Dr. C. Rangarajan and his team in Prime Minister’s Economic Advisory Council have written a paper on India’s (un) employment situation. I had expressed my frustration earlierthat EAC in its outlook has not expressed anything on unemployment situation especially after reading this paper from Jeemol Unni et al.
Finally we have some analysis on the topic from the team. The findings are largely similar to what Unni et al said which is Although employment has risen in the country, the increase has happened in informal sector and agriculture.
NSS (61 round) survey….. shows a reversal of the declining trend in employment growth rate which increased from an annual 0.98 per cent in the period 1993-94 to 1999-00 to 2.89 per cent in the period 1999-2000 to 2004-05. Interestingly there was also a sharp acceleration in the rate of growth of labour force from 1.03 per cent to 2.93 per cent.
This unprecedented growth in labour force is above the population growth rate…But the real story is:
However the Survey and the projections indicate that a large proportion of the increase in employment is happening in the informal sector and agriculture. This trend is a cause for concern as the relatively low wages and lack of social security here translate into the phenomenon of ‘working poor’ i.e. workers in the BPL households. The new challenge is one of improving the total factor productivity in the informal sector and in agriculture so that there is a significant improvement in the emoluments of those who are employed, that is, in the quality of employment.
The paper analyses the trends in detail but does not offer enough suggestions on how best can we avoid this low skill employment. In other words, how can we move people to more value add jobs in manufacturing and services.
The problem is quite a difficult one to address. Paper by Rajan et al saysIndia has so far focused at capital intensive industry. Hence agri/low skilled labour could not migrate as capital intensive sector needs some skills.
However, all is not lost as some people are looking at solutions. Arvind Panagriya offers his advice on transforming India. Keep watching this space for further developments.