JOBS, STILL
Ensuring that growth translates to more productive
employment opportunities is government's foremost challenge
MIDST GROWING CONCERNS over inadequate employment opportunities
despite the economy growing at a fast clip, new estimates from the RBI sug-
gesta pick upin job growth. As per the central bank's KLEMS database, em-
ployment in the country grew by 4.67 crore in 2023-24. However, these are
provisional estimates and they do not provide the disaggregated sector-wise job numbers
for the latest year. In recent years for which the disaggregated data is available (2017-18
to 2022-23), however, much of the increase in employment has occurred in agriculture,
followed by construction and trade — sectors marked by low levels of productivity. As
per the database, value added per worker, a measure of labour productivity, is the low-
est in the case of agriculture, and in the case of construction and trade is substantially
lower than in the most productive sectors of the economy. This low level of productivity
has implications for workers’ wages.
In recent years there has been a sharp pick up in the labour force participation rate as
seen in data from the periodic labour force surveys. Much of this increase was driven by
women joining the labour market in greater numbers. Wortyingly, a sizable number of
these new entrants are engaged in self-employment, as helpers in household enterprises.
This indicates the absence of more productive, more remunerative jobs. Alongside, data
from the recently conducted survey of unincorporated sector enterprises affirms that a
sizable section of the labour force continues to be engaged in a low productive informal sec-
tor. In 2022-23, the number of unincorporated enterprises or informal sector firms stood
at 6.5 crore and roughly 11 crore workers continue to be engaged in these establishments.
In such firms, value added per worker is only a fraction of that in the larger formal firms.
The issue of inadequate creation of more productive forms of non-farm employmenthas
beenat the heart of India's development story. The State of Working India 2023 report had
pointed towards the weak link between longrun GDP and non-farm employment growth.
While successive governments have taken steps to facilitate job creation, progress has been
patchy. With growing capital intensity of production, even in the labour intensive sectors,
this will become even more challenging. The India Employment Report 2024 had noted
that “the production process has increasingly become capital-intensive and labour-saving”.
Ithad also pointed out that the skill intensity of employment had increased, “which was con-
trary to the labour market needs of the country”. Ensuring that growth translates to more
productive job opportunities is the foremost challenge before the government.