consists roughly of about 17 million in the Third Plan, about 23 million in the Fourth and about 30 million in the Fifth Plan. The experience of the first two Plans has shown that a larger proportion of the employment opportunities generated during the period have gone to the non-agricultural sector. On the assumption that this trend will continue in future and also that about two-thirds of the increase in the labour force over the next 15 years is absorbed outside agriculture, it should be possible to reduce the proportion of the working force dependent on agriculture to around 60 per cent by 1976.
II
ADDITIONAL EMPLOYMENT IN THE THIRD PLAN 9. There are inherent difficulties, in estimating the employment potential of the vast range of projects and programmes which form part of a plan of development stretching over a period of five years. In each sector of the Plan two major assumptions have to be made. The first is that through appropriate economic and other policies, production and employment will not be allowed to fall below the existing levels. Secondly, the various development programmes for which the Plan provides will be undertaken with the necessary efficiency and economy and continuity of output would be assured. In some fields, as in agriculture and trade, it is specially difficult to estimate the likely additional employment. Increase in agricultural production, to which the Plan devotes a fair share of resources, will lead primarily to reduction in under-employment, although there will also be a measure of net increase in employment opportunities. In less developed countries, the numbers engaged in trade are large, in relation to the work they are required to handle, so that the effect of expansion in the trading sector is more to reduce under-employment than to provide additional work opportunities to new entrants.
10. In industry, increase in investment and capacity does not lead to a proportionate growth of employment because new processes, specially in large-scale manufacture, have generally to be based on high productivity techniques. The choice of techniques becomes, thus, a matter of crucial importance for employment policy. In certain branches of industry, it is essential to adopt the scale and methods of production which will yield the largest economies. This has to be balanced by a deliberate effort in other fields to employ techniques which will be more labour-intensive and will save on capital resources, specially foreign exchange. Labour intensive methods have even wider application. in the field of construction in which, given the necessary organisation and advance planning, it is possible to use manpower to a greater extent than has been common in recent
82 THIRD FIVE YEAR PLAN
years. What techniques, should be adopted have to be determined not only according to the types of activities to be carried out, but also by the economic and social characteristics of the regions in which they are undertaken. In areas in which there is considerable pressure of population, special care must be taken to follow methods which, consistent with the overall objectives, make the maximum use of the available manpower resources.
11. In estimating the employment effects of the Plan, it is usual to distinguish two phases of employment-the construction phase and the continuing phase. Employment on construction, though temporary, postulates a certain order of investment even for maintaining it at a given level. Increase in construction employment can, therefore, be estimated with reference to the increase in investment over the previous Plan period. Since investment in construction is divided broadly between the labour component on the one hand, and machines, materials and services on the other, for working out the additional employment, the former has to be calculated with some precision.
12. In estimating continuing employment in fields such as agriculture, irrigation, industry, transport, social services, trade, etc., a variety of criteria have to be followed. For instance, development of agriculture, afforestation and irrigation facilities may in part reduce underemployment and in part provide full-time em- ployment to new entrants. It is by no means easy to ascertain the relative share, of the benefits to the under-employed and to new en- trants. Programmes of development like soil conservation, afforestation, land reclamation, flood control, settlement on land and the utilisation of irrigation facilities will provide means for employing new entrants to the labour force in addition to giving greater employment to those who are already at work. For this purpose certain norms have been adopted on the basis of experience accumulated over the last ten years.
13. In estimating additional employment in industries, depending upon their character, employment may have to be related either to the investment or to increase in levels of production after allowing for rise in productivity in some cases ; in others, reliance has to be placed on project reports and on information supplied to the Licensing Committee. In road transport, the criterion may be furnished by different indicators of increase in the volume of passenger and goods traffic. In the field of social services a variety of tests have to be adopted, depending upon the level at which the Plan intends to pro- vide these services to the community. For instance, in health services, the requirements of different types of personnel were assessed in relation to the population served. In education, the pupil-teacher ratio was used as the criterion.
14. Apart from the direct employment flowing from different development programmes, account has also to be taken of indirect em- ployment in such fields as trade, commerce and transport. In the Second Plan, indirect employment was reckoned at 52 per cent of the additional employment which could be attributed to development programmes under the Plan, both in the public and the private sectors. On the basis of recent studies it would be reasonable to assume for the Third Plan, indirect employment benefits at 56 per cent of the additional employment attributable to development programmes in the Plan. Finally, certain checks have to be applied to estimates of additional employment worked out for different sectors. Gradually, fuller data for such overall appraisal are becoming available. These include the results of special surveys and investigations, project studies, employment market information gathered by the National Employment Service, and analysis of information provided in appli- cations submitted for industrial licences. Estimation of employment in relation to a plan of development involves a number of assumptions, which have to be continuously tested. In the nature of things, therefore, there can be no finality in estimates of employment which might be worked out in relation to a plan of development. Experience of the last ten years shows that there is need for continuous examination and improvement of methods and for assessment of the actual performance in relation to initial estimates of employment and investment. To facilitate this, a detailed statement of the as- sumptions made in calculating the additional employment potential of the Third Plan is given in Appendix C.
15. Following the methods of estimation explained above, it is reckoned that the Third Plan may provide additional non-agricultural employment of the order of 10.5 million and additional employment in agriculture of about 3.5 million. The additional non-agricultural employment is distributed broadly as follows :
EMPLOYMENT AND MANPOWER 83
Additional non-agricultural employment
(in lakhs)
additional
sector employment
in the
Third Plan
1 construction* 23.00
2 irrigation and power 1.00
3 railways 1.40
4 other transport and communications 8.80
5 industries and minerals 7.50
6 small industries 9.00
7 forestry, fisheries and
allied services 7.20
8 education 5.90
9 health 1.40
10 other social services 0.80
11 government service 1.50
total (1 to 11) 67.50
12 others' including trade and
commerce at 56 per cent of
total (1 to 11) 37.80
grand total 105.30
16. Besides additional employment outside agriculture and in agriculture described above, there will also be significant relief to underemployment, but it is difficult to indicate its extent in quantitative terms. In agriculture, only about a fourth of new employment potentialities have been taken account of for estimating additional employment and the remaining are expected to provide relief to under-employed persons. In village and small-scale industries, only full-time jobs have been accounted for in the table above. While the economy seeks to absorb as many workers, as possible into non- agricultural occupations, during the Third Plan it is expected that there will be a net addition to the total number of workers engaged in agriculture. A large part of the increase in the labour force will take place in families who are at present dependent on agriculture. If employment opportunities do not develop sufficiently in the non- agricultural sectors, under-employment in agriculture will be further intensified, leading to lowering of living standards in a section of the community upon whom the growth in population has already borne harshly. It should also be stated that in the nature of things, estimates of additional employment arising from the Plan are subject to a considerable degree of uncertainty. If some of the assumptions made are not borne out by later experience, or if the various programmes and projects are not implemented in a sufficiently effective and continuous manner, the additional employment estimated above may not be fully realised.
17. If, in consequence of Plan programmes, employment opportunities are available for about 14 million persons, leaving aside the backlog of unemployment, even for providing work for the new entrants to the labour force, there is need to find additional employment opportunities for 3 million persons. This is considered to be an essential objective in the Third Plan.
At this stage it must be emphasised that although the validity of quantitative estimates is affected by the inadequacy and complexity of employment data, experience in the First and Second Plans show that employment targets could not be achieved in full because of shortfalls in performance in various sectors of the Plan. Every attempt has, therefore, to be made to avoid the recurrence of such a situation.
It is proposed that the problem should be approached along three main directions. Firstly, within the framework of the Plan, efforts should be made to ensure that the employment effects are spread out more widely and evenly than in the past. Secondly, a fairly large programme of rural industrialisation should be undertaken with special emphasis on programmes of rural electrification, development of rural industrial estates, promotion of village industries, and effective re- deployment of manpower. Even though, in the first instance, the introduction of new production techniques may result in a decrease in employment, it is expected that there will be significant Iong-term benefits in revitalising the rural economy. Thirdly, in addition to other measures for increasing employment through small industries, it is proposed to organise a rural works programme, which will provide work for an average of say, 100 days in the year for about 2.5 million persons and, if possible, more. Those programmes, and specially the proposal for rural works, will assist the general mass of the population and will also provide increased opportunities for the educated unemployed. The latter have, however, certain special problems of their own, which are briefly discussed in a later section of this chapter.