Kerala Story Stands Out Amidst Slow Improvement In Indian Employment Conditions

The regional variations brought with it inequality and were reflected in the wide disparity in employment conditions across the states, as reported in the latest India Employment Report brought out by the New Delhi-based Institute for Human Development (IHD) in collaboration with the International Labour Organisation.

While top-performing states like Delhi, Telangana, Uttarakhand, and Himachal Pradesh continued to provide relatively better employment conditions to their workers, economic underdevelopment in Bihar, Odisha, Jharkhand, and West Bengal resulted in the persistence of relatively poorer employment conditions.

There remained, however, consistent performers like Maharashtra, Tamil Nadu and Gujarat.

Social scientists fear that despite the GDP growth, the country’s inability to translate India's economic success story into one of better jobs and better living conditions across the length and breadth of the country could be a hindrance to future growth and a cause for social unrest.

The Kerala Story

However, it is the Kerala story that stands out amidst this divergent snail-paced improvement in employment conditions across India during the period between 2005 and 2022. The state has spectacularly improved its ranking of employment conditions among the major 22 states, from 20th place in 2005 to 6th place in 2022.

The report created the Employment Condition Index (ECI), based on seven key labour market outcome indicators, where percentages of workers employed in regular formal work, casual labourers, and self-employed workers below the poverty line were considered.

Other indicators also taken into account were the work participation rate, average monthly earnings of casual labourers, the unemployment rate of youth educated at secondary and higher levels, and youth not in employment and education or training (NEET).

The index shows composite scores for different states, with the values lying between zero and one. Values closer to one depicted relatively better employment conditions, and vice versa.

ECI rankings for 22 major states showed that the overall employment condition has slowly but steadily improved in India over the past 17 years. The all-India value of ECI went up from 0.40 in 2005 to 0.65 in 2022.

There has been an improvement in ECI values in all 22 states as well. The degree of improvement, however, varied widely across these states. The general trend was that better-performing states have done well while the laggards remained at the bottom, with the sole exception of Kerala.

State Rankings

A cursory look at the ECI values shows that employment conditions remained poor for many of the states.

In 2005, Delhi, Himachal Pradesh, Uttarakhand, Jammu & Kashmir, and Telangana were at the top in providing relatively better working conditions. Gujarat, at 5th place, replaced Jammu & Kashmir in the 2022 top five list by increasing the share of regular formal employment and decreasing the proportion of self-employed workers living below the poverty line.

The fall of Jammu & Kashmir, from 4th place in 2005 to 8th place in 2022, can be attributed to the worsening of male working conditions in the state. Female employment conditions remained more or less the same.

Haryana slipped out of the top ten list in 2022, triggered by a decreasing worker population ratio, a rising proportion of casual and self-employed workers living below the poverty line, and a rising share of NEET youths.

After improving working conditions till 2012, Punjab fell drastically to 16th place in 2022 due to a decreasing share of regular formal employment and an increasing proportion of casual and self-employed workers living below the poverty line.

The decline in index rankings of both Punjab and Haryana is underlined by a deterioration in the employment conditions of male workers.

Existing economic underdevelopment in Uttar Pradesh, Bihar, Odisha, Jharkhand, and West Bengal is reflected in their consistently lower ranking between 2005 and 2022.

Sher Verick, Head of the Employment Strategies Unit at the International Labour Organization and one of the editors of the report pointed out, “As all states may not have the liberty of possessing well-developed manufacturing and services sectors, different states have to carve out and employ different state-specific strategy to increase employment and improve job quality. One size fits all won’t work.”

In the central region, Madhya Pradesh slipped from 12th place in 2005 to 18th place in 2022, with a decreasing share of regular formal employment and an increasing share of NEET youths.

Rajasthan, in the west, improved its ranking, while Maharashtra remained stable in providing better employment conditions in these 17 years. 

Down south, similar stable performance can be seen in working conditions in Tamil Nadu.

However, Kerala surpassed all other states by its stellar performance in improving employment conditions. From 20th place in 2005, it climbed to 6th place in 2022 by a huge reduction in the share of NEET youths and a substantial increase in the proportion of formal regular workers, particularly among women.

Lack of Quality Formal Jobs 

Data and information on employment conditions underlined the lack of high-quality formal employment opportunities, like those available in manufacturing and services jobs, in many of the states. Some states have well-developed manufacturing and services sectors, but many do not.   

Said Regional Lead Economist at the Asian Development Bank, Rana Hasan, “states lacking well-developed manufacturing or services have to think about some immediate alternative strategy to provide better jobs. Opportunities in labour-intensive manufacturing and rapid urbanisation should be looked into”.