India’s labour market witnessing structural changes, says report

India’s labour markets are experiencing structural change from primarily agrarian to non-agrarian, but there is a dearth of reliable data to capture these shifts, including gainful employment that focuses on improved quality of work and the income derived from it, McKinsey Global Institute (MGI) said in a new report. India has delivered strong economic growth relative to many other countries in the past few years, but there are concerns about whether the growth has been inclusive or whether the country is heading for jobless growth. Recent data released by India’s Labour Bureau on employment creation suggest that fewer than two million jobs are being created annually. In reality, much of the discussion around jobless growth is not founded on robust data or analysis. India’s workforce is estimated to be 460 million. Latest surveys show a three-percentage-point decline in India’s overall labour force participation between 2011 and 2015. However, MGI said it should not take focus away from the structural shift from agriculture towards the non-farm sector, particularly construction, trade, and transport.

During this period, agriculture jobs shrank by 26 million while non-farm jobs rose by 33 million, largely driven by rapid economic growth between 2013 and 2015. More recent trends in aggregate employment cannot be derived from the quarterly enterprise studies available, highlighting the data deficit.

“Declining labour participation may indicate that more young people have stayed in education and/or that more women from households which were once in extreme poverty but have now entered the middle class no longer need to work in low-productivity jobs,” it said.

Likewise, supplementary income opportunities (such as additional days of work on a construction project or selling home produce through a digital platform) may not increase the number of jobs, but they may raise the income level, choice, flexibility, and security of an underemployed worker engaged in low-productivity work, it added.

[ June 16, 2017]