Archive for July 18th, 2007

Employment in India: a scary story

July 18, 2007

India growth story is a mixed one. On one hand, we have the positives- high growth across manufacturing and services sectors, booming equity and commodity markets, news of huge paypackets abound etc and on the other we have the negatives- exclusive growth, poor growth in agriculture (on which 70% of population depends), ailing infrastructure etc. There are analysts and academicians on both sides with powerful arguments and it is like which way you like at half a glass of water- half full or half empty?

I have put my thoughts across both the sides in this blog and have even put across views of academicians who have suggested some alternative measures for furthering India’s growth prospects.

I just came across this paper on Employment in India by Jeemol Unni and G. Raveendran, which looks quite scary to me. You keep coming across stories in Media that the growth is exclusive as employment has hardly gone up . This paper confirms the views. (Download it asap as EPW is going to become a paid site from August 1, 2007. I still don’t know why? If NBER continues to provide papers of top economists for free, why should EPW make it paid ?) 

The paper is based on the findings of the recent 61st round of NSS survey. As survey is huge, this paper is a near summary in just 4 pages.

Some facts from the paper (or NSS survey are):

  • Table 1 shows employment has increased but the growth rate has slowed from 2.01% (between 1983 to 1993-94) to 1.84% (between 1993-94 to 2004-05). The fall is more in rural areas
  • When you look at where most employment is happening it is at part-time jobs. Women are getting more of these jobs.
  • When we disaggregate employment on basis of education, for men there has been a marginal increase across all education levels, but for women increase is mostly at middle school and below. As this section would not get high-fancied jobs, women are mostly getting low paid jobs.
  • NSS never gave Self-employment data earlier. This time it has made an attempt(as per authors it is a poor one) and results are shocking.  The authors say:

Interesting results emerged, with only a little over 50 per cent of the rural and nearly 60 per cent of the urban selfemployed reporting that their employment was remunerative.

Worse still, about 40 per cent of the self-employed in rural areas felt that their income of less than Rs 1,500 per month was remunerative enough [Chandrasekhar and Ghosh 2006b]. About 30 per cent of the urban self-employed felt that less than Rs 2,000 per month was remunerative employment.

The minimal income on which the selfemployed survive and their low levels of expectation come out starkly even using this crude indicator of income.

Why is it shocking? Well if you convert Rs 1,500 using currency based on PPP,  (1 $ = Rs 9.2) the earning is just $ 1.24 per day. This is just above the World Bank’s estimate of extreme poverty (WB is however often criticised for this approach). If, the rural self-employed feel that much is enough, they are even below that. Well, ideally you should be calculating based on PPP (as World Bank estimates on PPP basis only) and the earning based on this would be about 5 dollars per day (as per World Bank1 $ = Rs 9.2 in 2004).

  • Most employed do not have a designated place (as in a proper office) to work.

The authors are critical of the way employment statistics are done in India. They conclude:

The euphoria with which the growth of the economy, measured in terms of GDP growth, and the high salary packages received by certain sections in the organised sector that are hyped by the media, hides the truth on employment. If the growth of the economy is to be inclusive, the majority of the workforce, who do not seem to be reaping the benefits of GDP acceleration, will have to be brought into the growth process. However, this can only happen if there is ample recognition of this fact. If we do wish to understand the nature of this growth, we first need to refine our statistics on the workforce. The workforce statistics fail to capture the diversity of the labour force, and certain new and growing forms of work such as homework, the levels of incomes obtained by the workers in different segments and the lack of social security benefits accruing to them. We appeal to the Statistical Commission of India to prepare more inclusive statistics of the workforce before we can expect the Planning Commission to promote inclusive growth.

Assorted Links

July 18, 2007

1. MR has a nice posting on China.

2. WSJ Blog points out that a blogger gets a senior job at Fed. David Altig, author of the Macroblog has just been named research director of the Federal Reserve Bank of Atlanta. Well, apart frm blogging he has solid credentials. His Blog looks quite good. That adds one more to the daily read kitty:-(

3. Finance Professor points out to yet another blog which reviews a news article that says hedge funds do not outperform benchmarks. The article is a must read.

4. Free Exchange explains EMH.

5. SS Aiyar has a nice article in ET on India’s BoP. I need to look at BoP data more closely.


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