India's recent employment growth is primarily driven by self-employed individuals, unpaid workers, and temporary farm hires, rather than formal jobs with regular wages. This insight comes from private sector economists following the release of labor department figuresthis week.
The labor department's figures indicate that 20 million new employment opportunities have been generated annually since 2017/18. This counters a Citibank report that claimed only 8.8 million jobs were added each year since 2012. Amit Basole, head of the Centre for Sustainable Employment at Azim Premji University, pointed out that a significant portion of the increase in employment comes from agriculture and self-employment, which includes own-account work or unpaid family work.
Basole emphasized that the jump in employment does not equate to the creation of formal jobs with regular wages. Detailed data up to the financial year 2022/23 supports this claim. The fiscal year ending in March 2024 saw a rise in employment by 46.7 million, totaling 643.3 million, up from 596.7 million the previous year, according to a statement from the central bank.
The Reserve Bank of India's data showed that agricultural work opportunities contributed 48 million of the 100 million jobs generated between the financial years 2017/18 and 2022/23. Basole noted that these should not be classified as jobs in the traditional sense but rather as people working in agriculture or non-farm self-employment due to a lack of adequate demand for workers from businesses.
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Lack of Sector-Specific Data
While the central bank provided a provisional estimate of the increase in employment for 2023/24, it did not detail the sectors that saw these additions. Such detailed sector-specific data was only available up to the previous year. Neither the central bank nor the government responded to emails from Reuters seeking comment on this matter.
In response to a Citigroup report claiming that India would struggle to create enough jobs even with a 7% annual economic growth rate, the Indian government refuted the claim. The Ministry of Labour and Employment emphasized that the report failed to consider positive trends and comprehensive data from official sources, such as the Periodic Labour Force Survey (PLFS) and the Reserve Bank of India's KLEMS data.
The government highlighted that, according to PLFS and RBI's KLEMS data, India generated more than 80 million jobs from 2017/18 to 2021/22, translating to an average of over 16 million jobs per year. This data underscores the significant employment opportunities created, albeit many in informal sectors.
India's employment growth, as highlighted by private sector economists, largely stems from self-employment and temporary jobs, particularly in agriculture. While the official figures present a positive trend in job creation, the nature of these jobs underscores the need for a focus on generating more formal employment opportunities with regular wages to ensure sustainable economic growth.
