Growth: The Latest Trends
17th 2006, C.P. Chandrasekhar and Jayati Ghosh
quinquennnial large sample rounds of the NSSO provide
the most exhaustive data on employment trends and conditions
in India. The results of the latest survey - the 61st
Round, covering 2004-05 - have just been released, and
they reveal that there have been notable changes in
the employment patterns and conditions of work in India
over the first half of this decade.
first important change from the previous period relates
to aggregate employment growth itself. The late 1990s
was a period of quite dramatic deceleration of aggregate
employment generation, which fell to the lowest rate
recorded since such data began being collected in the
1950s. However, the most recent period indicates a recovery,
as shown in Chart 1. (Aggregate employment is calculated
here by using NSS workforce participation rates and
population estimates of the Registrar General of India
based on Census data.)
aggregate employment growth (calculated at compound
annual rates) in both rural and urban India was still
slightly below the rates recorded in the period 1987-88
to 1993-94, it clearly recovered sharply from the deceleration
of the earlier period. The recovery was most marked
in rural areas, where the earlier slowdown had been
This in turn reflects an increase in labour force participation
rates for both men and women, as evident from Table
1. This includes both those who are actively engaged
in work and those who are unemployed but looking for
rural males, labour force participation rates have recovered
to the levels of the earlier decade, and conform to
broader historical norms. Similarly, rural females show
labour force participation rates only slightly higher
than in 1993-94. However, for both males and females
in urban areas, the latest period indicates significant
increases in labour force participation according to
both usual status and current daily status definitions.
Incidentally, it should be noted that this aggregate
increase incorporates declining rates of labour force
participation among the youth, that is the age group
15-29, and a rise for the older age cohorts.
changes in work force participation, described in Chart
2, mirror the changes in labour force participation,
but to a lesser extent. The biggest change here is for
urban males, many more of whom describe themselves as
in some fashion than in the two preceding survey periods.
of the more interesting features that emerge from these
data is the shift in the type of employment. There has
been a significant decline in wage employment in general.
While regular employment had been declining as a share
of total usual status employment for some time now (except
for urban women workers), wage employment had continued
to grow in share because employment on casual contracts
had been on the increase. But the latest survey round
suggests that even casual employment has fallen in proportion
to total employment, as indicated in Chart 3.
urban male workers, total wage employment is now the
lowest that it has been in at least two decades, driven
by declines in both regular and casual paid work. For
women, in both rural and urban areas, the share of regular
work has increased but that of casual employment has
fallen so sharply that the aggregate share of wage employment
has fallen. So there is clearly a real and increasing
difficulty among the working population, of finding
paid jobs, whether they be in the form of regular or
The fallout of this is indicated in Chart 4 - a very
significant increase in self-employment among all categories
of workers in India. The increase has been sharpest
among rural women, where self-employment now accounts
for nearly two-thirds of all jobs. But it is also remarkable
for urban workers, both men and women, among whom the
self-employed constitute 45 and 48 per cent respectively,
of all usual status workers.
All told, therefore, around half of the work force in
India currently does not work for a direct employer.
This is true not only in agriculture, but increasingly
in a wide range of non-agricultural activities. This
in turn requires a significant rethinking of the way
analysts and policy makers deal with the notion of ''workers''.
For example, how does one ensure decent conditions of
work when the absence of a direct employer means that
self-exploitation by workers in a competitive market
is the greater danger? How do we assess and ensure ''living
wages'' when wages are not received at all by such workers,
who instead depend upon uncertain returns from various
activities that are typically petty in nature? What
are the possible forms of policy intervention to improve
work conditions and strategies of worker mobilisation
in this context?
This significance of self-employment also brings home
the urgent need to consider basic social security that
covers not just general workers in the unorganised sector,
but also those who typically work for themselves, which
is what makes the pending legislation on this so important.
Table 2 provides the details of which industry workers
are engaged in. Once again, there are some surprises.
While it is expected that there has been a significant
decline in agriculture as a share of rural employment,
the share of manufacturing employment has not gone up
commensurately for rural male workers. Instead, the
more noteworthy shift for rural males has been to construction,
with some increase in the share of trade, hotels and
For urban males, on the other hand, the share of trade,
hotels and restaurants has actually declined, as it
has for other services. Manufacturing is back to the
shares of a decade ago, still accounting for less than
a quarter of the urban male work force. The only consistent
increases in shares have been in construction, and to
a less extent transport and related activities.
Interestingly, the big shift for urban women workers
has been to manufacturing, the share of which has increased
by more than 4 percentage points. A substantial part
of this is in the form of self employment. Other services
continue to account for the largest proportion of women
workers, but the share of trade hotels and restaurants
has actually fallen compared to 1999-2000.
These activity rates, combined with projections of population
growth from the Registrar General, allow us to estimate
the growth of employment by broad category over the
period 1999-2000 to 2004-05 and compare it with the
earlier period. The results are shown in Table 3. While
there has been a slight recovery in the rate of growth
of agricultural employment, this is essentially because
of a significant increase in self-employment on farms
(dominantly by women workers) as wage employment in
agriculture has actually fallen quite sharply.
urban non-agricultural employment certainly appears
to have accelerated in the latest period. In rural areas,
this is the case for both self and wage employment,
although the rate of increase has been more rapid for
self employment. In urban areas, the increase has been
dominantly in self employment.
At one level, this should definitely be good news, especially
if it represents a Lewisian movement out of agriculture
to activities with higher labour productivity. However,
this is not self-evident, and requires further investigation,
in particular with respect to the remuneration and conditions
of the newer employment. These issues will be investigated
in the next edition of MacroScan.