Eco Survey Happy With Job Creation. But Data Says Otherwise

The previous Survey of 2023-24 underlined the need to generate 78.5 lakh non-farm jobs every year till 2030, to engage the country’s growing population productively.

The annual Periodic Labour Force Survey (PLFS) data, according to the Economic Survey, show healthy employment growth in recent years, highlighting the post-pandemic recovery of the economy.

So, is job creation in line with the broader objective of spreading prosperity across the population?

The all-India annual unemployment rate (UR) for individuals aged 15 years and above, under usual status, has steadily declined from 6.0 per cent in 2017-18 to 3.2 per cent in 2023-24.

Usual status unemployment estimates the number of unemployed people for the majority time in the previous year. In a slightly stricter form of measurement, unemployment is also measured in current weekly status (CWS). It implies that for data collection, a person willing to work is considered employed if he or she has worked even for an hour during the reference week.

For young workers — between the ages 15 and 29 — looking for jobs, the unemployment rate under CWS is consistently around 16-17 per cent of the total in the last five quarters. Within this group, women's unemployment rate is well over 20 per cent throughout.

So, the same dataset provides an indication of stress for certain sections of the population, particularly the youth and women. More details can be read here.

Rise In Self-Employment

The ratio of self-employed workers in the workforce has jumped to 58.4 per cent in 2023-24, from 52.2 per cent in 2017-18. The Survey attributed this shift to "growing entrepreneurial activity and a preference for flexible work arrangements".

The self-employed segment has two different sub-categories — (a) own account worker and employer combined together, and (b) unpaid helper in household enterprises. ‘Own account workers’ refer to persons who run their own small businesses independently, usually without hiring any employee. An ‘employer’ within the self-employed category runs a business and hires workers.

Unlike regular wage earners, self-employed people may have irregular or seasonal incomes, particularly in agriculture. A substantial proportion (around 14 per cent) of employed individuals in the Consumer Pyramids Household Survey (CPHS) report zero incomes, compared to only 0.75 per cent in PLFS.

This mismatch in two different but important databases indicates issues around data collection methods and interpretation.

The rise in self-employment, particularly among women, may not necessarily represent economic progress if it's driven by distress or lack of alternatives. It may partially reflect a rise in unpaid work in family enterprises and households.

The decline in regular wage or salaried workers to 21.7 per cent in 2023-24 from 22.8 per cent in 2017-18 may be interpreted as a piece of supplementary evidence to this.

However, the Economic Survey has attributed the increase in self-employment to "rising formalisation" in the economy. It cited the decline in casual workers, from 24.9 per cent to 19.8 per cent over the same period, as proof.

An alternative argument of less availability of informal casual employment and potential workers shifting towards self-employment under duress can also be made. The evolving workforce under a slowed-down economy, of course, needs to be tracked closely, and in more detail.

The Survey itself points out that 64.4 per cent of female workers (by usual status) in the economy were engaged in agriculture in 2023-24, up from 57.0 per cent in 2017-18. The more than 7 per cent rise in women workers engaged in primary agriculture activities does not bode well.

Statistically, there has been a decline in the share of regular-wage or salaried jobs, along with a rise in self-employment, over the last decade or so. This proportionate change brings issues related to job quality and economic security to the fore.

Average Worker Earnings Data Raises More Questions

The average worker earnings data, as published in the Economic Survey — segmented by status (regular/ salaried, casual, and self-employed workers), gender and location (urban and rural) – raises more questions than answers.

At more than Rs 20,000 per month, regular wage earners drew more average salary in 2023-24 than self-employed and casual workers. Though this is a no-brainer, data on the real earnings during the period between 2017-18 and 2023-24 is an eye-opener.

After adjusting for inflation, the real monthly wage of the male salaried worker actually fell to Rs 11,858 in 2023-24, from Rs 12,665 in 2017-18. For the female salaried worker, the drop is larger — from Rs 10,116 in 2017-18 to Rs 8,855 in 2023-24.

The real monthly wage of an average male self-employed worker dropped to Rs 8,591 in 2023-24, from Rs 9.454 in 2017-18. Once again, the average female self-employed is earning much less in inflation-adjusted terms, at Rs 2,950 in 2023-24, down from Rs 4,348 in 2017-18.

Informal workers, engaged in casual labour work other than public work, are earning more, but their wages are meagre. Average daily male casual labour’s daily earnings inched up to Rs 242 in 2023-24, from Rs 203 in 2017-18; while that of female casual labour also went up slightly to Rs 159, from Rs 128 in the same period.

These earnings data tell a different story altogether. While the economy has grown multiple times between 2017-18 and 2023-24, most of the workers in the economy are earning less in real terms.

In other words, most of the workers now have less purchasing power. This, synchronised with the lack of consumption demand in the economy, partially explains the slowdown — particularly in the domestic sphere.

Routes That Budget May Take To Generate Employment

A proposal from industry has come to create an integrated National Employment Policy to consolidate various employment-generating schemes across central and state governments. This may enhance the efforts and improve coordination for a better outcome.

Extending last year’s private sector incentives on employment generation, there is also a proposal to provide tax deductions to businesses for hiring new employees for the first three years of employment.

In a job-stressed economy, targeted support to labour-intensive sectors like construction, tourism and textiles, may be another idea worth exploring.

Targeting rural government offices for an extension of last year’s internship programme may not only help in creating short-term employment opportunities, but also in training the rural youth for future jobs.

Boosting female workforce participation, enhancing skill development and training, and focusing on emerging tech sectors are some other ideas that are already being discussed.

It will be interesting to look at the employment generation proposals in the upcoming Budget tomorrow.