CHAPTER- 2

EMPLOYMENT-UNEMPLOYMENT S1TUTATION: AN ALL-INDIA ANALYSIS

2.0. INTRODUCTION

2.1. LABOUR FORCE IN INDIA

2.2. OCCUPATIONAL STRUCTURE AND ECONOMIC DEVELOPMENT

2.3. OCCUPATIONAL DISTRIBUTION OF LABOUR FORCE IN INDIA

2.4. EMPLOYMENT TRENDS IN INDIA

2.5. UNEMPLOYMENT IN INDIA

2.6. ROLE OF THE STATE IN SOLVING THE UNEMPLOYMENT PROBLEM

2.7. CONCLUSIONS

51
 2.0. INTRODUCTION

Labour is a primary factor of production. It is not only the most productive factor it also
activates other factors. The size of the labour force in a country is of crucial importance
for the level of economic activity. It is determined by the number of people in the age
group of 15-59 years as generally children below 15 years of age and old people above 59
years are considered not capable of working.45 Even some people within the 15-59 years

of age group cannot work being sick and/or physically disabled. Hence, the size of the
labour force of a country includes economically active population and the unemployed
people who are ready to offer their labour service but are not finding job/employment. In
India, 39.26 per cent of the population constituted the labour force in 2001 as per the
Census of 2001.

In this chapter we will discuss the labour force growth in India, classification of labour
force in India, occupational structure and economic development and occupational
distribution of working population in India. This discussion will be followed by an
analysis of employment and unemployment in India with special reference to West
Bengal. For this purpose we will take help of the NSSO data. The analysis in this chapter
reveals that the space of labour in India is not homogeneous. Labour is fragmented in
terms of geographical difference, occupational distribution, skill differences and sex
differences. There may be other attributes which distinguish one form of labour from the
other.

The chapter is organized as follows: Section 2.1 dwells upon the labour force growth in
India along with a discussion on classification of labour force in India. An overview of
occupational structure and economic development in India is offered in Section 2.2. while
Section 2.3 takes up the discussion of occupational distribution of working population in
India. Section 2.4 deals with an analysis of employment trends in India along with an
understanding of structure of employment in India. Section 2.5 discusses unemployment
problem in India. Finally the concluding section sums up the major findings of the
chapter.

45 By this definition of labour force we are not taking into account number of child labour in a country,
although due to poverty many children below the age of 15 years are forced to work in many developing
countries, such as India.
52
 2.1. LABOUR FORCE IN INDIA

During the last three decades labour force in India has more than doubled. In 2001, it was
402.5 million as against 180.7 million in 1971. Thus the average rate of increase in labour
force during the period (1971-2001) was 2.71 per cent per annum which was higher than
the population growth rate of 2.11 per cent per annum during this period. Table 2.1
indicates the labour force growth rate in India during 1971-2001. It may be noted that the
labour force growth rate during 1970s was 2.96 per cent. It declined to 2.37 per cent
during 1980s. But the trend was reversed during the 1990s.

Table 2.1: Growth of Labour Force (1971-2001)

Year Labour Force Average Annual

(in million) Growth Rate (per cent)

1971 180.7 -

1981" 242.0 2.96

1991"" 306.0 2.37
2001 402.2 2.78
Note:

*- Excluding Assam and Jammu & Kashmir

** - Excluding Jammu & Kashmir

Source: Tata Services Limited, Statistical Outline of India 2007-08. (Table 29; p. 35)

The rapid increase in labour force creates pressure for generation of additional
employment opportunities. With economic growth remaining of jobless variety, the rapid
rise in labour force swells the number of unemployed in the labour force. In order to
understand the phenomenon of rapid increase in India’s labou force in recent time, we
offer a disaggregated analysis of labour force in India here. Some of the salient features of
India’s labour force are noted below:

(1) Workers-population ratio in India is low in contrast to that in developed

countries. This is owing to the rapid increase in population, low female
participation in labour, under-enumeration and omission of unpaid family
workers even when according to the accepted concept they are to be classified
as workers.
(2) The rural worker-population ratio is greater than urban worker-population
ratio as, in agriculture, almost all adult members of the households participate
in work while in urban areas many women do not undertake job due to social
inhibitions.
(3) The female workers participation rate is much lower as compared to the male
workers participation rate. The female workers participation rate in 2001 was
only 25.68 per cent as compared to the male workers participation rate of
51.93 per cent. This, in a way, reflects social backwardness.
(4) Workers participation rates across states are considerably different.

For studying growth of labour force in India, we adopt the following classifications:

(a) Main workers and marginal workers,

(b) Rural Workers and Urban Workers,
(c) Male Workers and Female Workers.

Main Workers and Marginal Workers:

Main workers, as per Census definition, are the whole time workers, while marginal
workers are not. Table 2.2 below indicates the position of main and marginal workers
in different Census. From the table we can decipher the following trends as far as the
main and marginal workers are concerned:

1. Declining share of main workers: The worrisome trend that appears from
the Table 2.2 is the fact of declining share of main workers in the total
labour force over the years. The decline is significant during the period of
1971-81. This shows that those who are willing to offer their labour
services are not finding enough opportunities to engage themselves in full­
time jobs/works. Hence, a significant portion of available labour power in
the country goes unutilized which is not desirable from any development
and/or welfare perspective. This underutilization of resources actually
implies existence of underutilized capacity in Indian economic system
from the perspective of labour and less than potential level of gross
r. *

54
 activities in the system. Had the entire labour force fully and properly
utilized India’s Gross Domestic Product and wealth creation would have
been much higher than what it is at present. The proportion of main
workers drastically declined from 96.8 per cent to 77.8 per cent in 2001.
2. Decline in total Main and Marginal Workers in Labour Force: Labour
force by definition constitutes those people in the workable age group (15-
59 years) excluding the physically and mentally disabled in that age group.
In the labour force those who are willing to work but do not find any work
i.e. those who are unemployed are also counted. From the Table 2.2 it is
clear that the absolute numbers of main and marginal workers are on the
decline from 1981. Does it not indicate that total numbers of unemployed
in the labour force is on rise? We make this conjecture given that
population is growing.
3. High proportion of male workers in total main workers: Share of male
workers in total main workers is significantly higher than the share of
female workers. In 2001 proportion of male workers in total main workers
stood at 76.8 per cent as against 23.2 per cent for female workers. The
higher share of male workers in main worker category in a way is
explained by the gender bias regarding paid work as generated by the
social values in patriarchal society. Female workers constitute 60 per cent
of the total marginal workers which signifies that females play a
supportive role in household earnings.
4. Fluctuating growth rates in main and marginal workers: As the Table 2.2
indicates growth rates of main and marginal workers remained highly
volatile over the years. While there was slight increase in the growth rate
of main workers during 1981-91 period it fell sharply in the next decade
signifying thus shrinking scope for employment as main workers. More
volatility is observed in the annual growth rates of marginal workers. Note
that growth rate in marginal workers was high when that in main workers
falls. Workers tend to thus engage themselves as marginal workers as the
scope for engagement as main workers continuously shrank.

55
 Table 2.2: Main Workers and Marginal Workers

Year Main Workers Marginal Workers

(in millions) Annual Growth (in millions) Annual Growth

Rate (in per Rate (in per
cent) cent)
1971 755 - 5.7 -

1981 220.7 2.35 21.3 14.09

1991 278.9 2.37 27.1 2.44
2001 313.2 1.17 89.3 12.66
Source: Census of India (1971,1981,1991 and 2001).

Rural Workers and Urban Workers:

Total labour force in India can be distinguished in terms of their engagement either in
rural space or in urban space. The bulk of India’s labour force is in rural space as can be
noted from Table 2.3 below. However, one distinguishing feature is that annual growth
rates of urban workers remained higher than the annual growth rates of rural workers
during 1971-2001. The share of rural workers in total working population of the country
was 82.5 per cent in 1971. However, it declined after that and in 2001 it became 77.2 per
cent. On the other hand, the share of urban workers increased from 17.5 per cent in 1971
to 22.8 per cent in 2001. This implies three things as follows:

(i) With population growth the number of urban workers increased faster
than the number of rural workers as rural space failed to absorb all its
working population meaningfully and on a sustained basis.
(ii) There occurred urbanization at a very faster rate during the period
under consideration which attracted many workers to the new urban
locations.
(iii) Rural-urban migration owing to lack of opportunities even to earn
living wages/income in the rural areas led the increase in the number of
workers during the period under consideration.

56
From Table 2.3 we further observe the following things:

(i) There is a fluctuating trend in annual growth rate of rural workers. However,
this fluctuation is less than the fluctuation in the annual growth rate of the
urban workers.
(ii) Annual growth rate of urban workers during 1971-2001 remained significantly
higher than the annual growth rate of rural workers. Urban workers can be of
three types - (a) urban-based workers with roots in urban areas only (non-
migratory), (b) permanently migrant worker completely de-linked with the
rural roots, and (c) seasonal migrant worker with roots remaining with the
rural space. For lack of data it is not possible to indicate the exact magnitude
of each category of workers.
(iii) Annual growth rates of urban workers are highly fluctuating during 1971-
2001. As already indicated above, the urban space of labour is influenced by
rural-urban migration to a large extent. The migration may be permanent as
well as seasonal in nature. The fluctuating nature of growth rates of urban
workforce vis-a-vis the rural workforce implies that at times migration is high
and at times low. Further, seasonal nature of migration may imply two things.
Firstly, the migrants may take up principal job in urban space and subsidiary
occupation in rural space during the peak season of agriculture. Secondly, it
may imply otherwise. That is to say, the migrant may take up only subsidiary
occupation in urban space during lean season of agriculture while retaining the
principal occupation in rural space. For lack of adequate secondary
information it is very difficult to throw light upon these issues properly.

57
 Table 2.3: Rural and Urban Workers

Year Rural Workers Urban Workers

(in millions) Annual Growth (in millions) Annual Growth

Rate (in Rate (in
percent) percent)

1971 149.1 - 31.6 -

1981 195.1 2.73 46.9 4.03

1991 241.7 2.16 64.3 3.21
2001 310.6 2.54 91.9 3.64

Source: Census of India ( 971, 1981, 1991 and 2001)

Male Workers and Female Workers

In terms of sex-division of labour force, it is the male workers who constituted the
majority of the labour force during 1971-2001. However, the growth of female labour
force is discernible during this period - a tendency which is often referred to as
feminization of labour force. This in a way reflects (a) continuous decline in social
inhibitions regarding female participation in public domain both in rural and urban space,
and (b) socio-economic compulsion for female members of households to take up outside
jobs. In the second sense, the role of female workers is of supportive type and as a result
female workers are oppressed more as they have to take up double burden of work at the
workplaces and at the households.

Female participation in primary sector traditionally remained quite high. Most of the
agricultural farm in India employs large number of female labourers as family labour.
Since they are mostly unpaid family labour they are not taken into account by the Census
or NSSO in the workforce. So, what is important is the fact of increasing number of
female workers in the urban space. This increased participation of female members of
households may be forced by the economic circumstances or not.

58
 Table 2.4: Male and Female Workers

Year Male Workers Female Workers

(in Annual Growth (in Annual Growth

millions) Rate (in per cent) millions) Rate (in per cent)
1971 144.4 - 36.3 -

1981 179.3 2.19 62.7 5.61

1991 218.6 2.00 87.7 3.41
2001 275.5 2.34 127.0 3.77

Source: Census of India (1971, 1981, 1991 and 2001)

Table 2.4 above indicates the increase in female workers since 1971, which was highest
in the decade of 1970s. The share of female workers in total workers was 20.08 per cent
in 1971 which increased to become 31.55 per cent in 2001 - almost one-third of the total
workers. From the table above the following observations can be made:

(i) During the decade of eighties the rate of growth of both male and female
workers fell. This is despite the emphasis laid upon employment generation in
the Sixth and Seventh Plan as the strategy and objective of these two Plans.
This in a way indicates employment generation in these two plans -
particularly in the Seventh Plan - was not up to the desired level in spite of
planned initiatives of the state.
(ii) The annual rate of growth of male worker in the decade of nineties was higher
than that in the decade of seventies. However, the annual rate of growth of the
female workers in the decade of nineties was lower than that in the decade of
seventies. This is explained in terms of large number of male workers swelling
the ranks of marginal workers vis-a-vis the female workers during this decade.
(iii) During 1971-2001, the rate of growth of female workers remained higher than
that of the male workers always. However, in recent time the difference
between the growth rates of female and male workers is becoming smaller and
smaller as the annual growth rate of female workers is falling, as can be noted
from Table 2.4.

# % f
59
2.2. OCCUPATIONAL STRUCTURE AND ECONOMIC DEVELOPMENT

In this section we will view labour force in terms of occupations. Broadly speaking
one can distinguish between three distinct occupational categories - primary,
secondary and tertiary. Once again we can divide the each space in rural and urban
category. Then further we can divide each rural and urban category as regular and
non-regular employment or casual or temporary employment and self-employment.
Further, in each category we can have sex division of workers. Chart 2.1 below gives
the detailed classification of workers in terms of their occupations as well as nature of
employment and sex-division. In this classification we have missed out the nature of
enterprises where the workers are engaged. Enterprises may be of various types
starting from large firm to small agricultural farm, co-operative, small units and
household space. The list is not exhaustive. Nature of enterprises in a particular
geographical location is dependent upon the history of the space which is constituted
by social, political, natural and cultural factors. Over time occupational distribution
and nature of employment undergo change including the sex-division of workforce.

With economic development it is held that occupational distribution undergoes

change. Economic development is best described in the mainstream neo-classical
economics in Lewis Model which implies transformation of underemployed
population from subsistence agriculture to the modem sectors including industry and
services. It is to be seen here whether such is the case in the context of India. Despite
large emphasis on industrialization we find even after sixty years of independence
more than 50 per cent of labour force is still engaged in agriculture which does not
tally with the predictions made by the Lewis Model.

60
 Chart 2.1

Occupational-Geographical Nature of Employment and Sex-division

CLASSIFICATION OF WORKERS

61
In India still now majority of the workforce is engaged in primary sector and the most
of the employment in primary sector, which includes agriculture, forestry, animal
husbandry, fishing, and poultry farming, mining and quarrying, is rural in nature in
which female participation rate quite high. A chunk of employment in primary sector
is seasonal in nature - particularly in agriculture. Not only can that one categorize a
segment of engagement in primary sector as self-employment. Further, primary
activities some time are of non-wage variety and non-paid as well. The latter is
discernible in case family labour is employed.

In secondary sector manufacturing employment constitutes the largest employment.

Types of enterprises vary from large corporate houses to tiny cottage industries in
manufacturing. In India, small scale and cottage industries provided employment to
82.2 per cent of labour force in the secondary sector as against 17.8 per cent in the
large and medium size industrial units in 1989-90. This pattern had changed little
since then. Since handicrafts and other small-scale industries do not require capital-
intensive technology, they can provide employment to more people as compared to
large-scale industries.

Trade, transport, communications, and finance comprising of banking, insurance etc.

are included in the tertiary sector. Of late, India’s high growth is explained in terms of
services production. However, the employment growth in tertiary sector was not in
proportion with growth in tertiary sector.

Occupational structure of a country depends on (a) geographical factors, (b)

development of productive forces, (c) division of labour and specialization, and (d)
level of per capita income. With changes in each one of these factors occupational
structure of a country does undergo change and there occur transformation of
employment from primary activities to secondary and tertiary activities. India is no
exception in this regard as its occupational structure has changed in terms of transfer
of population from primary to secondary and tertiary activities with economic
development. Economic development affects each one of these factors and therefore,
in turn, influences occupational structure. However, in the context of India only 20
per cent of labour force is engaged in tertiary sector despite rapid growth of this
sector.

62
 2.3. OCCUPATIONAL DISTRIBUTION OF LABOUR FORCE IN INDIA

In this section, we turn to a discussion of existing occupational structure of India. As

per as the 2001 Census, 56.7 per cent of the main workers were engaged in
agricultural and allied activities as against 66.9 per cent in 1991. The secondary sector
in India remains small as only 13.4 per cent of main workforce is engaged in
industries and allied activities in 2001 as against 9.4 per cent in India. This is despite
the attention given to industrialization in different plans since independence.
According to the 1991 Census, 20.4 per cent of the main workers in labour force were
employed in the tertiary sector. As against this, in 2001, 25.2 per cent of main
workers were employed in this sector. This indicates that the relative size of the
tertiary sector grew during 1991-2001.

The present occupational structure reflects the backward nature of Indian economy as
agriculture and allied activities still dominate as source of employment vis-a-vis
industries and services. Let us now see if occupational distribution of the labour force
has changed over time or not. Due to conceptual differences, data provided by various
censuses are not comparable. They are to be considered good only for drawing some
broad inferences. Keeping this fact in mind, we can draw some important inferences
from the Table 2.5 below as follows:

(a) In India the main occupation is agriculture. From 1951 to 1991

the place of agriculture and allied activities as provider of major
occupation to the majority of workforce remained unchanged.
Only during the decade of nineties there is some change as the
percentage of total workforce engaged in agriculture fell from
66.9 per cent to 56.7 per cent.

63
 Table 2.5: Occupational Distribution of Working Population in India

Occupation 1951 1961 1971 1981 1991 2001

Primary Sector 72.7 72.3 72.6 69.3 67.4 57.3
(1+2)
1. Agriculture & 72.1 71.8 72.1 68.7 66.9 56.7
Allied
Activities
2. Mining & 0.6 0.5 0.5 0.6 0.6 0.6
quarrying
Secondary Sector 10.0 11.7 10.7 12.9 12.1 17.6
(3+4)
3. Household and 9.0 10.6 9.5 11.3 9.4 13.4
other than
household
industry
4. Construction 1.0 1.1 1.2 1.6 1.9 3.7
Tertiary Sector 17.3 16.0 16.7 17.8 20.4 25.2
(5+6+7)
5. Trade and 5.3 4.0 5.6 6.3 7.1 9.4
Commerce
6. Transport, 1.5 1.6 2.4 2.7 2.8 4.0
storage and
communication
7. Other services 10.5 10.4 8.7 8.8 10.5 11.8
Total 100.0 100.0 100.0 100.0 100.0 100.0
Source: Census of ndia (various issues)

(b) The proportion of agricultural labourers does not reflect a steady

trend. Between 1951 and 1961 it had slightly declined. It is
suggested that this might be on account of the land reforms in the
process of which some agricultural labourers might have
declared their status as cultivators. However, the proportion of
agricultural labourers increased to a record level of 26.3 per cent
in 1971.
(c) Some changes in the occupational distribution of labour force
have taken place in the primary sector. In 1951, livestock,
forestry, fishing, plantation etc. had accounted for 2.4 per cent of
the labour force. Since then their share had declined to 1.9 per

V V 9'

64
 cent in the labour force. The percentage share of mining and
quarrying remained almost unchanged over the years.
(d) Considering the overall secondary sector it looks as if very little
happened in the secondary sector in terms of employment
generation over the years during 1951-91. However, if we
examine the occupational distribution of labour force for the year
1991, there are indications that the proportion of labour force in
the industrial sector and allied activities had increased during
1971-91. Household industry was more important as employment
provider. However, during 1961-81 the proportion of other than
household industry increased from 4.2 per cent in 1961 to 5.9 per
cent in 1971 and to 7.8 per cent in 1981. In household industry
proportion of labour force declined from 6.4 per cent in 1961 to
2.4 per cent in 1991. During 1991-2001 the proportion of labour
force in secondary sector increased significantly from 12.1 per
cent to 17.6 percent.
(e) As is clear from Table 2.5, the proportion of workers in the
tertiary sector has increased significantly during 1951-2001 from
17.3 per cent to 25.2 per cent. The relative position of the three
sub-sectors viz. trade and commerce, transport, storage and
communication, and other services has also kept on changing.
(f) However, as we note from Table 2.5 there is not much radical
change in the occupational structure since 1951. This is to our
perception owing to (i) rapid growth of population, (ii) traditional
agriculture, (iii) slow pace of industrialization, and (iv) low
capacity of tertiary sector to absorb more working population.

2.4. EMPLOYMENT TRENDS IN INDIA

In the recent past there has been deceleration in the growth of employment in India
despite accelerated economic growth. This can be explained in terms of steady decline
in employment elasticity in all the major sectors of economic activity except
construction. Table 2.6 below indicated the employment elasticity during 1983-2000.

» e?

65
 The decline was quite fast in agriculture from 0.70 during 1983 to 1993-94 to 0.01
during 1993-94 to 1999-2000. According to Papola (2004) the decline in employment
elasticity in agriculture “is found to due primarily to the sharply declining and even
negative elasticities in few regions - Punjab, Haryana and Uttar Pradesh - where the
green revolution has resulted significant output growth.”46

It is held that economic growth in India is job-less.47 High economic growth rates in

recent time, although remarkable, conceal sectoral differences, such as the extremely
poor performance of agriculture and disproportionately high rates of growth of
services. These did not help to solve the principal economic problem of India -
unemployment of large number of population.

Employment-Unemployment Round (61st Round, 2004-05) of the NSSO reveals that

the workforce increased to nearly 457 million with a substantial unemployed
population of 11 million. This implies that the number of unemployed persons grew
substantially in this period compared to mid and late 1990s (1993-94 to 1999-2000).
There was a sharp decrease in the rate of employment generation during the mid and
late 1990s in both rural and urban areas. This is evident from Table 2.7 below. In fact,
the decline is steep in the rural sector.

Joblessness of the current growth process in India signifies that to a large section of
the population benefits of growth is not percolating down. The Eleventh Plan (2007-
12) therefore talks about inclusive growth to make the benefits of growth available
and accessible to all. However, the question is whether the current growth strategy
can be made inclusive? This is so because what we are observing in the current
growth process swelling of service activities, use of highly capital intensive
technology and squeeze of agricultural activities. It must be noted that agriculture still
provides employment to more than 50 per cent of the labour force in the country.
With agricultural growth remaining low the condition of peasantry is definitely not
better off. Secondly, services - the way they are expanding - are not capable of
absorbing much of the labour force which is growing. And thirdly, as pointed out by

46 T.S. Papola, “The Question of Unemployment” in Bimal Jalan (ed.) The Indian Economy: Problems and
Prospects (New Delhi, 2004); pp.354-355.
47 C.P. Chandrasekhar, “Joblessness in a Thriving Economy”, Frontline, March 24, 2004. Jeemol Unni and
G. Raveendran, “Growth of Employment (1993-94 to 2004-05); Illusion of Inclusiveness?”, Economic and
Political Weekly, January 20, 2007. Sunanda Sen and Byasdeb Dasgupta, Unfreedom and Waged Work -
The Organized Manufacturing Labour in India, Sage, 2009.
^ * 4

66
 Sen and Dasgupta (2009) that in manufacturing space technology which is employed
at large scale is labour displacing one. This fact is indirectly supported by low
employment elasticity of output as noted in Table 2.6 below. We have on the one
hand rise in labour productivity and fall in real wages and employment on the other
hand. Therefore, there remains the doubt whether the present growth process can be
made inclusive as desired in the Eleventh Plan Approach Paper. To make growth
inclusive and employment augmenting it is necessary that processes, identified here
responsible for social exclusion of many, should be reversed. Is it possible? It seems
that in the current political economic scenario, where the state is withdrawing from
economic activity leaving everything to the market, it is quite difficult, if not
impossible.

Table 2.6: Employment Elasticities in Major Sectors

Sector 1983 to 1987-88 1983 to 1993-94 1993-94 to 1999-

2000
Agriculture 0.87 0.70 0.01
Mining and 1.25 0.59 -0.41
quarrying
Manufacturing 0.59 0.38 0.33
Construction 2.81 0.86 0.82
Electricity, Gas and 0.30 0.63 -0.52
Water Supply
Trade, Hotels and 0.87 0.68 0.62
Restaurants
Transport, Storage 0.47 0.55 0.63
and Communications
Financing, Real 0.49 0.45 0.64
Estate, Insurance and
Business Services
Community, Social 0.52 0.68 -0.25
and Personal
Services
All Sectors 0.68 0.52 0.16
Source: Government of India, Planning Commission, Tenth Five Year Plan 2002-07,
Volume I, Annexure 5.6. p. 163

67
 Table 2.7; Growth Rates of Employment

(Percent change per annum)

Period Rural Urban Total

1983 to 1993-94 1.72 3.10 2.01

1993-94 to 2004-05 0.47 2.70 0.98

Note: Employment refers to all workers (principal status and subsidiary status)

Source; NSSO 61st Round.

The occupational distribution of employment can be understood by the sectoral

distribution of employment. In Table 2.8 we have provided the estimates of employment
by sectors. These estimates are based on NSSO data.

From the Table 2.8 it is clear that there are four major sectors viz. agriculture,
manufacturing, trade and community, social and personal services which together
accounted for 86.84 per cent employment in 2004-05. Mining and quarrying, electricity,
gas and water supply, and financial services, and construction, transport, storage and
communication do not absorb much labour force and they accounted for only 13.16 per
cent of employment in 2004-05.

Since 1983 there has been a decline in share of employment in agriculture. In fact, even
the absolute number of employed workers declined in agriculture during 1993-94 to
1999-2000. However, agriculture still retains its predominant position as a provider of
employment providing employment to more than 50 per cent of labour force in 2004-05.

The number of workers employed in manufacturing rose from 34.03 million in 1983 to
42.50 million in 1993-94 and further to 48.01 million in 1999-2000. In absolute terms this
appears quite impressive. In percentage terms, the importance of manufacturing as a
provider of employment has not changed significantly. In fact, there was no improvement
during the ten year period 1983 to 1993-94. Thereafter, there is only a marginal increase
in 1999-2000 and 2004-05 as can be seen from the Table 2.8.

68
 Table 2.8: Sectoral Employment by Current Daily Status (CDS)

(in percent)

Industry 1983 1993-94 1999-2000 2004-05

1. Agriculture 65.42 61.03 56.64 52.06
2. Mining & 0.66 0.78 0.67 0.63
Quarrying
3. Manufacturing 11.27 11.10 12.13 12.90
4. Electricity, Gas & 0.34 0.41 0.34 0.35
Water Supply
5. Construction 2.56 3.63 4.44 5.57
6. Trade, Hotel and 6.98 8.26 11.20 12.62
Restaurant
7. Transport, Storage 2.88 3.22 4.06 4.61
&
Communication
8. Financial Services 0.78 1.08 1.36 2.06
9. Community, 9.10 10.50 9.16 9.24
Social & Personal
Services
Total 100 100 100 100

Source: Government of India, Economic Survey (2007-08). Table 10.10, p. 247

Next in importance from the point of view of employment is trade, hotel and restaurant.
In 2004-05 this sector accounted for 12.62 per cent of the employed workers as against
6.98 per cent in 1983. Thus annual growth rate of employment in trade, hotels and
restaurants sector was 4.01 per cent during 1983 and 2004-05. In no other major sector
employment increased at this rate.

Community, social and personal services accounted for 9.24 per cent of employed
workers in 2004-05. Employment in this sector increased from 9.10 per cent in 1983 to
10.50 per cent in 1993-94. Thereafter share of employment in this sector declined and
stood at 9.16 per cent in 1999-2000 and 9.24 per cent in 2004-05. The fall in employment
in this sector is the logical outcome of liberalization policy of the Government of India
since 1991.

The share of employment in mining and quarrying, and electricity, gas and water supply
remained 0.63 per cent and 0.35 per cent respectively in 2004-05. In absolute terms
number of employed workers rose only at a modest rate during the period 1983 to 2004-
05. As a result, in percentage terms employment in these sectors remained the same in
2004-05 as it was in 1983.

69
Construction accounted for 5.57 per cent of the employment in 2004-05 as against 2.56
per cent 1983 and 3.63 per cent in 1993-94. Thus employment in this sector increased
significantly during the 1980s and 1990s. This can be explained in terms of huge growth
in the real estate business over the last two decades.

Transport, storage and communication are important segment of infrastructure but their
employment capacity remained very limited. In 2004-05 this sector accounted for a mere
4.61 per cent of the employment.

Similarly, financial services despite their strategic role in the economy accounted for only
2.06 per cent of the employment in 2004-05. Over the period in absolute terms
employment in this sector has rapidly grown. But the fact remains that even now in
absolute terms the total employment in this sector is not much. This shows that its
employment potential is rather limited. This in a way indicates why India’s growth
remains job-less as the very growth process is service-led and the employment potential
of major services is rather limited.

2.5. UNEMPLOYMENT IN INDIA

Unemployment in developing countries is both open and disguised. Like all other
developing countries India presently suffers from structural unemployment which exists
in open and disguised form.

Most of the unemployment in India is structural in nature. During 1961-2001, population

had grown at an alarming rate of around 2.15 per cent per annum and with it the number
of people coming to the labour market in search of jobs had also increased rapidly,
whereas employment opportunities did not increase commensurately. Hence, there has
been “an increase in the volume of unemployment from one plan period to another.” 48
This unemployment on account of its very nature can be eliminated only by introducing
certain radical reforms in the structure of the economy. Apart from structural
unemployment there is Keynesian involuntary unemployment which can be eliminated by
increasing effective demand. For analytical convenience we classify unemployment in the
country as (i) urban unemployment and (ii) rural unemployment.

48 Government of India, Planning Commission, Eighth Five Year Plan 1992-97, Volume I (New Delhi.
1992); p. 116.
The Unemployment rates by the three alternative concepts of the Usual Status, the
Current Weekly Status and the Current Daily Status have become available from the
various Rounds of NSSO Surveys since 1972-73.49 These are given in Table 2.9. The

rates of unemployment do not indicate any clear trends over the years. There has been a
marginal decline in the unemployment rate in 1993-94 from what it was in 1983 and
1972-73. We note from the Table 2.9 that incidence of unemployment is higher among
the female workers than among the male workers.

Table 2.9: Unemployment Rates by Sex, Residence and Status (in Per cent)

Yr/NSS Male Female

ROUND UPSS CWS CDS UPSS CWS CDS
Rural
27th (1972-73) 1.2 3.0 6.8 0.5 5.5 11.2
32nd (1977-78) 1.3 3.6 7.1 2.0 4.1 9.2
38th (1983) 1.4 3.7 7.5 0.7 4.3 9.0
43rd (1987-88) 1.8 4.2 4.6 2.4 4.4 6.7
50th (1993-94) 1.4 3.1 5.6 0.9 2.9 5.6
55th (99-2000) 2.1 3.9 7.2 1.5 3.7 7.0
61st (2004-05) 2.1 3.8 8 3.1 4.2 8.7
Urban
27th (1972-73) 4.8 6.0 8.0 9.0 9.2 13.7
32nd (1977-78) 5.4 7.1 9.4 12.4 10.9 14.5
38th (1983) 5.1 6.7 9.2 4.9 7.5 11.0
43rd (1987-88) 5.2 6.6 8.8 6.2 9.2 12.0
50th (1993-94) 4.1 5.2 6.7 6.1 7.9 10.4
55th (99-2000) 4.8 5.6 7.3 7.1 7.3 9.4
61st (2004-05) 4.4 5.2 7.5 9.1 9.0 11.6
Notes: UPSS = Usual Principal and Subsidiary Status, CWS = Current Weekly Status,
CDS = Current Daily Status

Source: NSSO 50th Round Revised Report Number 406 and Reports on Successive
Rounds of NSSO Surveys on Employment and Unemployment.

49 UPSS refers to the Usual Principal and Subsidiary Status which records employment of an individual
preceding 365 days from the date of interview. CWS refers to Current Weekly Status which records
employment of an individual preceding 7 days of the survey. CDS refers to Current Daily Status which
records the employment of all 7 days preceding the date of interview.
* ** »
71
Following observations regarding the unemployment trend can be made from the
Table 2.9 above:

(a) As is expected, unemployment in terms of current weekly and current daily status
is higher than unemployment in terms of usual principal and subsidiary status. It is
highest in terms of current daily status.
(b) Unemployment in terms of usual principal and subsidiary status among female
workers is lower in the rural area compared to that among the male workers in the
rural area.
(c) However, unemployment among the female workers (both in rural and urban
areas) is higher in terms of current weekly status and current daily status
compared to the unemployment among the male workers in terms current weekly
status and current daily status.
(d) Unemployment rates in terms of all the three statuses are higher for both male and
female workers in the urban areas than in the rural areas.
(e) There is no indication in terms of any one of the three statuses employed by the
NSSO to quantify the unemployment that the latter has fallen over the years since
1972-73.

The Ninth Plan document has also provided estimates of incidences unemployment
and underemployment in 1993-94. These are based on data available from 50th Round

of NSSO Survey on Employment and Unemployment. Table 2.10 shows the

combined incidence of unemployment and underemployment in 1993-94. The salient
features of the trend of unemployment rates are as follows:

(a) The unemployment rate went up between 1993-94 and 2004-05. On the basis of
current daily status (unemployed on an average in the reference week), during the
reference period, unemployment rates for males increased from 5.6 per cent to 8.0
per cent in rural areas and from 6.7 per cent to 7.5 per cent urban areas.
(b) Similarly unemployment rate for females increased from 5.6 per cent in 1993-93
to 8.0 per cent in 2004-05 in rural areas and from 10.5 per cent to 11.6 per cent in
urban areas.
(c) Unemployment rates on the basis of current daily status were much higher than
those on the basis of usual status (unemployed on an average in the reference

« 9 ■-*

72
 year) implying a high degree of intermittent unemployment. This could be mainly
because of the absence of regular employment for many reasons.
(d) Urban unemployment rates (current daily status) were higher than rural
unemployment rates for both males and females in 1993-94. However, in 2004-05,
rural unemployment rates for males were higher than that of urban areas. This is a
cause of concern as it implies employment generation is severely affected by the
dwindling economic growth in the agricultural sector in the post-reform period.
(e) Unemployment rates vary sharply across States. There is no positive connection
between state domestic products and the unemployment rates.

Table 2.10: Combined Incidence of Unemployment and Underemployment:

1993-94

Activity Status Proportion of Labour Force Remarks

Labour Force 100.00 Working or seeking work on
usual status basis
Employed 89.55 Usual status employed
staying in work force when
classified by their weekly
status
Unemployed 2.02 Incidence of open
unemployment on usual
status
Underemployed 8.43 Usual status employed going
out of work when classified
by their weekly status
Unemployed 10.45 Open unemployment on usual
and status and the incidence of
Underemployed loss of work by the usually
employed when classified by
their weekly status
Source: Government of India, Planning Commission, Ninth Five Year Planl997-
2002, Volume I (Delhi 1999), Table 4.15; p. 198.

As is clear from Table 2.11 at the all-India level the estimates of current daily status
unemployment indicate a worsening of the unemployment situation during the period
of economic reform in all the four population segments viz. rural males, rural females,
urban males and urban females. The increase in the current daily status
unemployment rate between 1993-94 and 2004-05 was the steepest for rural females
(from 70 per thousand in 1993-94 to 87 per thousand in 2004-05). The second highest

73
increase was in the case of urban females - from 94 per thousand in 1993-94 to 116
per thousand in 2004-05. This indicates female workers are more adversely affected
than their male counterparts in the process of economic reforms, unleashed in this
country in 1991 to usher in structural reform in the economy.

Table 2.11: Unemployment Rates (per 1000) during 1993-94 and 2004-05

NSSO Round Rural

Males Females
US CWS CDS US CWS CDS
1993-94 (50tn) 20 30 56 14 30 56
1999-00 (55th) 21 39 72 15 37 70
2004-05 (61st) 21 38 80 31 42 87
2005-06 (62nd) 14 24 44 5 9 16
NSSO Round Urban
Males Females
US CWS CDS US CWS CDS
1993-94 (50th) 45 52 67 83 84 105
1999-00 (55,h) 48 56 73 71 73 94
2004-05 (61st) /jvj 52 75 91 90 116
2005-06 (62nd) 27 32 44 10 11 13
Note: US = Usual Status, CWS = Current Weekly Status, CDS = Current Daily Status

Source: NSSO (61st Round) on Employment and Unemployment conducted in 2004-

05.

2.6 ROLE OF THE STATE IN SOLVING THE UNEMPLOYMENT

PROBLEM

There are several causes of unemployment in India. They include jobless economic
growth, increase in labour force, inappropriate technology, inappropriate education
system and neo-liberal economic policy causing demand constraint. Though removal
of unemployment has been a proclaimed objective of India’s economic planning, yet
until the Sixth Five Year Plan one does not find any reference to long-term
employment policy. For a long time it was assumed that employment situation would
automatically improve as a result of economic planning and growth. This policy did
not deliver well as the number of unemployed rose to about 22 million in 1969.

74
The Planning Commission acknowledged in the Sixth Plan document the hard reality
that despite economic planning employment opportunities had not increased
adequately. Hence, stress was laid upon short-term employment generation
programmes in rural and urban areas for both male and female workers - especially
for those who lie in the below poverty line. Nonetheless, the situation did not improve
as in most of the cases implementation failures of these programmes failed to deliver
the full success.

According to Planning Commission, employment generation does not necessarily

imply creating wage employment. Under the Seventh Plan there was considerable
emphasis on creation of conditions for additional self-employment. Therefore, apart
from sectoral programmes, the package of poverty alleviation programmes, aimed at
giving self-employment and wage employment to the poorer sections of the
community, was continued on a big scale. From this point of view the National Rural
Employment Programme (NREP), the Rural Landless Employment Guarantee
Programme (RLEGP), the Integrated Rural Development Programme (IRDP), the
National Rural Employment Guarantee Scheme (NREGS) are important. The first two
were merged with the Jawahar Rojgar Yojana (JRY) in 1989.

As the situation on employment front in India suggests, high rate of economic growth
or the present growth-centric approach to economic development may be a necessary
condition but not sufficient condition to solve the unemployment problem in India.
Due to low employment elasticity an annual rate of growth can provide a partial
solution to the unemployment problem. Therefore, there is a need to attack the
problem directly and by radically transforming the structure of the economy.

2.7. CONCLUSION

Summing up our discussion in this chapter it can be asserted that the problem of
employment and unemployment in urban India has become acute over the years since
the inception of economic liberalization. This warrants immediate attention of the
policy makers in the country. Particularly critical is the problem of open
unemployment and casual employment in the urban areas.

•ft e *

75