Why in news?
=>‘The State of Working India’ 2018 report of Azim Premji University carries a comprehensive assessment of the other side of the Indian economy. Despite economic growth and gradual formalization of the workforce, low wages and wage growth remain key challenges with 57% of regular employees earning Rs. 10,000 or less a month.
=>The study uses government data to show that total employment actually shrank by seven million between 2013 and 2015, and cites private data to posit that an absolute decline has continued in the years since.
=>Unemployment has risen to more than 5% overall, and the study slices the data to show that in geographic terms, north Indian States are the most severely affected, while in demographic terms, young people with higher education levels suffer an unemployment rate as high as 16%.
=>While wages are rising in almost all sectors, hidden within the positive data is the worrying fact that rural wage growth collapsed in 2014, and has not risen since.
=>In the organised manufacturing sector, though the number of jobs has grown, there has also been an increase in the share of contract work, which offers lower wages and less job security.
GDP & Unemployment:
=>One of the crucial observations of the report is that every 10 percent increase in gross domestic product (GDP) results less than one percent increase in employment. India’s economic reform process has been criticised for this negative correlations, i.e persistence of jobless growth.
=>The Reserve Bank of India’s data on the employment elasticity of India from 1972 to 2012 proved that the country faces declining employment elasticity, i.e the percentage changes in employment with every one percent point change in economic growth.
=>The State of India Working report moved one step ahead and gives a clear and categorical picture of the declining employment opportunities vis-a-viz GDP growth rate in the country.
=>A higher GDP also indicates the amount of wealth and capital formed in the country. It is evident from the data that the country had been experiencing better employment generation before liberalisation.
=>From 1999 to 2004, the country made better progress and later on it started to decline. It also demonstrated that fact that higher GDP never ensures employment generation. However, every policy initiative of the government wants to achieve higher GDP and do maximum possible interventions to achieve it. This report questions this argument with facts.
=>The government shifted the base year of calculation from 2004-05 to 2011-12, according to which investment again shows an increasing trend.
Agriculture & Private Sector:
=>Private industrial capital formation is overtaking the public sector and also the fact that private capital is largely concentrated in mining and financial services. Investments in these two sectors are largely dependent on government’s policy support and huge tax relaxations.
=>The poor employment generation is also attributed to the preferential investments in the country. Compared to the private sector, public sector capital formation is less. Interestingly, public sector contributes more in the agriculture sector than the private sector.
=>The State of Working India report also shows that employment growth in agriculture sector is growing at a negative growth rate. This huge difference in capital formation has to be assessed in the context that the labour productivity increases six times based on 1982 to 2016-17, however the real income of the workers grown by only 1.5 times. This disparity added to the labour vulnerability in the country at the macro and micro level.
Scheduled Caste workers:
=>Another disturbing finding is that scheduled caste workers earn only 56 percent of their upper caste counterparts. For schedule tribe it is 55 percent and OBCs it is 72 percent.
=>This is perhaps the first report which carries such a crucial date after Justice Rajinder Sachar Committee report in 2005 which talks about the cast and religion wise economic disparities in the country.
=>Labour productivity in the sector is six times higher than it was 30 years ago; however, managerial and supervisory salaries have only tripled in the same period, while production workers’ wages have grown a measly 1.5 times.
=>Women’s participation in the paid workforce is still low, but the situation is unequal across States. In Uttar Pradesh, only 20 women are in paid employment for every 100 men, while that figure jumps to 50 in Tamil Nadu and 70 in Mizoram and Nagaland.
Pic courtesy:Business Standard
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