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For the first time in India’s post-Independence economic history, there has been an absolute fall in the number of people employed in agriculture – by 36.7 million during 2004-05 to 2011-12 – because the number of non-agricultural jobs is growing (by 52 million during this period), says a paper by the Institute of Applied Manpower Research.
However, most of these rising non-farm jobs are informal in nature, mainly in the ‘resurgent’ services, construction and manufacturing sectors, says the paper, “Why a jobs turnaround despite slowing growth?” by Santosh Mehrotra, Jajati K Parida, Ankita Gandhi and Sharmistha Sinha.
It noted that the structural shift of jobs to the non-farm sector (due to low agricultural productivity and stagnant rural wages) had led to a decline in poverty and rise in consumption.
And, the paper warns, that since a rising informal workforce is more vulnerable to retrenchment and has no social security benefits, even the slightest economic shock can lead to a fall in employment.
Rigid labour laws In fact, even in the organised sector, the share of informal employment has risen to 67 per cent in 2011-12 from 54 per cent in 2004-05 and 32 per cent in 1999-2000.
Explaining the key trends in employment over 2000-2012, the paper cites factors such as rigid labour laws and policy-induced ‘disincentives’ for firms to remain small for the rise in informal jobs.
“Firms tend to operate in smaller sizes or hire contract labour rather than permanent labour to stay out of the ambit of the Industrial Disputes Act. Factories employing less than 99 workers are about two-thirds of all factories surveyed under Annual Survey of Industries….,” says the paper.
Govt support It calls for Government support or tax incentives to tackle the problem of the “missing middle” and help the transition of smaller enterprises to medium ones.
It notes that after 2010, there was a 13 million rise in jobs in micro enterprises (with less than six workers). The number of enterprises with more than 20 employees grew to 34 million in 2011-12 from 22 million in 2004-05.
“There is, however, a minuscule middle, whose share is increasing but at a very slow pace,” says the research paper.
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