Post Liberalization Structural Changes: An Analysis of Indian Labour Market and its Occupational Structure

 

Dr. Kuntal Kanti Chattoraj

Head of the Department, Department of Geography (U.G and P.G),

P.R.M.S. Mahavidyalaya. West Bengal. PIN-722150. INDIA.

 

ABSTRACT:

India has experienced a rapid growth of economy, and recorded rising in the share of the non-agricultural income and employment after economic liberalization (1991). But the sizes of work participation rate as a whole and especially for females are relatively low in India. The study of Indian labour market is significant because a large ‘demographic dividend’ should be accommodating in Indian labour market. Indian economy and its occupational structure suffer with some serious problems. Though the GDP growth in non-agricultural sectors is ever-increasing but employment in agricultural sector did not show any dramatic change. Rural transformation and employment generation in non agricultural sectors is associated with low quality of job as well as low wage earning. In this way disproportionate growth of three sectors of economy has developed. Only 13.4% (2011) workers are found in manufacturing which is considered as the base of economy. Growth of jobs in organized sectors (public and private) is almost stagnant during last decade. It is hopeful that, female contribution and participation in Indian economy is increased but a large proportion of them found to be ‘marginal worker’ and gender differentials in wage is exist. To get opportunity of demographic dividend more ‘good job’ should be incremented for educated and skilled young potential workers. In this regard different public skill development programmes should be more proactive and the curricula of college, universities should be modified as per requirement of the new job market. It is a great challenge for Indian economy to do so. This paper aims to discuss about the nature and extension of the structural transformation and tries to focus on demographic dividend opportunity in Indian economy.

 

 

 

INTRODUCTION:

Economic growth and structural change in the economy moves labour away from the subsistence or agriculture sector to the modern or non-agricultural sector, thus increasing rural wage rates (Lewis 1954). After post liberalization (1991), India has experienced a rapid growth of economy, and a rise in the share of the non-agricultural income and employment.

 

This kind of growth enhancing structural change can be taken is an important contributor to overall economic growth (Mc Millan and Rodrik 2011). It is an important shift of India’s economic development. With the surplus labour reserves getting used up, the share and absolute size of the agricultural workforce show a decline, and real wages begin to rise in the economy (Fields 2004). Considering the gross domestic product (GDP), is an important indicator of structural change shows the share of non-agriculture income and employment flourishes over time. Share in GDP of agriculture sector falls from 41.1% to 14.1% from 1972-73 to 2011-12. The consequent rise in the share of the non-agricultural sector in GDP has increased from 58.9% in 1972-73 to 85.9% in 2011-12. Agriculture dependent labour decreased from 73.9% in 1972-73 to 48.9% in 2011-12 and non-agricultural labour increased from 26.1% to 51.1% in the same period (Reddy, A.A, 2015). It is also important to recognize inter-state differences at different stages of development (Datt and Ravallion 2002; Kotwal et al 2011). Obviously, inter-state and rural-urban variation is observed in spatio-temporal scale.

 

Study of India’s labour market is significant for other reasons. There is the so-called “demographic dividend” or acceleration in growth of India’s working-age population. (Thomas and Jayesh, 2016). World Bank estimated that, India’s population in the age-group of 15 to 59 years will increase by approximately 200 million between 2010 and 2030.This is likely to lead to a sharp rise in the potential labour force of the country (Thomas and Jayesh, 2016). It is therefore important to examine how far the demand and supply of labor is matched with each other. India’s labour is transformed rapidly and always labour is linked with gainful employment, covers a range of issues, including the quantity and type of work done by people already in employment, growth in labour productivity, higher earnings, and aspects of work quality such as safety, cleanliness, flexibility, income security, and intellectual challenge. Debate may be going on these issues but in this paper only quantity of labour force is considered for analysis.

The first section of this paper aims to discuss about the nature and extension of the structural transformation using mainly data from census of India and National Sample Survey Organisation (NSSO) as and when necessary. The structural change is viewed from the viewpoint of Work participation Rate (WPR) and its industrial classification. Subsequent section of the writing tries to focus on demographic dividend opportunity in Indian economy. The paper ends with conclusion focusing on its future.

 

The nature and extension of structural transformation in India.

To understand rural transformation, changing nature of work participation rate (WPR) should be viewed carefully because signature of transformation inherent within it. The size of work participation rate as a whole and especially for females is low in India. Only 39.8 percent for total and 25.5 percent for females are found to be worker in 2011 (Table-1) where as it is 71 percent in China and 65.5 percent in Brazil. If we analyse three consecutive census figures, 1991 to 2011, regarding work participation in India, two very interesting observations are comes out. The first one is the percentage of main worker is decreased for all in 2001 and percentage of marginal worker is increased accordingly (Table-1). The second observation is very slow growth rate of working population.

 

Table-1. Changing Pattern of Work participation Rate (WPR) and Main, Marginal Categories in India. From 1991 to 2011.

Year	Population in Millions			Total Workers in Millions			WPR			Main Workers  (in %)			Marginal Workers (in %)
	M	F	T	M	F	T	M	F	T	M	F	T	M	F	T
1991	439.2	407.1	846.3	224.4	89.8	314.1	51.09	22.06	37.11	50.9	15.9	34.1	0.6	6.3	3.4
2001	532.2	496.5	1028.6	275.5	127	402.5	51.77	25.58	39.13	45.1	14.7	30.4	6.6	10.9	8.7
2011	623.7	586.5	1210.2	331.9	149.9	481.7	53.21	25.56	39.80	43.8	15.2	29.91	9.4	10.3	9.86
Source: Census of India-1991, 2001, 2011.

Note: WPR=Work Participation Rate, M=Male, F=Female, T=Total

 

There are several reasons for the decelerating WPR as a main worker but the most important one is shrinkage of agriculture in Indian economy. Some studies have attributed this increase to rural distress, that is people were driven to find work to supplement household incomes during a difficult period (Thomus, 2014). National Sample Survey Organisation (NSSO) data shows that, between 2004-05 and 2009-10, agricultural employment declined absolutely by 20.4 million, leading also to the deceleration in overall employment growth. (Thomas 2014). Agricultural employment declined further by 12.9 million between 2009-10 and 2011-12. Agriculture sector is not able to provide sufficient wage employment to the households that are forced to move to non-agricultural labour, thereby swelling the percentage of rural labour households (Jeemol, 2014).

Student enrolment is another important reason for the same. According to NSSO data, 2004-05 to 2011-12 total growth of the working aged people (15-59 years) was 113 million among them students are 41.5 million–that is, 37% of the incremental population. The proportion is much higher in rural area which is 45%. So, large numbers of the young in rural areas left agriculture to join educational institutions. The growth in the population of students who are 15 years and above reduces labour supply for the time, but raises the numbers of educated persons who would be demanding high quality jobs in the future. (Thomas, 2014). In this regard M. Venkatanarayana and Suresh V. Naik (2013) represented a relationship between literacy rate and WPR across 21 major states in India, for the year 2011, shows an interesting observation. Where, the WPR of marginal workers category is negatively correlated with literacy rate.

 

Gradual development of rural economy may be the cause of withdrawn of females from the low quality jobs in primary sectors leads to low work participation rate among the females in country side. Parallel engagement in different rural development projects like ‘Mahatma Gandhi National Rural Employment Guarantee Act’ (MGNREA) is also helpful reason to increase the proportion of marginal worker.

 

Farm economy as well as work participation in rural India changes over time (Table-2 and 3). Obviously it is a development from a pre-industrial to an industrialized economic system. In this process of transformation, farm economy to non-farm economy, some characteristics are very significant and unique in India.

 

Table-2. Changing Nature of Agricultural and Non-Agricultural Workers and Main, Marginal Categories in India. From 1991 to 2011.

Year	Total		Main		Marginal		% of Agricultural worker
	Agri	Non Agri	Agri	Non Agri	Agri	Non Agri	Total	Main	Marginal
Persons in Million							Total in %
1991	210.7	103.5	185.3	100.6	25.4	2.8	67.1	64.8	90
2001	235.1	167.4	166.6	145.6	68.5	21.9	58.4	53.4	75.8
2011	263	218.7	182	180.4	81	38.3	54.6	50.2	67.9
Male in Million							Male in %
1991	136.7	87.7	134.6	87	2	0.7	60.9	60.7	74.6
2001	143.7	131.8	119.1	120.6	24.6	11.2	52.2	49.7	68.7
2011	165.4	164.4	128.3	144.9	32.2	21.5	49.9	47	63.3
Female in Million							Female in %
1991	74	15.8	50.7	13.6	23.4	2.1	82.4	78.8	91.6
2001	91.4	35.7	47.5	25	43.9	10.6	71.9	65.5	80.5
2011	97.6	52.3	53.7	35.6	43.8	16.7	65.1	60.2	72.4

Source: Census of India- 1991, 2001, 2011

 

Table-3. Compound Annual Growth Rate (CAGR) of Workers in Agriculture and Non-Agricultural activities in India since 1991.

Year	Agriculture			Non Agriculture
	Male	Female	Persons	Male	Female	Persons
MAIN and MARGINAL
1991-01	0.5	2.1	1.1	4.2	8.5	4.9
2001-11	1.4	0.7	1.1	2.4	3.9	2.7
MAIN WORKER
1991-2001	-1.2	-0.6	-1.1	3.3	6.3	3.8
2001-2011	0.7	1.2	0.9	1.9	3.6	2.2
MARGINAL
1991-01	28.4	6.5	10.4	32.2	17.4	22.7
2001-11	4.2	0	1.7	6.7	4.6	5.8

Source: Census of India. 1991, 2001, 2011.

 

·       Though, inter-sectoral transfer of work force is the way of advancement towards economic development but in India a disproportionate development in primary, secondary and tertiary sectors is observed. Contribution of manufacturing sector is low which is one of the strong pillar of the economy. Only 13.4% main workers are found in manufacturing sectors (Census of India 2011). The process of industrialization had created a very little impact on the generation of employment opportunities. On this industrialization P. Mitra rightly observed, “In Indian experience employment multiplier seems to be small and therefore, occupational structure remained almost static Limited employment horizons, resulting from a process of industrialization devoid of ‘build-in technological process’ effects, strengthen the hold of production techniques with build-in under employment”. Development of ‘trade and commerce’ category of ‘tertiary sector’ mainly flourished by very small scale retail business which do not generate more surpluses. This indicates a ‘hollow growth’ which may collapse any time.

·       Rural transformation and employment generation in non agricultural sectors is related with low quality of job as well as low wage earning. A significant shift of farm employment to construction activities is observed between 2001 to 2011. Using NSSO data Jayan Jose Thomas (2014) observed-

 

“Between 2004-05 and 2011-12, total non-agricultural employment in India increased by 48 million. Jobs in construction, which rose by 24 million, accounted for half of this increase. These construction jobs, which were overwhelmingly in the rural areas, were. likely to be poor quality. For people in rural areas, construction has virtually been the only source of non-agricultural employment after the mid-2000s. For rural males it is accounted for 70% of the net increase in non-agricultural employment (15.7 million out of 22.4 million) during 2004-12”.

·       The gender based wage differentials is prevailing in work participation (Das, 2012). The growth of female WPR in non agricultural sectors is better than male WPR but fragmented data from NSSO regarding female WPR shows that, the most females moving towards the unorganized and informal sectors particularly the labour-intensive businesses (Unni and Rani, 2008). Though the total female workforce engaged in non-agriculture is increasing over time but percentage of marginal workers for females increases in a faster rate. For example in 2011, around one-third of the total female workforce engaged in non-agriculture is in the category of marginal workers (Venkatanarayana and Suresh Naik, 2013). Female workers largely belong to the marginal group, more susceptible to economic shocks. This huge proportion of marginal female workers indicates less consistency of working environment for females in non-agriculture sectors. Lack of particular skills for specific job and lack of female working environment are the major difficulties in this connection (Table-4).

 

Table–4 Percentage of Female in the Total Population and within Workforce in India

Details	1991	2001	2011
Population	48.1	48.3	48.5
Total Workers	28.6	31.6	31.1
Main Workers	22.5	23.2	24.6
Marginal Workers	90.4	60.3	50.8

Source: Census of India, 1991, 2001, 2011.

 

Table-5. Female Workers and Work Participation Rate (WPR) in Total, Rural and Urban areas in India 1991 to 2011.

Year	Workers in Million			Work Participation Rate (WPR)
	Total	Rural	Urban	Total	Rural	Urban
1991	89.77	80.45	9.34	22.3	26.7	9.2
2001	127.22	111.12	16.1	25.6	30.8	11.9
2011	149.98	121.91	28.04	25.5	30..0	15.4

Source: Census of India, 1991,2001,2011

 

·       Growth of employment in organized sectors (public and private) is almost stagnant during last decade which may indicate the less qualitative change in job market. As per Economic Survey 2012-13, the total employment in organized sector (all Public Sector Enterprises and all Non-agricultural Enterprises in the Private Sector employing 10 or more workers) as on 31st march for the year 2003 to 2011 are given in table 6 which is most undesirable. Only a small percentage of the total workforce of the country is employed in the organized sector. Organized sector employment as on March 31, 2011 was 29.00 million (6.02% of total worker) of which 60.52 percent or 17.55 million was in public sector.

 

Table-6. Growth of employment in organized sectors.

Year	Employment in Million
2003	20.7
2004	26.4
2005	26.5
2006	27.0
2007	27.3
2008	27.5
2009	28.2
2010	28.7
2011	29.0

Source: Indian Labour Book-2011-12, Govt.of India.

 

·       Growth of employment in finance, insurance, real estate and service flourished in a rapid rate which is the high productivity sectors in the country. As per NSSO data 5.8 million jobs created in these sectors between 2001-05 to 2011-12 but almost restricted in urban areas.

 

 

Demographic Dividend and opportunity:

Indian non-agricultural economy faces pool of workers mainly from two sources, one away from agriculture and second one is rapid growth of people in the economically active age group (15-59 years). India, near to fertility transition, received a large demographic dividend which has already started. At present more than 64% ‘economically active’ people live in India, popularly known as ‘demographic dividend’. In near future ‘window of opportunity’ will convert to ‘burden’ due to increasing percentage share of elderly population in demographic architecture. India will enjoy the demographic dividend for next twenty five to thirty years. According to UN population department it has defined the windows of opportunity as ‘period when the proportion of children and youth under 15 years falls below 30% and the proportion of the people with 65 years age and older is still below 15%’. So, history of development, contemporary opportunity and potential opportunity in industrial sectors for employment augmentation are the crucial factors to get benefit from the demographic dividend for a country. Scholars are generally cited example in this regard taking comparison between India and China where the growth of manufacturing sectors in China is 1.6 times higher than India with 7^th times high per capita income  than Indian people. Generalisation from NSSO data, it has been stated that number of 15-59 years population is increased 32.9 million and job opportunity created only 21.9 million during 2004 to 2012. To get opportunity of demographic dividend more ‘good job’ should be incremented for educated and skilled young potential workers. It is a great challenge for Indian economy.

 

CONCLUSION:

India, as a second populous nation (next to China) with huge demographic dividend is facing to generate a large number of ‘good jobs’ and even after 27 years of economic liberalization where as it was thought that ‘economic liberalization’ is being treated as a universal remedy for the country’s structural weaknesses. Though the GDP growth in non-agricultural sectors is ever-increasing but employment in agricultural sector did not show any dramatic change. Only the number of cultivator shrank down and similarly agricultural labour flourished signifies ‘jobless growth’ and rural poverty which is important cause of rising tide of distress migration of rural workers to urban areas. There is an urgent need for public investment and specific government policies to enhance agricultural incomes, stimulate rural enterprises, and help create new rural non-agricultural jobs. Tertiary sector feeds mostly on secondary and primary sector’s surplus, considered as the ‘base of economy’. Manufacturing in India needs to grow significantly faster than overall growth; few other sectors have the same potential to lift millions out of poverty and provide gainful employment. Like China India needs to produce labour-intensive, low-and medium-value-added manufactured goods. In this regard different public skill development programmes should be more proactive and the curricula of colleges, universities should be modified as per requirement of the new job market. There is an ample scope in Indian tourism. Government should continue to drive development of tourism circuits as clusters of tourist attractions, supplemented by hotels, restaurants, and recreational activities. It is hopeful that, female contribution and participation in Indian economy is increase but a large proportion of them found to be ‘marginal worker’ and average wage earning is low. Emphasis should be given to create new ‘good jobs’ for females with a good working environment. To achieve a sustainable and balanced economic growth Government policies regarding gainful employment should be reviewed frequently as per feedback mechanism. And taking cue from Robert Frost we can say that in order to achieve the laurel in this context we have–‘miles to go’

 

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Received on 20.05.2018          Modified on 11.06.2018

Accepted on 22.06.2018      ©A&V Publications All right reserved