A 10-Year Report Card on Employment in India

A Collective’s In-Depth Analysis of Job Trends and Government Promises

Newsreel Asia Insight #189
April 12, 2024

A report by a collective that examines the accountability and transparency of the national financial institutions and economic policies shows discrepancies between the current government’s claims on employment generation and reality.

At the heart of the BJP’s electoral promises in 2014 was the commitment to generate 20 million new jobs each year, cumulating to 200 million jobs by March 2024, says the report by the Financial Accountability Network – India. The party’s leaders, it adds, have often highlighted that this government’s tenure saw 1.5 times more job creation compared to the previous administration over the same period.

Furthermore, the launch of the Skill India initiative under the 2015 National Skills Policy was aimed at skilling 400 million individuals by 2022, reflecting an ambitious blueprint for enhancing India’s workforce capabilities, according to the report.

Additionally, the BJP government envisioned a significant transformation in the manufacturing sector, pledging to increase employment by 100 million while raising the sector’s contribution to GDP from 17% to 25%, the report says. The narrative of empowerment also extended to women, with promises of formulating a comprehensive “Women in Workforce” roadmap, aiming to dramatically boost female participation in the workforce within five years.

Post-Covid, Finance Minister Nirmala Sitharaman expressed optimism about rural employment opportunities, noting that many skilled individuals, previously employed in urban areas, were finding equivalent opportunities in rural settings, the report recalls, adding that this observation was meant to underscore a paradigm shift in India’s employment landscape, suggesting a potential balance between urban and rural job markets.

However, the report cites the data from the Centre for Monitoring Indian Economy (CMIE), which, it says, presents a different reality.

The workforce size has stagnated at just over 400 million for the past five years, with unemployment rates experiencing fluctuations and a general upward trend in recent years. “The unemployment rate in India was 6.64% of the labour force in December 2018. It was 5.27% in 2019 rose to 8% in 2020, and remained at 5.98% and 7.33%, respectively, in the next 2 years; and it has gone up still further in 2023 (around 8.1%),” says the report.

The manufacturing sector, pivotal to the government’s economic strategy, witnessed a decline in its GDP share post-2016, falling to all time low of 13% of GDP in the next four years, according to the report, which says that it only recently returned to pre-Covid levels. Moreover, the sector’s employment share decreased, reflecting broader issues within the industrial landscape.

“After the stringent and abrupt Covid19 lockdowns were imposed in India, millions of workers were forced to migrate back adding a whopping 6 crore (60 million) workers to agriculture between April 2020 and June 2023 as determined by an Oxford study,” the report says.

The economic situation in rural India, especially for wage earners, has been grim. “Under-employed workers in agriculture in 2023 constituted 46% of the workforce and contributed only 15% of India’s GDP.”

Despite modest increases in wages for construction and agricultural workers, the cost of living, as evidenced by cereal price inflation, has outpaced income growth, exacerbating the rural distress, the report points out.

Women’s workforce participation rate has been on the rise after years of decline, yet the reasons behind this increase are concerning, the report adds. Since 2019, there has been a growth in self-employment among women, driven by economic distress rather than opportunity, it explains. Before the Covid pandemic, half of the employed women were self-employed, a figure that has climbed to 60% post-pandemic. However, the earnings from self-employment decreased in real terms during this time. Discussions at the Conference on Finance and Economy in India highlighted that over 50% of working women are self-employed, with many engaged in unpaid family work or agriculture. Unfortunately, much of this work is distress-driven and does not contribute to genuine empowerment, the report remarks.

The employment landscape also reveals deep-seated disparities, with SC/ST owners and Muslim communities facing significant challenges, as of 2023, the report points out. “They are barely represented among firms employing more than 20 workers and upper caste overrepresentation increases with firm size.”

Post-Covid employment data shows a marked decrease in daily-wage and salaried positions, further straining the already vulnerable sections of society, according to the report.

Further, the report says, “Compared with 2019, GDP has increased by about 16% in 2023 (assuming a 6% growth rate for 2023); despite this, employment has not increased, which says a lot about the nature of the growth process, rather than just the slowness of it.”

The narrative of employment under the BJP-led government is also characterised by a shift towards contractual employment in the public sector, alongside a decline in overall public sector jobs, according to the report.

The workforce in Central Public Sector Enterprises (CPSEs), it explains, has decreased from 1.73 million in March 2013 to 1.46 million in March 2022, a drop of about 270,000 jobs over the decade under this administration. Concurrently, the proportion of contract employees surged from 19% to 42.5% within the same period. This increase in contractual employment also impacts reservation policies, as these jobs typically do not offer the reservation benefits provided in permanent positions.

Comparatively, India’s public sector employment is significantly lower than in countries like Argentina, Brazil, China, the USA, the U.K., Russia and Cuba, pointing to a broader trend of limited public employment opportunities and the need for a reassessment of employment policies, says the report.