Jobs data is distorted, but fall in factory employment disturbing
The sharp surge in employment — 14 million jobs between FY10 and FY12 according to the latest NSS data — has to be good news for a government that is grappling with the after effects of a sharp reduction in economic growth and, more important, suggests that were growth to be higher, the pick-up in employment would be even sharper. This is especially encouraging since the last NSS round showed that employment had really tanked. Between FY2000 and FY05, roughly the time the NDA was in power, employment rose by 60 million versus just 3 million between FY05 and FY10, roughly the time UPA-1 was in power. With the latest number, the NDA vs UPA equation looks marginally better — FY10 was a drought year anyway — but while this doesn't give the correct picture, there are nonetheless troublesome signals that emanate from the data.
The reason why the data is misleading is that the major collapse in employment numbers comes from the fall in the number of women in the work force, from 28.7% of the total women in the country in FY05 (the figure for men was 54.7%) to 22.8% in FY10 and further to 21.9% in FY12. But the reason why the number of women working has fallen so sharply is very likely got to do with the rise in enrolment levels for women — in which case, as Surjit Bhalla and Ravinder Kaur argue in a recent LSE paper, women's participation may just be poised to rise again as those who have got educated prepare to join the work force.
What is a cause for concern, however, is the dramatic fall in the number of jobs in the manufacturing sector, a natural source of employment in most countries as the economy shifts away from agriculture. In the case of India, however, the share of manufacturing jobs rose from 11.1% of the total in FY2000 to 12.2% in FY05 before collapsing to 10.7% in FY10 — the detailed break-up for FY12, however, is not yet available. While the share of manufacturing has fallen, the share of construction has risen from 4.4% in FY2000 to 5.7% in FY05 and 11.3% in FY10, suggesting the nature of jobs has changed from full-time jobs to ones that are more temporary in nature. A large part of the missing manufacturing jobs, of course, has to do with just how difficult it is to do business in India. According to the discussion paper on National Investment and Manufacturing Zones, every industrial unit needs to comply with 70 laws that include maintaining "a record of lime washing and painting" - that's a total of 100 returns that need to be filed each year which, for smaller firms, can occupy as much as a fifth of management time. If, the NIMZ policy says, these are fixed — and it says NIMZs are crucial for this de-bureaucratizing of manufacturing — manufacturing's share of GDP can rise from 16% today to 25% by 2025 and, in the process, create 100 million jobs. That, and not the missing women, is the real story about India's employment.