Report: Absolute decline in employment in India post 2013

India’s structural transformation has been slower than desired resulting in a situation that there has been an absolute decline in employment post 2013, with the rate of unemployment among the youth now at 16%, says a report by one of the country's noted private universities released on Tuesday.

The State of Working India (SWI) report by the Centre for Sustainable Employment at Azim Premji University said there is an urgent need to think comprehensively about employment and for the government to formulate a focused National Employment Policy.

"Even as GDP growth rates have risen, the relationship between growth and employment generation has become weaker over time. Growth creates fewer jobs than it used to. A 10% increase in GDP now results in less than 1% increase in employment," the SWI report said.

"Between 2013 and 2015, total employment actually shrank by seven million. More recent data from private sources show that the absolute decline has continued past 2015," it said. "A recent study claims, to the contrary, that the economy generated 13 million new jobs in 2017. Unfortunately, this optimistic conclusion depends on selective use of data and unjustified assumptions. As a result, the rate of unemployment among the youth and higher educated has reached 16 per cent."

The SWI report conceives of India's ongoing structural transformation as composed of two processes—movement of workers from agriculture to non-farm occupations and from informal to formal activities— while it adds crucial considerations of social equity and ecological sustainability to this framework.

India's problem has traditionally been known as not one of unemployment but underemployment and low wages, according to the report. "But a new feature of the economy is a high rate of open unemployment, which is now over 5% overall, and a much higher 16% for youth and the higher educated," it said.

"The increase in unemployment is clearly visible all across India, but is particularly severe in the northern states," the report has found.

Key findings of the State of Working India report on unemployment

• There has been an absolute decline in employment post 2013
• Rate of unemployment among the youth now at 16%
• Growth creates fewer jobs than it used to. A 10% increase in GDP now results in less than 1% increase in employment
• Between 2013 and 2015, total employment actually shrank by seven million
• Recent data from private sources show that the absolute decline has continued past 2015
• Claims that the economy generated 13 million new jobs in 2017 are an optimistic conclusion, made on selective use of data and unjustified assumptions
• New payroll data prepared by EPFO shows that only around 9.5 lakh jobs were created in the formal sector in July, as against the requirement of more than a million joining the workforce each month

Report finds wage growth below the recommended minimum, gender disparities high in Indian economy

According to SWI, adjusted for inflation, wage rates have grown in most sectors at 3% per annum or more. "But 82% of male and 92% of female workers earn less than ₹10,000 a month," it said. In this regard, the minimum salary recommended by the Seventh Central Pay Commission (CPC) is ₹18,000 per month.

The report also found:

• Even in organised manufacturing sector, 90% of the industries pay wages below the CPC minimum
• The wages situation is worse in the unorganised sector
• The Indian economy remains heavily gender segregated
• Gender disparities are still high but are reducing in some cases. Women are 16% of all service sector workers but 60% of domestic workers, while overall women earn 65% of men's earnings.
• Occupationally, women are under-represented among senior officers, legislators and managers.
• Situation has worsened with the proportion falling from 13% in 2011 to 7% in 2015
• The ratio of male to female labour force participation rate varies from less than 0.2 in Uttar Pradesh and Punjab to 0.5 in Tamil Nadu as well as Andhra Pradesh, and to above 0.7 in Mizoram and Nagaland

Inputs by NH Web Desk