The pandemic was probably India’s most challenging period from an employment perspective. Data from the Centre for Monitoring Indian Economy (CMIE) shows that the total number of employed fell from 412.7 million in 2016-17 to 387.2 million in 2020-21, and then rose to 405.8 million in 2022-23. Evidently, lost ground has not yet been regained so far. A deeper look into CMIE’s Consumer Pyramid Household Survey offers some rather sharp qualitative takeaways.
The pandemic was probably India’s most challenging period from an employment perspective. Data from the Centre for Monitoring Indian Economy (CMIE) shows that the total number of employed fell from 412.7 million in 2016-17 to 387.2 million in 2020-21, and then rose to 405.8 million in 2022-23. Evidently, lost ground has not yet been regained so far. A deeper look into CMIE’s Consumer Pyramid Household Survey offers some rather sharp qualitative takeaways.
First, compounded annually, India’s employment decline was -0.28% in the six years ended 2022-23. This covers those over 15 years of age. The drop was in the age group of 15-39, implying that younger workers moved out of employment. Their share in total employment fell from 50% to 37%. On the other hand, those in the age group of 40-59 years saw their share expand from 42% to 59%. People in younger age groups were not able to find jobs or just decided to move out of work, while older Indians might have had family commitments or debt obligations to meet that may have played a role in this age trend.
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First, compounded annually, India’s employment decline was -0.28% in the six years ended 2022-23. This covers those over 15 years of age. The drop was in the age group of 15-39, implying that younger workers moved out of employment. Their share in total employment fell from 50% to 37%. On the other hand, those in the age group of 40-59 years saw their share expand from 42% to 59%. People in younger age groups were not able to find jobs or just decided to move out of work, while older Indians might have had family commitments or debt obligations to meet that may have played a role in this age trend.
Second, the share of women in the total employed came down from 13.1% to 9.4%. Family obligations may have made some women leave work. This is a setback for gender empowerment.
Third, the share of persons with a graduate and above degree was steady at 12.5%. This means that most of those employed are educated less. If this is combined with the fact that the share of people employed under the age of 40 has fallen, it places a question on the theory of a demographic dividend. Instead, a youth bulge in a country’s headcount can pose other social issues if they are under-qualified for jobs that provide a sustainable income. The focus has to be on not just ensuring that people get a complete education, but also that they take job-oriented courses. Even reskilling is a challenge if they are not adequately educated to begin with.
Fourth, the share of salaried workers has barely changed at around 21%, while those in business increased from 13% to 20%. This indicates that people are opting to work for themselves rather than for a company in a job. This can be due to an entrepreneurial mindset that has caught on, or because companies have been economical in increasing their staff. As more tools of artificial intelligence (AI) and machine learning (ML) are embraced, demand for labour will fall further, which is bad for a labour surplus economy.
On the other hand, the share of small traders and wage labour fell from 42% in 2016-17 to 31%. This reflects a decline in jobs at small and medium enterprises. Simultaneously, the share of farmers went up from 23.2% to 27.6%, indicating reverse migration from urban to rural India. This trend also reveals the darker side of our growth story, as it does show that job creation has lagged in urban regions and not kept pace with economic growth. A high cost of living and lack of affordable accommodation have had clear roles in this reverse flow.
Fifth, a sector-wise jobs distribution shows negative growth in agriculture and industry, while it has been positive only for services, at 1.5% per annum. The share of services is almost the same as that of agriculture at 36%. Within industry, which accounted for 27% of employment in 2022-23, the highest share is in real estate and construction (mainly blue-collar) with 17.5%, while manufacturing is a laggard with 8.8%. The shift to services is sharp, as jobs are getting generated in this area. Stagnant and low growth in manufacturing has led to a compounded annual shrinkage of 2% in this sector.
Sixth, within services, trade dominated with 17% of the 36% overall share, and retail accounting for the bulk of it. These would be local kirana shops that are spread far and wide. Financial and personal services were among the segments that saw growth.
Finally, though not easy to interpret, CMIE data on employment across religions throws up interesting observations. The share of Hindus and Muslims came down. They account for almost 96% of the total; the share of Christians, Buddhists and Jains rose, while that of Sikhs was unchanged. A possible explanation could be the latter’s affinity to services such as trading, which saw a distinct increase in growth and share.
On the whole, the picture of employment based on CMIE data is thought-provoking for sure. While our debate on whether jobs are being created or not will continue, based on the methods used, this particular survey provides some insights on emerging trends. Weak employment among younger age groups is a concern, especially in the context of a demographic dividend that is often extolled as an economic advantage. Also, women dropping out of the workforce is worrisome.
The move back to agriculture is contrary to the urban migration theory that is often espoused. That manufacturing is not contributing much to employment is an eye opener, as it is commonly believed that future jobs lie in factories. Against these findings, one needs a seriously debate on whether increased AI and ML adoption is appropriate, given our needs, though admittedly, we cannot avoid it. In which case, how will jobs be created? Note that a large proportion of the employed aren’t even graduates.
These are the author’s personal views.
Madan Sabnavis is chief economist at Bank of Baroda and author of: ‘Corporate Quirks: The Darker Side of the Sun’
