Professional Documents
Culture Documents
EPW
August 9, 2014
vol xlIX no 32
SPECIAL ARTICLE
two-year period (2009-10 to 2011-12), employment in manufacturing and non-manufacturing taken together grew by 16.1
million in a matter of two years vis--vis an increment of 15.7
million over a five-year period (during 2004-05 2009-10).
Employment growth rate in the manufacTable 1: Size of Labour Force, Workforce (by Sectors), the Unemployed and Employment Elasticity
of Output in India (1993-94 2011-12)
turing sector at 8.6% between 2009-10 and
Workforce, Labour Force and
Absolute Number (in million)
Employment Elasticity of Output
2011-12 surpasses the employment growth
Unemployed
1993-94 1999-2000 2004-05 2009-10 2011-12 1999-2000 2004-05 2009-10 2011-12
rate in all other sectors. Employment in the
Total employment by sectors
Agriculture
241.5
246.6 268.6 244.9 231.9
0.12
1.09 -0.67 -0.53 service sector too has witnessed a sharp inManufacturing
38.9
42.8 53.9 50.7 59.8
0.27
0.81 -0.17
1.35 crease with 11 million more jobs being creNon-manufacturing
15.8
20.4 29.4 48.3 55.3
0.74
1.03
1.26
1.07 ated post 2009-10, much higher than the nine
Services
77.7
89.8 107.3 116.3 127.3
0.35
0.55 0.20
0.55
million increase during the five years to
Total workforce
374.0
399.5 459.1 460.2 474.2
0.20
0.53
0.01
0.21
2009-10. The real question for the future is:
Total labour force
381.2
408.5 469.9 469.9 484.8
can the Indian economys expected growth be
Unemployed (open)
7.2
9.0 10.8
9.6 10.6
employment-intensive enough to generate
LFPR female (age 15 to 59)
45.2
41.7 45.4 34.5 33.1
employment in non-agriculture to absorb
LFPR male (age 15 to 59)
88.0
86.6
87.1 83.7 82.7
both those entering the labour force as well as
The numbers in the table are based on the principal + subsidiary status employment; LFPR: Labour force participation rate.
Source: Authors estimates based on CSO and NSS unit level data.
those leaving agriculture for non-agricultural
labour, mechanisation in agriculture, withdrawal of women jobs? We will return to this question later in the paper.
and their increasing participation in household activities
Sub-Sectors Driving Employment Trends
all issues we will discuss later.
the labour force is attributed to changes in the demographic
profile of the young population, rising enrolments in elementary
and secondary schooling due to the efforts of Sarva Shiksha
Abhiyan (SSA) and Right to Education (RTE), declining child
5.8
4.4
7.6
2.5
1
4.5
1.2
1.1
1.7
3.4
5.8
0.6
3.1
42.8
2.2
1.1
17.1
20.4
34.8
4.4
14
2.1
2.5
9.9
8.2
2.7
11.3
89.8
5.5
4.7
9.7
7.2
1.3
5.2
1.5
0.9
2
4.5
6
1
4.4
53.9
2.6
1.2
25.6
29.4
41.2
5.8
17.6
2.9
4.3
8.3
11.1
3.5
12.7
107.3
5.5
4.1
8.4
7.3
0.9
3.6
1.6
0.8
1.7
4.3
6.6
1.5
4.3
50.7
3
1.3
44.1
48.3
43.5
6.1
20
3.8
5.8
9.5
11.8
3.6
12.2
116.3
6.4
4.9
9.2
9.6
1.3
3.9
1.1
1.3
2
5
6.9
1.5
6.6
59.8
2.6
2.5
50.3
55.3
44.2
7.8
22.9
4.3
6.7
7.9
14.1
4.4
15.1
127.3
August 9, 2014
vol xlIX no 32
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SPECIAL ARTICLE
30
23.5
PS SS
20
13.9
12.4
10.2
10
7.3
2.0
-1.2
-0.2
-5.5
-10
-10.7 -10.7
-20
2000-05
2005-10
2000-05
2005-10
Male
PS= Principal status; SS= subsidiary status.
Source: Authors estimates based on NSS, various rounds.
2010-12
Female
2010-12
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vol xlIX no 32
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SPECIAL ARTICLE
Organised
Formal Informal
2004-05
Agriculture
Manufacturing
Non-manufacturing
Services
Total
2009-10
Agriculture
Manufacturing
Non-manufacturing
Services
Total
2011-12
Agriculture
Manufacturing
Non-manufacturing
Services
Total
Unorganised
Formal Informal
Formal
Total
Informal
0.2
5.0
2.0
19.5
26.7
4.1
10.3
7.2
10.0
31.5
0.1
0.6
0.1
1.1
1.9
264.2
38.0
20.1
76.8
399.0
0.3
5.6
2.1
20.6
28.6
268.2
48.3
27.3
86.7
430.5
0.3
5.3
2.5
22.7
30.9
13.0
11.1
15.8
13.5
53.5
0.1
0.4
0.4
1.4
2.3
231.5
33.9
29.6
78.7
373.7
0.4
5.7
2.9
24.1
33.1
244.5
45.0
45.4
92.2
427.1
0.5
6.1
2.7
24.2
33.5
17.7
14.6
19.7
16.1
68.1
0.1
0.4
0.3
1.2
1.9
213.6
38.7
32.7
85.8
370.8
0.6
6.5
2.9
25.4
35.4
231.3
53.3
52.3
101.9
438.9
2004-05
No of
Share in
Workers
%
(mn)
2009-10
2011-12
No of
Share in No of Share in
Workers
%
Workers
%
(mn)
(mn)
Less than 6
6 and above but less than 10
10 and above but less than 20
20 and above
Not known
Total
119.1
14.4
11.9
25.1
16.2
186.7
121.7
21.6
13.9
32.6
21.6
211.4
63.8
7.7
6.4
13.5
8.7
100
57.6
10.2
6.6
15.4
10.2
100
138.6
28.5
18.6
41.1
13.3
240.1
57.7
11.9
7.8
17.1
5.5
100
vol xlIX no 32
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SPECIAL ARTICLE
1993-94 1999-2000
2004-05
2009-10
2011-12
5.0
79.2
341.4
34.6
460.2
3.7
76.5
356.9
37.1
474.2
225.7
84.6
1.7
0.2
312.1
238.3
97.0
2.2
0.1
337.5
101.9
34.0
0.7
0.0
136.5
109.4
40.0
0.7
0.0
150.2
EPW
August 9, 2014
vol xlIX no 32
5.32
24.10
5.59
7.26
7.32 7.36
21.50 25.50 22.60 21.30
SPECIAL ARTICLE
Figure 2: Gross Capital Formation in Agriculture and Applied Sector of India
(1991-2012, Rs in crore)
2,50,000
2,00,000
Total
1,50,000
1,00,000
Public sector
Private sector
50,000
0
1990-91 1992-93 1994-95 1996-97 1998-99 2000-01 2002-03 2004-05 2006-07 2008-09 2010-11
Source: Plotted using data from Ministry of Agriculture, Government of India (available at
www.indiastat.com).
August 9, 2014
vol xlIX no 32
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SPECIAL ARTICLE
3,36,611.4
3,00,000
Total commodity export
2,00,000
1,00,000
1,81,860.9
1,76,765.0
33,468.6
0
1996
1998
2000
2002
2004
2006
2008
2010
2012 2013
Part B: Exports of selected labour-intensive manufacturing goods from India, 1996-2013 ($ million)
40,000
Food and footwear
30,000
Textiles
Apparel
20,000
10,000
0
1996
1998
2000
2002
2004
Source: Compiled from UN-Comrade database.
2006
2008
2010
2012 2013
Post-crisis, a recovery in manufacturing employment was experienced with a 9.1 million increase in absolute terms. This is
partly explained by the rise in exports of commodities, particularly
labour-intensive manufacturing goods: exports of food and
beverages, wearing apparel, textiles increased significantly.
However, there are two other structural trends in place that
explain falling employment in manufacturing in the second
half of the 2000s.
Economic & Political Weekly
EPW
August 9, 2014
vol xlIX no 32
Rising Import-Intensity of Manufacturing: One of the structural trends visible in the manufacturing sector is the rising
import ratio in output. The manufacturing sector is intrinsically integrated into the global economy with an average trade
ratio for the period 2008-09 to 2010-11 of 180%; a rise from
92% in 1994-95. The integration is, however, asymmetric with
import penetration almost doubling whereas exports increased
by only 20% (Mohanty 2013). If petroleum, oil and lubricants
(POL) exports are excluded, Table 8: Manufacturing Integration
the ratio which was actually and Trade Balance (with and without
POL exports)
showing a trade surplus till Year
X-M/
(X-M) Less POL
2003 turns into a deficit post
Manufacturing
Exports/
GDP
Manufacturing
2003-04 (Table 8). The non-oil
GDP
trade deficit increased sharply 1993-97
7.6
6.5
in the slowdown. Further, in 1998-2003 14.5
12.7
11.4
-0.2
the period of the slowdown, 2004-08
10.2
-9.6
import competition has dis- 2009-10
16.8
-6.3
placed domestic production to 2011-12
Source: Mohanty (2013).
a huge extent (Mohanty 2013).
Rising wages and other costs (rising real estate prices, taxes
and tariffs, electricity) inflated the cost of our domestic manufacturers. This often encourages manufacturers to import final
goods from China and other neighbouring countries as the
costs of production at home turned higher than imported final
goods. Many countries in the world have witnessed a rising
share of China in their import basket.12
For India, the upward trend in import intensity since 2003
explains capital intensity, to some extent. Goldar (2013) noted
that starting from 2001, exports of manufactured products that
rank high in terms of import intensity13 have grown much faster
than those with low import intensity.14 Also firms spending more
on technology imports and/or capital goods imports, those with
larger firm size and higher foreign equity holding, and with new
plant and machinery have a higher import intensity of output.
However, there is a structural dimension to the rising capitalintensity of manufacturing, which is a global phenomenon.
Rising capital and skill intensity of manufacturing, as Rodrik
(2012) argues, has limited the capacity of the manufacturing
sector to absorb labour. According to him, it will not be possible
for the next generation of industrialising countries to move 25%
or more of their workforce into manufacturing, as was accomplished by the east Asian economies. Manufacturing employment in China showed a continuous increase from 86 million
in 2002 to 99 million in 2009. Chinese manufacturing employment grew by about 15% over the seven-year period, despite
the global economic crisis beginning in late 2008 after which
manufacturing employment either stagnated or declined in
many developed/industrialised countries (Banister 2014).
Table 9: Capital Intensity of Output in Organised Manufacturing
Manufacturing
2001-02
2004-05
2009-10
2010-11
0.179
0.449
0.165
0.307
0.087
0.362
0.0789
0.344
SPECIAL ARTICLE
Rural Areas
Professional and admin
91.62
Clerical jobs
99.73
Sales and services
16.91
Agriculture and allied
15.08
Crafts and trade workers
24.26
Plant and machine operators 43.26
Total
22.45
Urban Areas
Professional and admin
154.90
Clerical jobs
148.53
Sales and services
42.22
Agriculture and allied
24.07
Crafts and trade workers
54.13
Plant and machine operators 81.59
Total
79.45
167.81
142.11
70.32
34.14
54.47
85.06
50.83
193.95
158.10
69.25
39.79
56.69
92.25
59.38
277.17
186.93
90.96
55.91
89.09
112.21
132.74
317.26
210.34
88.58
50.24
85.42
115.58
141.90
365.04
217.96
115.42
92.57
107.19
133.07
164.10
377.14
245.71
129.26
126.39
111.35
148.54
181.19
390.57
240.08
135.94
110.30
121.72
149.23
193.35
While this was the situation for workers at the lower end of the
wage and skill distribution, a similar development was occurring at the higher end of the salary/skill distribution. Bet ween
2003-04 and 2010-11, GDP grew by 8.4% per annum. Since it was
both industrial (manufacturing and non-manufacturing) and
services growth that was driving GDP, skill shortages emerged
at the higher end of the salary/skill distribution, increasing
salaries of the skilled and highly skilled.
These two sets of forces that were driving wages for the unskilled as well as salaries for the skilled/highly skilled were also
driving greater capital-intensity in goods and services production.
Non-agricultural Employment Rise between 2009-10 and
2011-12: After 2004-05, the domestic demand for a number of
consumer goods has grown sharply, with a rise in the size of
the middle class, as well as the emergence of a new non-poor.
But while employment growth has occurred in the organised
56
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vol xlIX no 32
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SPECIAL ARTICLE
EPW
August 9, 2014
million new young people will be looking for work each year.
Thus, the number of non-agricultural jobs that will need to
grow is at least 10 million per annum (or 50 million in five
years). If we add the stock of educated unemployed currently
(total 10 million), they should be added to the numbers who
will look for work in industry and services. In addition will be
those leaving agriculture (five million per annum have left
agriculture between 2004-05 and 2011-12). How are all these
17 million jobs per annum to be created in non-agriculture?
This will have to be the subject of another paper. In any case,
it is a challenge that the new government will have to face, if
the demographic dividend is to be realised before 2040, by
when the dividend would have ebbed away and India would
have become an ageing society.
Bibliography
Banister, J (2014): Chinas Manufacturing Employment and Hourly Labour Compensation,
2002-09, Bureau of Labour Statistics, available
at http://www.bls.gov/fls/china_method.htm,
accessed on 19 March.
Gill, A and L Singh (2006): Farmers Suicides
and Response of Public Policy, Economic &
Political Weekly, Vol XLI, No 26.
Goldar, B (2013): Determinants of Import Intensity of Indias Manufactured Exports Under the
New Policy Regime, Indian Economic Review,
Vol 48, Issue 1, pp 221-37.
Himanshu (2011): Employment Trends in India: A
Re-examination, Economic & Political Weekly,
Vol 46, No 37.
Husted, S and S Nishioka (2012): Chinas Fare
Share? The Growth of Chinese Exports in
World Trade, Review of World Economics,
Vol 149, (3).
Jeromi, P D (2007): Farmers Indebtedness and
Suicides, Economic & Political Weekly, Vol XLII,
No 31.
Kannan, K P and G Raveendran (2012): Counting
and Profiling the Missing Labour Force,
Economic & Political Weekly, Vol XLVII, No 6.
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