Career Guide

Employment Scenario in India

The employment growth in India shows that there has been a huge reduction in the rate of the growth of employment at present daily status basis, from 2.8 percent in 1983 – 1994 per annum to 1.06 percent per annum in 1993 – 94 to 2000. The rate of GDP growth on the other hand was higher with respect to growth rate of employments. There has been a reduction in the intensity of employment. The 55th round of NSSO surveys suggested that Growth Rate of employment was directed with a reduction in labour power. This reduction in the absolute amount of unemployment, shown with respect to unemployed as a percent of labour power, improved during 1994 to 2000. India’s economy was merited from the recent high economic growth which reduced massively as a result of the global economic crisis. Economic growth in India during the financial year 2008-09 stood at 6.8%. The global crisis had less impacts on India because of the exporting accounts for only 14% of India’s GDP, less than almost half of the levels of major Asian economy balanced countries such as China as well as Japan. However, unlike most of the major Asian economies, the government of India finances were in a poor state and as a result, it was not able to enact large scale economic stimulus packs. Despite of this, since June 2008 to June 2009, industrial production in India grew by almost 7.2%. Even though the former Indian Finance Minister P. Chidambaram ended up being wrong, he once boasted that he expected Indian economy to bounce back to 9% during the financial year 2009. Manmohan Singh assured that the government will take measures to ensure that the economic growth bounces back to 9%. The Asian Development Bank predicted that India would recover from this weak momentum in 4 to 6 quarters. At the G-20 Summit, India called for coordinate global fiscal stimulus in order to mitigate the severity of the global-credit crunch. India is said that it would inject $4.6 billion into the financial system in order to assist the exporters.

Certain analysts suggested that Indian growing trade along with other Asian countries, especially China, may assist to reduce the negative impact of such crisis. Analysts also said that India’s high domestic demand as well as huge infrastructure projects might act as a buffer decreasing the impact of the global downturn on its economy. Economists argued that India’s financial system is relatively insulated and its banks do not have significant exposure to subprime mortgage. In an editorial, the New York Times complimented the strong regulations placed on the Indian banking system by the Reserve Bank of India. India was reported an economic growth rate of 5.7% in May 2009, beating most forecasts. During the second quarter of 2009 the Indian economy increased by almost 7.8% and gave indications that the Indian economy would scale a growth rate of around 6% or above in the year 2009 and around 7-9% in the year 2010. During the 3rd Quarter of 2010, the economy had bounced back with a growth rate of around 8.7%. Agriculture is one of the largest sectors, where most of the people are employed. During 1994 to 2000, there was a near halt in the growth rate of employment in agriculture, which in turn reduced from 60 percent in 1993 – 1994 to 57 percent in 1999 – 2000. Employment growth in all these sub sectors with in the services excepting communities as well as social services exceeded 5 percent per year.

The rate of unemployment in the developing nations such as India is of certain distinct nature. The root cause of unemployment and under employment prevailing in the developing nations such as India is lack of the stock of physical capitals using which the growing labour force is employed. Due to the lack of physical capital, it has not been possible to absorb the growing labour force in productive employment. The result has been the emergence of long term or chronic unemployment. Apart from the enough low rate of capital formation as compared to the growth in labour force, the usage of capital intensive techniques in the industries mostly imported from the Western nations like US is another crucial factor impacting the unemployment in developing nations such as India. Moreover, in agriculture, despite the existence of enough labour reckless mechanisms of variety of agricultural operations has decreased the employment opportunities in agriculture. Another crucial reason of rural unemployment existing in the developing nations such as India is the extremely unequal distribution of land so that several agricultural households have no legit access to land for the production and self-employment in agriculture. Deficiency of infrastructure such as roads, power, telecommunications, highways, irrigation facilities in agriculture is also responsible for the existence of huge unemployment in India. Inadequate availability of infrastructure is a great obstacle for the generation of opportunities for productive employment. Growth of employment in India, a case of jobless growth is a crucial objective of planning in India and it has been to generate enough employment opportunities not only to provide jobs to the backlog of unemployed but also to the new annual additions to the labour force. The new economic reforms started in India in 1991 visualized that acceleration of the economic growth would also lead to rapid growth of employment opportunities. The total growth rate of employment as per on the usual principal status which was 2 percent per annum in the period 1983 – 94, fell to about 1.56 per cent annum during the post – reform period, 1993 – 94 to 1999 – 2000. However, it recorded a higher growth rate of 2.45 per cent per annum in 1999 – 2000 to 2004 – 05.

The organized sector employment which improved by 1.2 per cent per annum during 1983 – 94 recorded much less growth around 0.05 per cent during the post – reform period 1994 – 2008. However, growth rate of Gross Domestic Product accelerated from 5.5 per cent in 1983 – 1994 to 7.1 per cent in 1994 – 2011. Thus, higher output growth failed to generate higher employment in the 90s and in the first decade of the present century 1994 – 2011. During 1994 to 2004 – 08 there was a negative growth in the employment in the organised public sector, around -0.65 per cent per annum, whereas in the organised private sector employment increased at the rate of 1.74 per cent per annum. So, in the organised private sector, the growth in employment was not enough to make up for the loss of jobs in the public sector. As a result, there was a reduction in the employment by -0.05 per cent per annum in the organised sector in 1999 – 2000 to 2004 – 08 despite of having a significantly high growth of output in it. The much lower growth of employment opportunities is due to the fact that the employment elasticity of output growth in the organised private sector has significantly reduced in the recent years as a result of increase in capital intensity. It means less people have been able to participate in and benefit from the growth process in the organised sector in the post – reform period. It may however be noted that despite of the higher growth in employment in the 10th plan period, even though in the unorganized sector, unemployment rate on usual principal status basis was higher at 3.05 per cent of the labour force in 2004 – 05 compared to 2.79 in 1999 – 2000. Besides, average daily status unemployment rate also improved from 7.4% in 1999 – 2000 to 8.4 per cent in 1999 – 2000. According to the approach to the 11th plan, worseness of unemployment situation was due to faster growth in labour force. However, the fact that there was reduction in improvement in employment in the organised sector despite of higher growth in GDP shows the utter failure of the strategy of employment generation. Employment growth in the organised sector, both public and private combined, improved during the post – reform period 1994 – 2008 at the rate of only 0.06 per cent per annum as against 1.21 per cent during 1983 – 94.

Rate of growth of employment in the organised sector can be addressed as in the recent years, employment growth in the organised sector, both public and private sector, increased by 1.0 percent in 2011 or 2010 as against 1.9 percent in 2010 or 2009. The annual growth in employment in the private sector was around 5.4 per cent 2011 or 2010 whereas that in the public sector it was negative, -1.8 per cent. The share of women in the organised sector employment was around 20.4 per cent during 2009 – 11 and has remained nearly constant in recent years. There has been jobless growth and it is revealed by report of 68th round of NSSO, especially conducted by the government in 2011 – 12, after the regularly five yearly survey carried out in 2009 – 2010 showed a dramatic dip in employment creation. As per these special unemployment surveys in 2011 – 12, overall employment rate in the Indian economy on the basis of usual status, both principal and subsidiary, has fallen to 38.7 per cent of population in 2011 – 12 from 39.1 per cent of population in 2009 – 10. In 2004 – 05 the employment rate was 41 per cent of population. The number of unemployed people rose to 10.6 million in January 2012 from 9.7 million in January 2010, in short, one million increase in the unemployment in just 2 years. The data of 68th round of NSSO showed that around 2.6 million jobs were created in the five years period between 2004 – 05 and 2009 – 10 despite of the 8 per cent plus growth in GDP per annum during this period as against 60 million jobs created in the previous five years period, that is from 1999 – 2000 to 2004 – 05. Blaming the global financial crisis and its causes of global slowdown in 2008 – 09 and 2009 – 10, the government thought that it was a result of the drought conditions in 2009 – 10 and economic slowdown that unemployment survey in 2009 – 10 did not show good conditions regarding employment, it later decided to carry out special employment – unemployment surveys for 2011 – 12. But 2011 – 12 survey shows that situation regarding employment and unemployment worsened in the two year period between 2009 – 10 & 2011 – 12. The usual status of the unemployment rate, principal status, went up from 2.4 per cent of labour force in 2009 – 10 to 2.8 per cent in 2011 – 12. A crucial finding of 2011 – 12 survey is that the labours force participations rate reduced to 39.4 per cent of population in 2011 – 12 from 40 per cent in 2009 – 10 suggesting the deficiency of job opportunities forcing people to study longer or drop out of labour force. However, the unemployment rate on current daily status basis which was increasing before 2004 – 05 fell sharply from 8.3 per cent in 2004 – 05 to 6.7 per cent in 2009 – 10 and further to 5.4 per cent in 2011 – 12. This implies that in terms of man day’s employment improved at a higher rate both between 2004 – 05 and 2009 – 10 and between 2009 – 10 and 2011 – 12. This has been demonstrated by the fall in labour force participation rate because the relatively more young population has chosen for getting more education rather than participation in labour force. Under the newly started MGNREA scheme, a huge number of man days of employment has been created resulting in the persons in rural households getting relatively full employment that is, more man days of employment. But employment generated under MGNREA scheme is neither stable nor creating any durable assets which can sustain further growth of employment. This lower rate of growth of employment in the organised sector has been there even in the post reform period despite the fact that there has been very high rate of growth of output, both in the organised industrial and services sector. Obviously, this is bound to improve the problem of unemployment in the nation.

Organised sector Employments, along with the total workforces, around 8 – 10 per cent of the workforces of the nation is employed at the organised sector. There was an improvement of employment in the private organised sector after economy liberalisations. Public sector employment is responsible for more than 68 % of the total employments in the organised sectors, hence with the more or less non recruitment syndromes occurring in the public sector for last one decades, the growths in the organised sectors employments has not increased in absolute terms. Rather, there exists a reduction in the employment in the public sector due to restructuring as well as the VRS in 2001 over 2000, by nearly 1 % and in 2002 by almost 1.2 %. The employment of women in the organised sector both public and private sector as on march 31, 2001 was 4.9 million, constituting about 17.8 percent of the total organised sector employment registering an increase of 0.5 percent over the previous year. Women employment are engaged mostly in socio and personal service sectors 55.6 per cent, manufacturing 20.6 per cent, and Finance insurances and real estate businesses 4.7 per cent. As per the special group of planning commissions, summed up organised sectors contributed only 8.34 per cent of the total employment. Out of which, 8.34 per cent public sector accounts for 5.77 per cent and private sector accounts for 2.57 per cent.

India has been the second largest populated nation of this planet, ranked 3rd in the annual World GDP contributions and soon it would become the 5th largest economy in the world. With numerous and variety of advancements taking place, still, almost a quarter of the working population is in extreme / moderate poverty. By 2019, India is predicted to have 18.9 million unemployed people. Now, this is some serious issue, the job scenarios in India is worrying. Statically implying, the actual job markets of India are less and the number 1 spot is taken by Bangaluru with its almost 2 million IT pros racing to over-take the Silicon Valley by 2020. Next is Gurugram, which has come out in the last few years as a name for providing jobs and the proximity to Delhi makes it a perfect choice for the job seekers. Next up is the Mumbai, the home of Bollywood, which is also regarded as the commercial capital of India and being a port city, it has numerous jobs in Logistics, IT, healthcare etc. Finally, Delhi, the national capital which is one of the best locations where one can look for job. This is also an extremely important economic centre for India with around 1.6 lakhs pros working here are from states like Bihar, Uttar Pradesh, etc. But these job markets have become extremely crowded and the scope for the future employment looks dark. Nevertheless, India is a booming economy which recently managed to surpass the estimated 6.7 per cent growth for the full fiscal year 2018 and its gross domestic product grew at 7.8 per cent in the fourth quarter. As per the findings of the Economy Survey, India has become the fastest growing economy in the world by leaving China behind in the race. Employment in organized sectors will be largely unaffected if the demonetization is handled adroitly by govt. and does not take too long. If the demonetization does not keep pace as promised and by cash is still difficult to come by then the organised sector will also see layoffs. A near total liquidity squeeze on the purchasing power of people extending into Q4 will lead to a slowdown in sales of every product and service. Besides people will get used to getting by with less and this may translate into a habit. For the unorganised sectors the effects on employments has been not good. A large part of the unorganised sectors deal only in unaccounted cash. This has come to a grinding halt and chances are it is a permanent halt. The vacuum left by this type of enterprise will be filled by mainstream enterprise but the switchover will take a long time. The poor will bear the brunt since unemployment will lead to a contraction in wages. The whole process getting employment back on track, in better shape will take at least 24 months. If the demonetizing leads to huge extinguished obligation of the government in the form of old currency not tendered for exchange or credit, then the govt. will have the leeway to alleviate the problems and unemployment through heavy investment in rural infra generating enough employment to offset the effect of demonetization. The turnover of the parallel economy part of which will merge into mainstream economy will keep stock markets buoyant and increase potential future sales of products and services.

Hence, the current scenario of employment the country is not at all in a good shape and due to demonetization, it has become worse. This scenario of employment tends to be worse in the near future if proper steps are not taken by the government. With the mass production of graduates year after year it is becoming extremely difficult for a fresher to find jobs in this highly competitive world. Not only fresher but also for those experienced enough. India is country with a lot of potential, the only problem is the lack of proper steps taken to give the talented youth of the nation a proper platform and create more and more jobs so that the knowledge gained by the youth can be applied and work for the betterment of this great and prosperous nation.