Jobless growth PDF Print E-mail
Monday, 23 September 2013 01:41
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Within a year, unemployment rate up to 4.7%

While stubbornly high inflation, at the level of CPI not WPI, continues to trouble successive RBI Governors, the government has to be getting more worried about what’s happening to jobs. The anecdotal evidence is there for all to see, and now there is even official evidence to show the same thing. Till some time back, India’s official employment data was only available on a 5-yearly basis from the National Sample Survey—and because the FY10 data was rejected as being biased by the year’s drought, this was also done for FY12. Apart from this, the Labour Bureau does a quarterly exercise based on a survey of manufacturing units; more recently, it has started an all-India sample survey of roughly the same size as the NSS’s annual surveys. Each sample has its own advantages and purists can dwell at length on their defects. But they all tell the same story.

The Labour Bureau’s quarterly survey tells us that as compared to 3.15 lakh jobs created in the September 2011 quarter over the June one, jobs growth in manufacturing slowed to 2.26 lakh in the December 2011 quarter … to 0.73 lakh in the June quarter. In terms of percentage growth, this fell from 0.68% in the September 2011 quarter to 0.24% in the June 2012 quarter. The annual Labour Bureau survey of around 1,30,000 households shows that unemployment levels are up from 3.8% in FY12 to 4.7% in FY13—even taking into account the usual amount of disguised unemployment, that’s a pretty stunning jump for a 1-year period. Sadly, the Labour Bureau data doesn’t provide the same level of detail that the NSS data does, but even the indicators it provides are worrying. Part of the fall in employment, and the rise in unemployment, undoubtedly has to do with the fall in agricultural employment. What is problematic is that while agriculture employment fell by 29 persons per 1,000 employed in the country, the slack was not made up by increased industrial employment. While the share of the secondary sector went up from 19.2% in FY12 to 20.8% in FY13—that for the tertiary sector rose from 28% to 29.3%—this includes construction as well. You have to look at NSS data to get to know what happened to manufacturing, and while two datasets cannot be combined, the NSS very clearly shows a decline in manufacturing employment and a rise in construction employment. None of this is surprising given the collapse of the IIP but, as we’re seeing now, even the services sector has started slowing, suggesting unemployment rates are all set to rise again. Going into election season, that can’t be a good thing.


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