Employment and Unemployment in India: Emerging Tendencies During the Post-reform Period

Employment and Unemployment in India Employment and Unemployment in India Emerging Tendencies during the Post-Reform ...

Author: E. T. Mathew

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Employment and Unemployment in India

Employment and Unemployment in India Emerging Tendencies during the Post-Reform Period

E.T. Mathew

Copyright © E.T. Mathew 2006 All rights reserved. No part of this book may be reproduced or utilised in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage or retrieval system, without permission in writing from the publisher. First published in 2006 by Sage Publications India Pvt Ltd B-42, Panchsheel Enclave New Delhi 110 017 www.indiasage.com Sage Publications Inc 2455 Teller Road Thousand Oaks, California 91320 Sage Publications Ltd 1 Oliver’s Yard, 55 City Road London EC1Y 1SP Published by Tejeshwar Singh for Sage Publications India Pvt Ltd, phototypeset in 10.5/12.5 pt Garamond by Star Compugraphics Private Limited, Delhi and printed at Chaman Enterprises, New Delhi. The Research Project on which this book is based was funded by the Indian Council of Social Science Research. However, the responsibility for the facts stated, opinions expressed and conclusions reached, is entirely that of the author and not of the Indian Council of Social Science Research. Library of Congress Cataloging-in-Publication Data Mathew, Elangikal Thomas, 1928– Employment and unemployment in India: emerging tendencies during the postreform period/E.T. Mathew. p. cm. Includes bibliographical references and index. 1. Unemployment—India. 2. Labor supply—India. 3. India—Economic policy. I. Title. HD5819.M38 331.10954—dc22 2006 2006027543 ISBN: 10: 0–7619–3545–2 (Pb) 13: 978–0–7619–3545–2 (Pb)

10: 81–7829–702–7 (India-PB) 13: 978–81–7829–702–6 (India-Pb)

Sage Production Team: Deepa Dharmadhikari, Anindita Majumdar, Sandeep Bankhwal, and Santosh Rawat

For Usha, Tommy and Jaya

Contents List of Tables Preface

9 13

1 Introduction 2 Trends in Employment 3 Unemployment and Underemployment 4 Casualisation 5 Feminisation of Labour Force 6 Informalisation of Employment 7 Emerging Opportunities for Employment: The Case of IT and IT-enabled Services with Special Reference to Business Process Outsourcing 8 Summary and Conclusions Appendix References Index About the Author

15 25 53 75 85 105

123 135 149 159 163 167

List of Tables

2.1

Worker-population ratio (percentage) according to usual status (PS+SS), NSS rounds, 1983 to 1999–2000 2.2 Estimated distribution of the workforce (usual status i.e. PS+SS) by gender, location of residence, NSS rounds 1983 to 1999–2000 2.3 Labour force participation rate (percentage) by gender and location of residence 2.4 Distribution of the labour force by gender and location of residence according to usual status (PS+SS), NSS rounds 1983 to 1999–2000 2.5 Per 1,000 distribution of usually employed persons (PS+SS) by sector, NSS rounds 1983 to 1999–2000 2.6 Per 1,000 distribution of usually employed persons (PS+SS) by broad industry division, NSS rounds 1983 to 1999–2000 2.7 Growth of employment (UPSS) by sector, gender and location of residence, NSS results 1983 to 1999–2000 2.8 Growth of employment (UPSS) by sector, NSS rounds 1983 to 1999–2000 2.9 Per 1,000 distribution of usually employed (PS+SS) by category of employment in different NSS rounds 2.10 Growth of average daily wage earnings in 1993–94 prices in rural India 2.11 Growth of rural employment—agricultural and non-agricultural (UPSS), NSS rounds 1983 to 1999–2000 2.12 Growth of employment in the ‘services’ sector, 1993–94 to 1999–2000

26 27

28 29

31 33 35 37 40 43 44 46

10

EMPLOYMENT AND UNEMPLOYMENT IN INDIA

2.13 Trends in organised sector employment (UPSS) 2.14 Elasticity of employment to GDP by sector

48 50

3.1

54

Unemployment rates during 1983 to 1999–2000 in different NSS rounds 3.2 Unemployment rates (usual adjusted) of the educated of age 15 years and above 3.3 Unemployment rates (usual adjusted) among the youth (15–29 Years) 3.4 Unemployment rates (usual status) among educated youth (per cent) 3.5 Per 1,000 distribution of usually employed (PS+SS) by their broad current weekly status 3.6 Per 1,000 distribution of person-days of usually employed (PS+SS) by their broad current daily status 3.7 Per 1,000 distribution of person-days of current weekly status employed persons by their broad current daily status 3.8 Rate of underemployment (per cent) by status of employment and gender 3.9 Number of employed persons who did not work more or less regularly throughout the year per 1,000 employed persons in the usual principal status by gender and location of residence 3.10 Per 1,000 distribution of usually working persons of 15 years of age and above (PS+SS) who had sought or were available for additional work by gender and location of residence, 1993–94 and 1999–2000 3.11 Number of usually working persons of age 15 years and above who sought or were available for alternative work per 1,000 usually employed persons in the principal status (15 years and above) and their per 1,000 distribution by reason for seeking or availability for alternative work 4.1

4.2

Percentage distribution of usually employed (PS+SS) by category of employment, gender and location of residence, NSS rounds 1983 to 1999–2000 Structure of employment (UPS) and level of education of workers by sector

57 58 59 62 64 65 66 68

70

73

78

81

LIST OF TABLES

5.1

5.2 5.3

6.1

6.2

6.3

11

Labour force participation rate (percentage) by gender 95 and location of residence according to usual status (PS+SS), NSS rounds 1983 to 1999–2000 Worker-population ratio (percentage) according to usual 97 status (PS+SS), NSS rounds 1983 to 1999–2000 Distribution of usually employed persons (PS+SS) 98 by broad industry division, NSS rounds 38 and 55 Rural unorganised sector manufacturing enterprises and employment, growth rates per annum by category of enterprises Rural unorganised sector trading enterprises and employment, growth rates per annum by category of enterprises Informal sector job losses in manufacturing and trade, numbers by category of enterprises

119

119

120

Preface

At the time when economic reforms of far-reaching implications were initiated in India (in 1991) in the wake of an unprecedented fiscal crisis, opinion in the country was sharply divided on their probable outcomes. While supporters of the reform measures welcomed the steps with much acclaim, critics of the government in the political arena and a section of academic economists were equally vehement in their protestations. It is now well over a decade since the reforms have been in place and the hot debate on the pros and cons of the measures has almost completely subsided. Now, therefore, is the opportune moment to take a close look at what has happened in the economy during the first few years of implementation of the reforms. The purpose of this study is to assess the impact of the reforms on the employment and the unemployment situation in the country taken as a whole and to ascertain if any clear tendencies have been emerging. The study was made possible by a grant-in-aid from the Indian Council of Social Science Research (ICSSR) for a one-year period in 2004–05. I take this opportunity to thank the ICSSR for the grant. I am grateful to Professor K.P. Kannan, the then director of the Centre for Development Studies (CDS), for granting me affiliation to conduct research at CDS where I serve as Honorary Fellow. I wholeheartedly acknowledge the debt I owe to Professor P. R. Gopinathan Nair, my long-time friend and colleague, for reading the entire manuscript and offering valuable suggestions. Thanks are also due to the anonymous reviewer of Sage Publications for detailed suggestions regarding revising the manuscript.

14

EMPLOYMENT AND UNEMPLOYMENT IN INDIA

I am indebted to Mr Varghese K. George for his unstinted research assistance. Finally let me express my gratitude to Mr Soman Nair, registrar and Mr K. Muraleedharan, Senior Assistant Administrative Officer for timely administrative support and to Smt D. Girija for excellent secretarial assistance. E.T. Mathew

Chapter One

Introduction

The present study constitutes a critical analysis of the emerging tendencies in employment and unemployment in the Indian economy during the post-reform period. The exercise is contextualised with a brief account of the characteristics of the economic crisis which led to the reforms. The discussion in the following section draws heavily on Chapter 1 of Intelligent Person’s Guide to Liberalisation by Bhaduri and Nayyar (Bhaduri and Nayyar 1996).

The Context of the Economic Crisis The economic crisis that surfaced in early 1991 was, according to several observers, the culmination of wrong policies pursued during the 1980s. The Indian government had started to live beyond its means during this period. The average fiscal deficit of the central government alone was 8.2 per cent of the GDP during 1985–86 to 1989–90. This was mainly due to the rapidly rising expenditures on subsidies, interest payments, salaries and defence. While fiscal deficits met by internal borrowing were mounting steadily, current account deficits in the balance of payments were leading to ever-increasing borrowing abroad. The internal debt of the government had risen from Rs 485 billion (36 per cent of the GDP) at the end of 1980–81 to Rs 2,830 billion (54 per cent of the

16

EMPLOYMENT AND UNEMPLOYMENT IN INDIA

GDP) by the end of 1990–91, constituting about 500 per cent growth during a decade. With mounting pressure for debt servicing, the government was constrained to raise the rate of interest on its borrowings to make them attractive to the prospective lenders. To add to the gravity of the situation, a substantial proportion of the government expenditure was incurred on consumption, the proportion of expenditure on investment remaining inadequate to earn returns high enough to finance interest payments on total government borrowing. The balance of payments situation also had been rapidly deteriorating. The trade liberalisation policies followed during the late 1970s and the new industrial policies initiated in the mid 1980s together created conditions favourable for the emergence of a type of industrialisation which depended on imports disproportionately. The second half of the 1980s also witnessed a sharp rise in the import of weapon systems for the defence sector much of which was financed through external borrowing. The combined effect of all these trends was the doubling of the current account deficit from an annual average of US dollars 2.3 billion (1.3 per cent of the GDP) during the first half of the 1980s to an annual average of US dollars 5.5 billion (2.2 per cent of the GDP) during its second half. Inevitably the debt service burden (comprising interest payments and amortisation) shot up from 15 per cent of the export earnings in 1980–81 to 30 per cent in 1990–91. Special mention may be made of the fact that external resources were also spent to finance interest payments and consumption (e.g., the use of short-term borrowing abroad to finance imports of petroleum, fertilizers and edible oils during 1987–89). These events ultimately led to a dramatic erosion of confidence in India among lenders, particularly lenders from abroad. Quite expectedly credit ratings for India in international capital markets plummeted. The vulnerability of the balance of payments of the country was accentuated by two other factors: (1) It was no longer possible to roll-over the existing short-term debt which amounted to US dollars 6 billion; (2) Deposits held by non-resident Indians (US dollars 10 billion) levelled off in September 1990 as soon as the first signs of a crisis surfaced, mainly due to the outbreak of hostilities in the region. A run on non-resident external deposits appeared imminent. The balance of payments lurched from one liquidity crisis in January 1991 to another in June 1991; on both occasions foreign exchange reserves dropped to rock-bottom levels (US dollars 1 billion) that would not have paid for the country’s imports

INTRODUCTION

17

even for a fortnight. The crisis drew the attention of the powers that be to the deep structural imbalances in factor and product markets and also in the fiscal system. Faced with the threatening consequences of possible default of international debt obligations, the government began to explore all possible options, as the culmination of which resulted a series of steps; the climax came with the shipping of 47 tonnes of gold from the Reserve Bank of India to the Bank of England to raise US dollars 405 million. Clearly the government was running out of all options. The new (Congress) government which assumed office after the general elections in late-June (1991) negotiated a stand-by agreement with the IMF and followed it up with negotiations for a structural adjustment loan with the World Bank.

Stabilisation (of IMF) and Structural Adjustment (of World Bank) Programmes Stabilisation Programme The response to the crisis was to put in place a set of policies aimed at stabilisation and structural reform. The economic stabilisation programme had two objectives namely, (i) the prevention of a collapse of the balance of payments in the short-run by reducing the deficit on current account; and (ii) the curbing of inflation. The principal instruments for achieving IMF-style stabilisation are the fiscal policy (of the government) and the monetary policy (of the Central Bank). Both instruments are used to reduce the level of aggregate demand in the economy, especially demand emanating from the government. Such compression of demand is often associated with a devaluation of the currency. On the basis of this package, the rupee was devalued twice, on July 1 and on July 3 in 1991 resulting in a devaluation by 18 per cent.

Structural Adjustment Programme While the essence of stabilisation is a drastic compression of demand and a hope that the reduction in demand will mostly reduce prices rather than output and employment, the major emphasis of structural

18

EMPLOYMENT AND UNEMPLOYMENT IN INDIA

adjustment is on deregulation and marketisation; the public sector is downsized in the hope that the resulting void will be filled by the private sector. In conformity with the stabilisation and structural adjustment prescriptions of the IMF and the World Bank, the Government of India embarked on a wide range of reforms beginning in July 1991.

Reforms 1. Industrial policy reform: This reform sought to remove the barriers preventing entry of new firms and the limits on growth in the size of existing firms. Investment decisions were no longer to be dependent upon government approval. Industrial licensing was abolished except in certain specified categories. The law regulating monopolies was amended to remove the threshold limit of Rs 1 billion on the assets of large business houses and to eliminate the need for prior approval from the government for capacity expansion, capacity creation, amalgamation, and mergers or takeovers on the part of such companies. 2. Trade policy reform: The object of the trade policy reform was to encourage free flow of imports and exports to the maximum possible extent, which involved dismantling of quantitative restrictions (quotas) on imports and exports, a substantial reduction in tariffs on imports combined with an abolition of subsidies on exports and several downward adjustments in the exchange rate. 3. Policy regime for foreign investment and foreign technology: The primary objective of these reforms was to enlarge non-debt-creating foreign capital inflows, while technology-acquisition and market-access constituted secondary objectives. It is pointed out that ‘an almost dangerous obsession’ with the balance of payments has led to liberalisation of portfolio investments on generous terms for foreign institutional investors. Such financial flows may not necessarily be transferred into investment in real terms to generate production because they are mostly confined to the secondary market for repurchase and resale of existing shares or other financial assets rather than being involved in the purchase of new shares in the primary market of financing new investment. 4. Public sector reform: The core of public sector reform was the disinvestment of government equity up to 49 per cent in selected public sector enterprises. The dominant motive underlying this move, however, was the desire to mobilise resources for the exchequer and thus to reduce the fiscal deficit temporarily. According to some critics, ‘public sector reform characterised by asset sales and closures constitutes the most unimaginative, perhaps opportunistic, form of privatisation without any attempt at genuine restructuring’ (Bhaduri and Nayyar 1996: 42).

INTRODUCTION

19

5. Financial sector reform: The object of financial sector reform was improved profitability of the commercial banking system and better functioning of the domestic capital market. Towards this goal, the structure of differentiated interest rates charged and paid by commercial banks were simplified and rationalised largely through deregulation. It was hoped that this step would reduce the squeeze on the profitability of commercial banks. Simultaneously, interest rates on long-term government securities were raised to levels close to those of the market. 6. Capital market reforms: The reforms in the capital market sought to finance investment in the private sector and to attract foreign portfolio capital. Interest rates in the domestic capital market were deregulated and the need for prior government approval of the size and price of equity issues in the primary capital market were dispensed with.

Assessment of the likely Impact of Reforms on Employment Impact of Reforms on Employment The announcement of the reform measures and their subsequent implementation led to varying assessments regarding their likely impact on the economy. In the following sections, the discussion is limited, however, to observations of the impact of the reforms on the employment situation. 1. In the agricultural sector: Several economists held the view that positive results might follow if trade liberalisation led to a massive take off in fruit and vegetable production and processing. It was pointed out that the withdrawal of agricultural subsidies in Europe and Japan would raise the world prices of wheat, oil-seeds, sugar beet, dairy products, fruits, vegetables and rice. India would be better off if it could become a major exporter of wheat, rice, sugar and livestock (Nayyar and Sen 1994). Broadly similar views were held by several others too. Regardless of the question of withdrawal of subsidies in Europe and Japan, it was pointed out by some that liberalisation was likely to encourage agro-based modern organised industries to take up production and marketing of speciality items in the fields of horticulture, floriculture, fisheries etc. (e.g., Rao 1994). A less optimistic note was struck by a few others. They held that agriculture was likely to attract more resources from the private sector in the years to come. Under the new economic policy,

20

EMPLOYMENT AND UNEMPLOYMENT IN INDIA

growth rate of foodgrains output could increase further from the existing 2.6 per cent per annum. On the other hand, the growth rate in the demand for food grain was likely to decelerate due to changing consumer tastes and preferences as a result of the increasing availability of a wide variety of food items other than cereals. According to them, agricultural output needed to step up diversifying into areas such as dairying and other types of animal husbandry, horticulture and floriculture, in which the demand is more elastic than in the case of foodgrains. According to them, agro-processing and marketing should emerge as major rural activities which provide linkages with industry and trade and enhance opportunities for rural employment (Rao and Gulati 1994). 2. In the non-agricultural sector: Most observers felt that employment prospects were not promising in the non-agricultural sector (Rao and Gulati 1994). However the adverse impact was bound to be more severe in the unorganised than in the organised non-agricultural sector. It was emphasised that while in the non-agricultural sector a slow-down in production would not be easily translated into a decline in employment, in the organised sector (partly because jobs are legally protected and partly because workers are well organised), the impact of stabilisation would be manifested more strongly either in the form of reduced employment growth or reduced real wage rates, particularly in the informal, non-agricultural sector. Workers belonging to unskilled, unorganised and weaker sections were likely to be retrenched under any programme of cut-back in public investment, especially in infrastructure, which is admittedly labour-intensive (Mundle 1993; Rao 1994; Vyas 1993). 3. On the economy in general: It was widely held that the main burden of reforms in terms of their impact on employment, would be more acutely felt by workers in the urban informal sector and by rural labourers. The burden was likely to fall more severely on the urban than on the rural, and on the unorganised sectors than on the organised sector. A limited section of the workers with high skills might gain, but larger sections would be net losers. The net losers would, most likely, consist of small producers in the unorganised (informal) sector and vulnerable sections of the population. Hence a long-term industrial development strategy should, it was pointed out, include measures for augmenting productivity of workers in village industries as well as in modern small scale industries, for linking them effectively with larger industries (Kurien 1993; Singh 1993).

The preceding discussion has shown that economic reforms generate losses as well as gains. The losses may be concentrated among particular groups of workers or geographical areas and may become more noticeable; on the other hand, gains are more widely diffused and are less visible. In developing countries with large and widespread informal sectors,

INTRODUCTION

21

overall employment growth may not be adversely affected as it is likely that formal sector workers will move to informal sectors. In other words, there may not be net increases in open unemployment rates, but the quality of employment may become poorer (Dev 2000b: 10).

Objectives of the Study Broad Objective The major objective of the present study is an analysis of the employment and unemployment trends in the Indian economy since the structural reforms. The analysis is based on data of quinquennial surveys of the National Sample Survey Organisation (NSSO) conducted during 1993–94 (NSS 50th round) and 1999–2000 (NSS 55th round), both rounds falling in the same post-reform decade (for concepts and definitions used by the NSS see the appendix). The specific objectives of the study comprise the impact of reforms on the following dimensions. 1. Employment generation: Generation of additional employment opportunities has been a major objective of public policy in India. The manner in which economic reforms would affect the employment situation has been, as indicated earlier, a topic which has been widely debated. The trends in the levels and the structure of employment as well as the status of employment with reference to rural and urban, agricultural and non-agricultural, and organised and unorganised sectors are examined in some depth in this section. 2. Unemployment and underemployment: The spectre of widespread unemployment has always agitated the minds of policy makers in the country. There has emerged a genuine apprehension among scholars that economic reforms would lead to loss of employment to vast sections of workers. Besides examining the trends in unemployment, an attempt is made in this context, to unravel the magnitude of a kindred problem, very specific to India, namely underemployment. 3. Casualisation of employment: A prominent feature of the Indian economy has been that the majority of workers are either in self-employment or casual labour. Several experts have been of the view that the post-reform period would witness an increase in the proportion of casual labour—a process often described by them as ‘casualisation’ of employment. In view of the wide currency of this impression, an examination of this phenomenon shall also form one of the objectives of the present exercise.

22

EMPLOYMENT AND UNEMPLOYMENT IN INDIA

4. Informalisation of employment: With globalisation, domestic prices are being increasingly influenced by international prices. There exists, therefore, a growing emphasis on the emergence of an era of cost-cutting competition. As part of this, it is argued that there has been a process of ‘informalisation’ of employment. Informalisation is brought about through more networking, with contract labour, casual labour, part-time labour and home workers; in short, by labour of all kinds unprotected by labour regulation. It is known that even before the advent of reforms the structure of employment in the Indian economy had been characterised by the preponderance of the informal sector. It needs to be looked into whether informalisation is spreading to areas which had hitherto remained in sectors organised along formal lines. 5. Feminisation of employment: There is a distinct possibility that under global competition employers would favour women workers since they are supposedly prepared, in general, to accept lower wages than men’s wages, thus leading to substitution of men workers by women workers. Such substitution is widely referred to as feminisation. This question is also examined in some detail in the Indian context.

Data Sources The major source of data for this study is the quinquennial surveys on employment and unemployment conducted by the National Sample Survey Organisation (NSSO) in the 1980s and the 1990s. Whenever population estimates had to be attempted for the intervening years between decennial censuses, the census data have been used for the purpose of interpolation. Besides NSSO and census reports, extensive use has been made also of other relevant secondary data. No field survey has been undertaken since this is a country-level study and the research was carried out during a 12-month period.

Chapter Scheme The chapter scheme of the work is as follows. Chapter 2 deals with trends in employment in the post-reform period. More specifically, it

INTRODUCTION

23

discusses the levels and statuses of employment, growth of the workforce, industrial distribution of employment and its growth by sectors— organised and unorganised, and farm and non-farm. Unemployment (including underemployment) is the theme of the third chapter. After indicating the three measures of unemployment—usual principal, current weekly and current daily—changes in unemployment in the post-reform period are discussed with special reference, among other things, to the ages and the educational levels of the unemployed. Chapter 4 examines, on the basis of NSS rounds 38 to 55, whether any move to casualise employment has taken place in recent years. The question of feminisation of employment is addressed in Chapter 5. Before examining how real feminisation in India is, the emergence of feminisation as a shift to a more flexible labour market globally is discussed. Chapter 6 attempts to present a comprehensive picture of the process of informalisation that is in progress in the Indian economy. Various shades and forms of informality are highlighted. Although the focus of this study is on the emerging tendencies in employment and unemployment in the postreform period, no discussion of the employment situation in India can afford to overlook the IT revolution that is fast unfolding in the country. Chapter 7 presents a brief account of business process outsourcing (BPO). Chapter 8 draws a summary of the findings of the study and presents the major conclusions that emerge.

Chapter Two

Trends in Employment

Introduction A major objective of this study is to examine how economic reforms have impacted the employment situation in the country. Employment, it may be noted, has quantitative as well as qualitative dimensions. Most often attention is focused on the expansion of employment in terms of the number of workers employed while the qualitative aspects (e.g., type of employment) do not receive adequate attention. In this treatment we seek to examine all the major aspects of employment. In Section 1 we discuss levels and growth of employment. The analysis is made in terms of the usual status approach which includes both principal and subsidiary statuses. Section 2 deals with the structure and distribution of employment (by broad industry division). Section 3 discusses the trends of employment, again, by broad industry division. The status of employment and its variations over the years is the theme of Section 4. Sections 5 to 7 constitute brief ‘notes’ on rural non-farm employment, organised versus unorganised sector employment and elasticity of employment. Section 8 summarises the main findings of the discussion.

26

EMPLOYMENT AND UNEMPLOYMENT IN INDIA

Levels and Growth of Employment In keeping with the accepted practice we use the worker-population ratio (WPR) or work force participation rate (WFPR) as an index of the level of employment. According to the National Sample Survey (NSS), of the three approaches that it follows, the usual status approach including both the principal and subsidiary status is the best suited as a measure of the level of economic activity in an economy experiencing seasonal fluctuations in employment. Levels of employment in the Indian economy during the 1980s and the 1990s are presented in the Table 2.1. Although the thrust of the present study is on the post-reform period, it is obvious that unless we also have a correct picture of the pre-reform period (wherever possible) no valid conclusions can be drawn. Table 2.1 Worker-population ratio (percentage) according to usual status (PS+SS), NSS rounds, 1983 to 1999–2000 NSS results (Round and Year)

Male

Rural Female

Person

Male

Urban Female

Person

38 43 50 55

54.7 53.9 55.3 53.1

34.3 32.3 32.8 29.9

44.5 43.4 44.4 41.7

51.2 50.6 52.0 51.8

15.1 15.2 15.4 13.9

24.0 33.7 34.7 33.7

(1983) (1987–88) (1993–94) (1999–2000)

Source: National Sample Survey Organisation, Employment and Unemployment in India, 1999–2000 (NSS 55th Round) Key Results, December 2000, Table 4, p. 14.

Since 1987–88 was a drought year, the WPRs of the four population segments for the year 1987–88 may not be strictly comparable to those of the other rounds, for earlier or later years. However, as between the pre-reform and the post-reform periods, no major changes in the WPRs are noticed except in respect to females in the 55th round (1999–2000). Of course, during the post-reform period, between 1993–94 and 1999– 2000, there has taken place a significant decline in the worker-population ratios in three population segments, namely rural male as well as female and urban female. In the case of urban males, the decline has been marginal. It is pointed out that, to a significant extent, the reduction in WPRs reflects a rise in the student-population ratios—not only in the 5–9 and

27

TRENDS IN EMPLOYMENT

10–14 age groups covering the primary and middle school systems, but also in the 15–19 and 20–24 age groups, indicating a rising population in the secondary and the higher levels of education. These gains have been particularly impressive for rural girls (Sundaram 2001: 932–33). We may also note, as clearly brought out in Table 2.1, that the urban female WPRs have remained markedly lower than the rural. This difference partly reflects the greater difficulty of combining ‘work’ with household duties in urban areas instead of in villages where work on the family farm or in the family enterprise tends to be the predominant activity (Visaria 1999: 33). With the gradual disappearance of rural–urban differences in occupational structures, and the growing diversification of rural employment, the disparities in worker-population ratios between the different population segments are bound to diminish. The modernisation phase that has set in during the post-reform period will add momentum to this process.

Growth of (Usual Status i.e. PS+SS) Workforce On the basis of the worker-population ratios reported by the NSSO for its various quinquennial survey periods (Table 2.2) we may attempt an estimation of the workforce corresponding to each round. This exercise is carried out by interpolating the final population census figures for 1981–91 and 1991–2001 for the midpoints of each year of the quinquennial survey. Table 2.2 Estimated distribution of the workforce (usual status i.e. PS+SS) by gender, location of residence, NSS rounds 1983 to 1999–2000 (in millions) Year and NSS round 1983 (38) 1987–88 (43) 1993–94 (50) 1999–2000 (55)

Rural Male 150.45 163.55 (8.71) 189.56 (15.93) 198.61 (4.56)

Urban Female 88.67 92.67 (4.50) 105.82 (14.19) 105.70 (00.00)

Male 46.65 53.04(13.69) 65.71(23.88) 75.49(14.89)

Female 12.16 14.44(16.70) 17.44(23.00) 18.23(4.51)

Source: Figures in parentheses denote percentage rates of growth over the previous NSS Round.

It is observed that the 50th round of the NSS showed a substantial increase in the workforce in all the four population segments as compared

28

EMPLOYMENT AND UNEMPLOYMENT IN INDIA

to the 43rd round. The growth in numbers was the highest for urban males followed by urban females. Compared to the urban sector, the growth of rural workforce lagged behind. It appears that while the immediate impact of economic reforms on employment was positive, the long term effect as reflected in the results of the NSS 55th round (1999– 2000), was lacklustre. They indicate that for all segments of the population except for urban males the employment situation deteriorated. At the other end of the spectrum the results of the 50th round showed that absolutely no growth was found in the size of the rural female workforce. Before any definite conclusions are drawn about the impact of economic reforms on the employment situation solely on the basis of the estimated workforce, it is necessary to examine the labour force participation rates for the different periods. Obviously, a lower labour force participation rate would inevitably result in fewer people opting for gainful employment. It is seen from Table 2.3 that labour force participation rates (LFPR) have remained fairly stable till 1993–94. True, female LFPRs have been significantly lower than male LFPRs irrespective of the location of residence. Also, as far as male LFPR is concerned, the levels are similar in both the rural and the urban segments. However, significant changes have taken place in the LFPR between 1993–94 and 1999–2000. Compared to the rates in 1993–94 among rural males, the LFPR declined in the younger age groups as well as for those aged 50 years and above during 1999–2000. The decline in the LFPR in the younger age groups during the period 1993–94 to 1999–2000 is a reflection of the long term shift in the activity status of this group away from labour and towards education. According to the task force on employment appointed Table 2.3 Labour force participation rate (percentage) by gender and location of residence Year and NSS round

Male

Rural Female

Male

Urban Female

1983 (38) 1987–1988 (43) 1993–1994 (50) 1999–2000 (55)

55.5 54.9 56.1 54.1

34.2 38.1 33.0 30.2

54.0 53.4 54.3 54.2

15.9 16.2 16.5 14.7

Source: Reports of NSS quinquennial surveys on employment and unemployment for the relevant years.

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TRENDS IN EMPLOYMENT

by the Planning Commission, this trend is likely to continue in future (Planning Commission of India 2001: 19). It has remained more or less unchanged for the age groups 25–49 years. It is important to note that among rural females, the LFPR declined for almost all age groups. In the urban areas the pattern closely resembled that observed in the rural areas. For example, the LFPR for males remained almost equal to those for the age groups 25–49 in both the rural and the urban areas (NSSO 2000: 12–13).

Growth of Labour Force On the basis of the population estimates arrived at through interpolation of the census data for the different NSS rounds relating to the quinquennial surveys on employment and unemployment, and the labour force participation rates estimated by the NSSO, the size of the labour force pertaining to the same periods is shown in Table 2.4. Table 2.4 Distribution of the labour force by gender and location of residence according to the usual status (PS+SS), NSS rounds 1983 to 1999–2000 (in millions) Year 1983 1987–88 1993–94 1999–2000

NSS round

Rural Male Female

38 43 50 55

152.653 89.197 166.586 94.634 192.304 106.464 201.981 106.787

Annual Growth Rates 1983 to 1987–88 1.960 1987–88 to 1993–94 2.422 1993–94 to 1999–2000 0.822

1.324 1.983 0.051

Urban Male Female

Male

Total Female

Total

49.203 55.975 68.612 78.987

12.807 15.116 18.690 19.280

201.856 222.561 260.916 280.968

102.004 109.750 125.154 126.067

303.860 332.311 386.070 407.035

2.907 3.451 2.375

3.752 3.601 0.519

2.194 2.685 1.242

1.640 2.213 0.121

2.009 2.531 0.885

Source: Reports of NSS quinquennial surveys on employment and unemployment for the relevant years.

While between 1987–88 and 1993–94 there had been a substantial increase in the labour force in all the four population segments, between 1993–94 and 1999–2000 the rate of increase in the labour force was low in respect to rural males and urban females; in respect to rural females a marginal decline is observed in the labour force. As pointed out earlier, this variation is explained by the fact that while the LFPR among

30

EMPLOYMENT AND UNEMPLOYMENT IN INDIA

rural males had declined in the younger age groups as well as in the age groups of 50 years and above during 1999–2000, the LFPR among rural females declined for almost all age groups. Urban males is the only population segment which registered a substantial increase in the labour force though the increase was much lower compared to that of the earlier period (1987–88 to 1993–94). It is pertinent to note that the annual rate of growth of population in India had fallen from 2.14 per cent during 1981–1991 to 1.93 per cent during 1991–2001. Such a decline would normally be associated with a slower growth in the working age population, which in turn would also lead to a slower growth in the labour force.

Structure and Distribution of Employment A brief discussion of the changes in the structure of employment over the years is attempted in this section. It is customary to discuss the structure of employment in terms of three industrial sectors, each sector representing a broad group of ‘industry’. The primary sector consists of agriculture, mining and quarrying; the secondary sector consists of manufacturing, electricity, water and construction; and the tertiary sector includes wholesale and retail trade, restaurants and hotels, transport, storage and communication services, financial intermediation, insurance, real estate and business services, public administration, education, healthcare services and community services. It is noted that although the structure of employment has broadly remained unchanged during 1983 to 1999–2000, a decreasing trend is observed in the share of workers in the primary sector. As between male and female workers in the rural sector, female workers constitute a much greater proportion of employment in the primary sector. Further, the ground lost by the primary sector has been largely gained by the tertiary sector. The share of employment in the tertiary sector rose steadily during the period 1983 to 1999–2000 for both males and females but the rise was sharper for females than for males. A careful examination of Table 2.5 shows that economic reforms had a most salutary impact on urban female employment in the tertiary sector. No other population segment has registered such a large increase (6.6 percentage points) in

(1983) (1987–88) (1983–84) (1999–2000)

775 745 741 714

Primary

100 121 112 126

Male Secondary

122 134 147 160

Tertiary

Rural

875 847 862 854

Primary 74 100 83 89

Female Secondary 48 53 56 57

Tertiary 103 91 90 66

Primary 342 340 330 328

Male Secondary 550 569 579 606

Tertiary

310 294 247 177

Primary

Urban

306 317 291 293

Female Secondary

376 389 463 529

Tertiary

Source: National Sample Survey Organisation: Employment and Unemployment in India, 1999–2000, Key Results, NSS 55th round, 2000, Table 11, p. 25.

38 43 50 55

NSS round and year

Table 2.5 Per 1,000 distribution of usually employed persons (PS+SS) by sector, NSS rounds 1983 to 1999–2000

TRENDS IN EMPLOYMENT

31

32

EMPLOYMENT AND UNEMPLOYMENT IN INDIA

employment. The emergence of the tertiary sector as a dominant sector in terms of employment opportunities, especially for females, is a striking feature of the post-reform period. As an economy undergoes transformation, changes are naturally observed in the industrial distribution of the workforce. While some enterprises may reduce their deployment of labour, others may go in for additional labour. Changes may arise in the gender composition of the workforce as well as between rural and urban sectors. The detailed distribution by industry division of the employed according to the usual status taking into account the principal and subsidiary status together, is presented for the NSS rounds 1983 to 1999– 2000 in Table 2.6. A close look at Table 2.6 leads to the following inferences. In the rural sector the proportions of both males and females engaged in agricultural activities have fallen sharply. While the percentage of male workers in agriculture declined from 74.1 to 71.4 between 1993–94 and 1999–2000, that of female workers registered a much smaller decline, from 86.2 to 85.4. This indicates that although dependence on agriculture for employment has declined in the 1990s, female workers still depend on agriculture for employment to a much greater extent than males. Although the proportion of workers (PS+SS) engaged in agricultural activities declined in the 1990s, a more than proportionate increase in the number of persons engaged in manufacturing has taken place. Also over the years in rural India a gradual increase is observed in the proportion of males engaged in ‘trade, hotel and restaurant’ and ‘transport, storage and communications and construction’. In urban India, while the proportion of both males and females engaged in manufacturing has fallen between 1993–94 and 1999–2000 (from 23.5 to 22.4 per cent and from 24.1 to 24.0 per cent respectively), the proportion of persons engaged in services has declined from 26.4 to 21.0 per cent in respect to males and from 35.0 to 34.2 per cent in respect to females. While in the construction industry an increase in the proportion of male workers has taken place, from 6.9 per cent to 8.7 per cent and that of female workers from 4.1 to 4.8 per cent, a major shift in employment pattern is evinced in respect of ‘trade, hotel and restaurant’. Between 1993–94 and 1999–2000 the proportion of male workers in this industry division rose from 21.9 to 29.4 per cent and that of female workers from 10.0 to 16.9 per cent.

33

TRENDS IN EMPLOYMENT Table 2.6 Per 1,000 distribution of usually employed persons (PS+SS) by broad industry division, NSS rounds 1983 to 1999–2000 Broad industry division

NSS round

Agriculture

(1983) (1987–88) (1993–94) (1999–2000) (1983) (1987–88) (1993-94) (1999–2000) (1983) (1987–88) (1993–94) (1999–2000) (1983) (1987–88) (1993–94) (1999–2000) (1983) (1987–88) (1993–94) (1999–2000) (1983) (1987–88) (1993–94) (1999–2000) (1983) (1987–88) (1993–94) (1999–2000) (1983) (1987–88) (1993–94) (1999–2000)

38 43 50 55 Mining and 38 quarrying 43 50 55 Manufac38 turing 43 50 55 Electricity, 38 gas and 43 water 50 55 Construction 38 43 50 55 Trade, hotel 38 and 43 restaurant 50 55 Transport, 38 storage and 43 communi- 50 cations 55 Services 38 43 50 55

Rural

Urban

Male

Female

Male

Female

775 (116.600) 745 (121.845) 741 (140.465) 714 (141.810) 6 (0.902) 7 (1.144) 7 (1.327) 6 (1.192) 70 (10.531) 74 (12.102) 70 (13.269) 73 (14.499) 2 (0.300) 3 (0.490) 3 (0.569) 2 (0.397) 22 (3.309) 37 (6.051) 32 (6.066) 45 (8.938) 44 (6.619) 51 (8.341) 55 (10.426) 68 (13.506) 17 (2,557) 20 (3.271) 22 (4.170) 32 (6.356) 61 (9.177) 62 (10.140) 70 (13.269) 61 (12.115)

875 (77.590) 847 (78.491) 862 (91.216) 854 (90.265) 3 (0.266) 4 (0.370) 4 (0.423) 3 (0.317) 64 (5.675) 69 (6.394) 70 (7.407) 76 (8.033) – – – – 7 (0.620) 27 (2.502) 9 (0.952) 11 (1.163) 19 (1.684) 21 (1.946) 21 (2.222) 20 (2.114) 1 (0.088) 1 (0.092) 1 (0.106) 1 (0.106) 28 (2.482) 30 (2.780) 34 (3.598) 37 (3.911)

103 (4.805) 91 (4.826) 90 (5.914) 66 (4.982) 12 (0.559) 13 (0.689) 13 (0.854) 9 (0.679) 268 (12.502) 257 (13.631) 235 (15.441) 224 (16.910) 11 (0.513) 12 (0.636) 12 (0.789) 8 (0.604) 51 (2.379) 58 (3.076) 69 (4.534) 87 (6.568) 203 (9.470) 215 (11.403) 219 (14.390) 294 (22.194) 99 (4.618) 97 (5.144) 97 (6.373) 104 (7.851) 248 (11.569) 252 (13.366) 264 (17.346) 210 (15.853)

310 (3.770) 294 (4.169) 247 (4.309) 177 (3.227) 6 (0.072) 8 (0.113) 6 (0.105) 4 (0.073) 267 (3.247) 270 (3.829) 241 (4.204) 240 (4.375) 2 (0.24) 2 (0.028) 3 (0.052) 2 (0.036) 31 (0.377) 37 (0.524) 41 (0.715) 48 (0.875) 95 (1.155) 98 (.389) 100 (1.744) 169 (3.081) 17 (0.206) 12 (0.170) 15 (0.262) 20 (0.365) 266 (3.235) 278 (3.942) 350 (4.361) 342 (6.235)

Source: National Sample Survey Organisation, Employment and Unemployment Situation in India 1999–2000, Part I (NSS 55th Round July 1949–June 2000), Table 6.7, pp. 75–76. Note: Figures in parentheses refer to the absolute number of workers in each industry (in million).

34

EMPLOYMENT AND UNEMPLOYMENT IN INDIA

To sum up: 1. Agriculture still remains a major industry for both males and females in the rural sector. 2. The industrial segment ‘trade, hotel and restaurant’ has emerged as a major avenue of employment for males as well as females in both rural and urban areas. 3. For urban females, ‘services’ has emerged as a distinctly major provider of employment, accounting for as large a proportion as 34.2 per cent of the workforce in 1999–2000. At the same time, the fact remains that though between 1983 and 1999–2000 the proportion of the male workforce engaged in services fell from 24.8 to 21.0 per cent, ‘services’ still continues to be a major avenue of employment in terms of the number of workers employed. 4. Although between 1983 and 1999–2000 manufacturing as an avenue of employment registered a decline for both urban males and females from 26.8 to 22.4 per cent and from 26.7 to 24.0 per cent respectively, it still constitutes a major source of employment in terms of the number of workers employed.

Growth of Employment by Sectors (Broad Industry Group) We have earlier estimated (in Table 2.6) the workforce in each industry division on the basis of the per 1000 distribution of usually employed persons (PS+SS). We reproduce in Table 2.7 our estimates for NSS Rounds 38(1983), 50(1993–94) and 55(1999–2000) in order to highlight the major changes that have taken place on the employment front in the post-reform period. On the basis of the results given in Table 2.7, we present in Table 2.8 estimates of the annual rate of growth of employment in the Indian economy by sector. At the macro level, we note that the annual rate of growth of employment declined sharply from 2.34 per cent per annum during the period 1983 to 1993–94 to 0.86 per cent per annum during the period 1993–94 to 1999–2000. Such a sharp deceleration in the growth rate of employment has naturally evoked much criticism about the ‘adverse’ impact of economic reforms on employment and has aroused apprehension about ‘jobless growth’ in the years to come. It is important to

1983 1993–94 1999–2000 1983 1993–94 1999–2000 1983 1993–94 1999–2000 1983 1993–94 1999–2000 1983 1993–94 1999–2000

Agriculture

Electricity, gas and water Construction

Manufacturing

Mining and quarrying

NSS round

Broad industry group

116.6 140.465 141.81 0.902 1.327 1.192 10.531 13.269 14.499 0.300 0.569 0.397 3.309 6.066 8.938

Male

77.59 91.216 90.265 0.266 0.423 0.317 5.675 7.407 8.033 – – – 0.62 0.952 1.163

Rural Female 194.19 231.681 232.075 1.168 1.75 1.509 16.206 20.676 22.532 0.300 0.569 0.397 3.929 7.018 10.101

Persons 4.805 5.914 4.982 0.559 0.854 0.679 12.502 15.441 16.91 0.513 0.788 0.604 2.379 4.534 6.568

Male 3.77 4.309 3.227 0.072 0.105 0.073 3.247 4.204 4.375 0.024 0.052 0.036 0.377 0.715 0.875

Urban Female 8.575 10.223 8.209 0.631 0.959 0.752 15.749 19.645 21.285 0.537 0.84 0.64 2.756 5.249 7.443

Persons 121.405 146.379 146.792 1.461 2.181 1.871 23.033 28.71 31.409 0.813 1.357 1.001 5.688 10.600 15.506

Male

202.765 241.904 240.284 1.799 2.709 2.261 31.955 40.321 43.817 0.837 1.409 1.037 6.685 12.267 17.544

Persons

(in millions)

(Table 2.7 continued )

81.36 95.525 93.492 0.338 0.528 0.39 8.922 11.611 12.408 0.024 0.052 0.036 0.997 1.667 2.038

Total Female

Table 2.7 Growth of employment (UPSS) by sector, gender and location of residence, NSS results 1983 to 1999–2000

TRENDS IN EMPLOYMENT

35

1983 1993–94 1999–2000 1983 1993–94 1999–2000 1983 1993–94 1999–2000

group

Trade, hotel and restaurant

6.619 10.426 13.506 2.577 4.17 6.356 9.177 13.269 12.115

Male

Rural

1.684 2.222 2.114 0.088 0.106 0.106 2.482 3.598 3.911

Female 8.303 12.648 15.62 2.645 4.276 6.462 11.659 16.867 16.026

Persons 9.47 14.39 22.194 4.618 6.373 7.851 11.569 17.346 15.853

Male

Urban

1.155 1.744 3.081 0.206 0.262 0.365 3.235 6.105 6.235

Female

Source: NSSO, Employment and Unemployment in India 1999–2000, Part I, Table 6.7, pp. 75–76.

Transport, storage and communications Services

NSS

Round

Broad industry

(Table 2.7 continued )

10.625 16.134 25.275 4.824 6.635 8.216 14.804 23.451 22.088

Persons 16.089 24.816 35.700 7.175 10.543 14.207 20.746 30.615 27.968

Male

Total

2.839 3.966 5.195 0.294 0.368 0.471 5.717 9.703 10.146

Female

18.928 28.782 40.895 7.469 10.911 14.678 26.463 40.318 38.114

Persons

36 EMPLOYMENT AND UNEMPLOYMENT IN INDIA

37

TRENDS IN EMPLOYMENT Table 2.8 Growth of employment (UPSS) by sector, NSS rounds 1983 to 1999–2000

Industry Agriculture Mining and quarrying Manufacturing Electricity, gas and water Construction Trade, hotel and restaurant Transport, storage and communications Services Total employment

Employed workers (million) 1983 1993–94 1999–2000

Annual rate of growth (percentage) 1983–94 1994–2000

202.765 1.799 31.955 0.837 6.685 18.928 7.469

241.904 2.709 40.321 1.409 12.267 28.782 10.911

240.284 2.261 43.817 1.037 17.544 40.895 14.678

1.695 3.976 2.239 5.085 5.952 4.072 3.676

–0.112 –2.968 1.395 –4.981 6.145 6.029 5.067

26.463 296.901

40.318 378.621

38.114 398.630

4.091 2.343

–0.933 0.862

Source: NSSO, Employment and Unemployment in India 1999–2000, Part I, Table 6.7, pp. 75–76.

recognise that labour force participation rates had significantly declined in 1999–2000 from the situation in 1993–94. While the labour force grew at 2.53 per cent per annum in the period 1987–88 to 1993–94, the corresponding rate was only 0.88 per cent during the period 1993–94 to 1999– 2000. The observed deceleration in the rate of growth of employment, therefore, cannot be dissociated from the sharp decline in the growth rate of the labour force. It is also important to recognise that the employment situation in 1999–2000 was not desperate at all as the gap between the rates of growth of labour force and of employment was negligible. While between 1993–94 and 1999–2000 the labour force grew at an annual rate of 0.88 per cent, employment grew at 0.86 per cent; the difference between the two rates being only 0.02 percentage points. In addition to the trends in total employment, it is instructive to examine the pattern of development in different industry divisions from 1983 to 1999–2000. These trends, presented in Table 2.10, show that the slow down in the growth of total employment during the period 1993–94 to 1999–2000 compared with the previous period 1983 to 1993–94 was almost entirely due to slower growth in employment in two major sectors, namely agriculture and services (Two other sectors which showed a negative rate of growth of employment, namely—(i) mining and quarrying, and (ii) electricity, gas and water—may be ignored since their contribution to employment is negligible). Agriculture had in the past played a prominent role in the Indian economy in terms of the workforce accounted

38

EMPLOYMENT AND UNEMPLOYMENT IN INDIA

for and the share of the national income contributed. In both respects, agriculture has been experiencing a decline in recent times. For the first time, the absolute number of persons employed in agriculture showed a decline in 1999–2000 over 1993–94. It is pointed out that employment elasticity in agriculture has declined sharply. One of the reasons for the stagnation or fall in employment in agriculture is the trend towards the substitution of capital for labour. The rise in the substitution of capital for labour in agriculture seems to be due not so much to the rise in wage rates as to the availability of capital at low cost. The deceleration in employment in the agricultural sector is also attributed to the falling rate of public investment in agriculture and the slow pace of land-augmenting technological change in the less developed regions in the country (Rao 1998: 148). However, the possibility of opening up of trade in agricultural commodities holds significant prospects for raising employment and income from this sector in rural India. Agro-processing based on animal husbandry, horticulture, and floriculture holds tremendous prospects for exports in the long run.

Status of Employment In the NSS terminology, status of employment refers to the category the worker belongs to, namely, (1) regular employment, (2) self-employment, and (3) casual labour. This is basically a classification based on the quality of employment, though of course there are other issues also relating to quality. While regular employment is the most secure form of employment, casual labour is the least secure. Regular salaried/wage employees are entitled to a wide range of benefits such as a regular salary with provision for increments, provident fund, leave with pay, pension and other retirement benefits etc. depending on the type of the employer. Casual labour is not entitled to any such benefits. The self-employed are ‘ownaccount’ workers who enjoy almost complete autonomy subject to the laws of the country. The entire consequences of failure and the full benefits of success of their enterprises belong wholly to them. The selfemployed could range from street vendors to professionals like lawyers and doctors. It is against this background that we take up a discussion on the status of employment.

TRENDS IN EMPLOYMENT

39

We present below the per 1,000 distribution of the usually employed (PS+SS) according to their status of employment—self-employed, regular employees and casual labour—based on NSS rounds 1983 to 1999–2000. It is seen that in all the survey years, the self-employed were the most, and regular employees the least, frequent among the employed, regardless of gender. However, it is important to note that over the years (1983 to 1999–2000) the share of self-employment as a category of employment has fallen for all the population segments except urban males. It may also be noted that during the post-reform period 1993–94 to 1999– 2000, the proportion of the self-employed declined in all the four population segments but the decline has been marginal in respect of urban workers, both males and females. While the proportion of self-employed workers among rural males declined from 60.5 to 55.0 per cent between 1983 and 1999–2000, the corresponding proportion for rural females declined from 61.9 to 57.3 per cent during the same period. It is thus clear that the decline in self-employment was predominantly a rural phenomenon. One explanation offered for this phenomenon is that the fall in the proportion of the self-employed was due to the decline in the size of land holdings and the consequent rise in the share of small and marginal holdings in the country as a whole. Cultivators with small and marginal farms work for a major part of the year as agricultural labourers and get counted as casual farm labourers in terms of the status of their activity. The growth of small and marginal land holdings has raised the proportion of persons who report casual labour as their status in major activity (Visaria 1996: 738). It may be added, in this context, that the rise to prominence of small and marginal land holdings over the years cannot be attributed to the ill-effects of economic reforms implemented during the 1990s. The Planning Commission’s task force on employment opportunities (2001) had estimated that as much as 53 per cent of the total workforce in all the sectors was engaged in self-employment in 1999–2000. The proportion was higher at 56 per cent in rural areas. In urban areas, even though this percentage was smaller, it was still as high as 42 per cent. As the task force rightly emphasises, self employment covers a wide spectrum of economic activities with high income professional services such as doctors, lawyers, consultants, architects etc. at one end and selfemployment activities involving much lower levels of skills and incomes,

605 586 579 550

1983 (38) 1981–88 (43) 1993–94 (50) 1999–2000 (55)

103 100 83 88

Male Regu. empl.

292 314 338 362

Casual empl.

Rural

619 608 585 573

Self empl. 28 37 28 31

Female Regu. empl. 353 355 387 396

Casual empl. 409 417 417 415

Self empl. 437 437 421 417

Male Regu. empl. 154 146 162 168

Casual empl.

458 471 454 453

Self empl.

Urban

258 275 286 333

Female Regu. empl.

284 254 162 214

Casual empl.

Source: Government of India, National Sample Survey Organisation: NSS 55th round (July 1999–June 2000), Key Results, December 2000, Table 10, p. 24.

Self empl.

Year and NSS round

Table 2.9 Per 1,000 distribution of usually employed (PS+SS) by category of employment in different NSS rounds

40 EMPLOYMENT AND UNEMPLOYMENT IN INDIA

TRENDS IN EMPLOYMENT

41

e.g., certain types of khadi and handloom production, village and tiny industries, and traditional services such as barbers, artisans, craftsmen and small retail outlets, at the other end. In the view of the task force on employment opportunities, selfemployment in the urban areas will remain a very important source for growth of employment in future. Such a view is broadly in line with the patterns observed in most developing countries. Self-employment is particularly important for women in urban areas as this type of employment is often well-suited to the needs of a large section of women workers. As female participation in the workforce increases in future, growth of self employment opportunities will be an important factor matching employment possibilities with employment needs. However, there is need for caution. Self-employment requires access to capital and entrepreneurial skill; this implies that many forms of selfemployment may not be well-suited to meet the employment needs of the lowest income groups which are likely to continue to heavily seek wage employment. Between 1983 and 1999–2000 the proportion of regular employees increased significantly among urban female workers and to a lesser extent among rural female workers, from 25.8 to 33.3 per cent, and from 2.8 to 3.1 per cent respectively. On the other hand, the proportion of regular workers among male employees registered a sharp fall during the same period—from 10.3 to 8.8 per cent for rural males and from 43.7 to 41.7 per cent for urban males. It has been pointed out that the lower growth of public sector employment during the post-reform period was the main reason for the deceleration in the growth of regular employment of males. According to one estimate, the growth rate of regular public sector jobs fell from almost 5 per cent per annum during 1977–88 to less than 1 per cent per annum during 1987–94 (Sen 1998: 81). The sharp deceleration in the growth of rural non-agricultural employment was caused by (i) a decline in public works; and (ii) a major slow down in the rate of regular job creation in the public sector. It was earlier noted that the share of regular employees among women increased, especially in urban areas. However, according to some observers, it would be a mistake to interpret this as reflecting a process of absorption of women in the formal sector (Kundu 1999: 68). Kundu has argued that according to the NSS definition, ‘regular workers’ include persons engaged on a regular contractual basis even within the informal

42

EMPLOYMENT AND UNEMPLOYMENT IN INDIA

sector at low wages such as domestic servants and helpers of petty traders. An increasing percentage of regular workers need not, therefore, necessarily suggest higher wages and better working conditions for women. Looking at the economy as a whole, it is seen that the share of regular salaried/wage employment has fluctuated marginally around 14 per cent. It is much higher in urban areas at around 40 per cent and lower in rural areas at around 7 per cent (Planning Commission of India 2001: 38). The proportion of casual employment increased from 29.7 per cent of rural employment in 1977–78 to 37.3 per cent in 1999–2000. The share of casual labour in urban employment has fluctuated over the past five decades; it increased from 16.9 per cent in 1987–88 to 18.3 per cent in 1993–94 but then declined to 17.8 per cent in 1999–2000 (Planning Commission of India 2001: 38–40). The proportion of rural male workers in casual employment increased from 29.2 per cent in 1983 to 36.2 per cent in 1999–2000; in the case of rural female workers, the proportion increased from 35.3 per cent to 39.6 per cent during the same period. In sharp contrast to rural labour, male and female, it is seen that the prevalence of casual employment is distinctly lower for urban labour. While the proportion of casual labour among urban males increased from 15.4 per cent in 1983 to 16.8 per cent in 1999–2000, the share of urban females declined from 28.4 to 21.4 per cent during the same period. However, during the post-reform period, the share of casual employment among urban males increased from 16.2 to 16.8 per cent and that among urban females increased from 16.2 to 21.4 per cent during 1993–94 to 1999–2000. A major factor leading to casualisation of rural labour has already been referred to. According to this explanation, cultivators with small and marginal holdings work for a major part of the year as agricultural labourers and get counted as casual labourers in terms of the status of their major activity. It is evident from Table 2.9 that casual labour is more prevalent among female workers than among male workers; it is also more widespread among rural rather than urban workers. The increase in the share of casual employment is often regarded as an indication of a deterioration in the quality of employment, since casual employment is not associated with job security or other benefits. However, it is worth noting that the increase in the share of casual labour during the 1990s was associated

43

TRENDS IN EMPLOYMENT

with a significant acceleration in the growth of real wages as pointed out by the task force on employment opportunities. Table 2.10 Growth of average daily wage earnings in 1993–94 prices in rural India Rural males 1987–88 to 1993–94 to 1993–94 1999–2000 Public works Casual labour in agriculture Casual labour in non-agriculture Casual labour in all activities

1.55 1.36 1.33 0.77

3.83 2.80 3.70 3.59

Rural females 1987–88 to 1993–94 to 1993–94 1999–2000 1.90 2.34 1.32 1.95

5.04 2.94 5.07 3.19

Source: Planning Commission: Report of the Task Force on Employment Opportunities, New Delhi 2001, Table 2.16, p. 40.

It may be noted that the rate of growth of average daily wages during the second period (1993–94 to 1999–2000) was much more rapid than during the first (1987–88 to 1993–94). This suggests that although casual labour became more widespread, the process was accompanied by a sufficient growth of productivity to permit growth in real wages. It is, therefore, evident that to the extent that growth of casual labour involves a movement of workers from subsistence agriculture or other low productivity occupations, to casual (yet substantial) employment in the more productive and to more remunerative sectors and occupations, such shifts cannot necessarily be viewed as a deterioration in the quality of employment (Papola and Sharma 1999: 8).

Rural Non-farm Employment Given the slow growth of agricultural employment, interest has shifted to the role of non-agriculture in rural employment. There was a sharp deceleration in the growth of rural non-farm employment during 1987–94 with an actual fall in absolute terms after 1990. After 1990, not only was a rapid growth of non-agricultural employment halted but significant decline in the magnitudes in such employment followed in 1991 and 1992. Some recovery occurred only in 1993–94. There was deceleration

44

EMPLOYMENT AND UNEMPLOYMENT IN INDIA

of growth rate during 1987–94 for all type of non-agricultural employment and an absolute decline in the case of casual non-agricultural employment, which had been the fastest growing segment during 1977–88. A major reason for the collapse of casual non-agricultural employment opportunities was the decline in employment under public works from 3.6 million in 1987–88 to 1.3 million in 1993–94 (Sen 1998: 81). Two principal causes for the sharp deceleration in the growth of rural nonagricultural employment were (i) a decline in public works and a major slow down in the rate of regular job creation by the public sector as a whole; and (ii) a very sharp deceleration in the rate of creation of employment opportunities in the rural casual non-agricultural labour market by the private sector (Sen 1998: 82). From the discussion of the results of the NSS rounds 1983 to 1999– 2000 (quinquennial surveys), the conclusion emerges that between rural agricultural and rural non-agricultural employment, rural non-agricultural employment has been growing at a much higher rate. However, there has been a deceleration in this growth rate as shown in Table 2.11. Table 2.11 Growth of rural employment—agricultural and non-agricultural (UPSS), NSS rounds 1983 to 1999–2000

Sector Rural agricultural Rural non-agricultural Rural non-agricultural Male Female

Employment workers (million) 1983 1993–94 1999–2000

Annual growth rate (percentage) 1983 to 1993–94 to 1993–94 1999–2000

194.190 44.200

231.681 63.804

232.075 72.647

1.695 3.556

0.028 2.187

38.390 10.810

49.096 14.708

57.003 15.644

3.740 2.520

2.520 1.034

Source: Earlier tables.

The annual growth rate of rural non-agricultural employment declined from 3.56 to 2.19 per cent during the period between 1983 to 1993–94 and 1993–94 to 1999–2000. However, the decline in employment was sharper in the case of female workers. While the annual rate of growth of male employment decreased from 3.74 to 2.52 per cent between the two periods 1983 to 1993–94 and 1993–94 to 1999–2000, that of female

TRENDS IN EMPLOYMENT

45

employment fell from 2.52 to 1.03 per cent during the same period. It is this trend which has prompted some experts to observe that ‘for all that one can anticipate for the future job markets, the non-agricultural sectors are sure to pose more severe difficulties for the rural female workers. For jobs in the modern industrial sector that would percolate to the countryside, the rural males would always have an edge over the female largely because of their superior educational and skill attainments’ (Chadha 1999: 148). The same author has gone on to assert strongly that ‘whatever way one may look at the impending impact of economic reforms, including the urge to gain industrial competitiveness in the global context, it is for sure that the rural workforce in India, more certainly the female partners among them, is not yet ripe enough to take up more specialised and skill-oriented industrial jobs’. As for the setback experienced in employment in the services sector, it is seen that employment declined from 40.318 million in 1993–94 to 38.114 million in 1999–2000. This is quite surprising as there exists a strong presumption that the tertiary sector has been fast expanding. It will be noted that the services sector consists of two sub-groups, (i) finance, insurance, real estate and business services; and (ii) community, social and personal services (sometimes also referred to as public administration, education, health care and community services). While the number of workers employed in finance, insurance, real estate and business services’ increased from 3.692 million in 1993–94 to 4.952 million in 1999–2000, employment in community, social and personal services decreased from 36.627 million to 33.162 million during the same period as shown in Table 2.12. As more than 90 per cent of the employment in the services sector is accounted for by community, social and personal services, any fall in employment in this sub-group is most likely to result in a reduction in employment in the entire services sector even while it is accompanied by a fairly substantial proportional increase in employment in finance, insurance, real estate and business services. While employment of females—urban as well as rural—registered a marginal rise in employment in community, social and personal services during the period 1993–94 to 1999–2000, employment of males—urban and rural—showed a fairly large decline, from 12.511 to 11.122 million in respect to rural males, and from 14.849 to 12.456 million in the case of urban males. We do not have any clues as to the causes for this change.

46

EMPLOYMENT AND UNEMPLOYMENT IN INDIA Table 2.12 Growth of employment in the ‘services’ sector, 1993–94 to 1999–2000 (in millions) 1993–94

1999–2000

0.758 0.106 2.497 0.331 3.692

0.993 0.106 3.397 0.456 4.952

II. Community, Social and Personal Services Rural male Rural female Urban male Urban female Total

12.511 3.492 14.849 5.774 36.626

11.122 3.805 12.456 5.779 33.162

III. Total Employment in the Service Sector (I+II)

40.318

38.114

I. Finance, Insurance, Real Estate and Business Services Rural male Rural female Urban male Urban female Total

Source: (1) Employment and Unemployment in India, Fifth Quinquennial Survey, NSS 50th Round, March 1997, Table 6.7.2. (2) Employment and Unemployment Situation in India, 1999–2000, Part I, NSS 55th Round, May 2001.

The annual rate of growth of employment in manufacturing declined, as shown in Table 2.10, from 2.24 per cent during 1993–94 to 1.39 per cent during 1999–2000. This fall is attributed to a relatively slow growth of employment in the organised manufacturing sector. As pointed out earlier, most of the employment in manufacturing industry is in the organised sector. Why has the organised manufacturing industry undergone a steep decline in the growth rate of employment? According to one explanation, this decline is primarily due to the technological change in individual industry groups. The manufacturing industry seems to have become more capital-intensive in the wake of modernisation and the emergence of high technology segments. Compulsions of international competition are likely to further reduce employment intensity partially because of the need for cost reduction, but mostly because of the need for improving the quality of the products. The organised manufacturing sector is thus not likely to significantly contribute to employment generation (Papola 1991: 5–7). Among the industries which accounted for substantial increase in employment during 1983 to 1993–94 and 1993–94 to 1999–2000, three

TRENDS IN EMPLOYMENT

47

industries stand out, namely: (i) construction (ii) trade, hotels and restaurants; and (iii) transport, storage and communications. In fact, all three have consistently maintained high employment growth rates (Table 2.10). Construction has led the rest with an annual growth rate of employment of 5.95 per cent during 1983–1994 and 6.14 per cent during 1994–2000.

Organised versus Unorganised Sector Employment According to the Report of the Task Force on Employment Opportunities (Planning Commission of India 2001) much of the concern about the lack of employment opportunities reflects a strong preference for employment in the organised sector which usually refers to employment in the government and in establishments employing more than 10 persons. These jobs typically provide much higher levels of wages than jobs in the unorganised or informal sector and also provide much higher levels of job security and other benefits. It is noteworthy that the wage rates for lower-skill categories in government service are significantly higher than could be earned even in the private organised sector for similar levels of skills and that the level of job security is virtually infinite. The main source of data on employment in the organised sector is the employment market information (EMI) programme of the Ministry of Labour which compiles data based on returns submitted by establishments employing more than 10 persons. According to the available information, organised sector employment in 1999 was only 28.11 million or about 7 per cent of the total employment in the economy. Furthermore, as much as 19.41 million or over two-thirds of total organised sector employment was in the public sector (Planning Commission of India 2001: 32). It is possible that the EMI data under estimate the size of organised private sector employment because the EMI system is based on returns that are voluntary for establishments employing between 10 and 25 workers and mandatory for only those above that level. It appears that estimates based on the data from the Annual Survey of Industries (ASI) are more reliable than those provided by EMI. However, as pointed out by the task force of the Planning Commission, even if

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the EMI estimates of the share of employment in the organised sector are revised upwards, the size of the organised sector in total employment would still be below 10 per cent. A major reason why the share of the organised sector in total employment is relatively small is the predominance of agriculture in the economy, which provides little organised sector employment. However, agriculture is not the only sector known for the lack of organised sector employment. Even manufacturing is no exception. It is pointed out that as much as 86 per cent of the employment generated in manufacturing is still in the unorganised sector (Planning Commission of India 2001: 34). Table 2.13 Trends in organised sector employment (UPSS) Employment Growth rate (million) (per annum) 1988 1994 1999–2000 1983–94 1994–2000

Sector

1983

Organised sector employment Of which public sector private sector

24.01 25.71 16.46 18.32 7.55 7.39

27.37 19.44 7.93

28.11 19.41 8.70

1.20 1.52 0.45

0.53 –0.03 1.87

Source: Planning Commission, Report of the Task Force on Employment Opportunities, 2001, p.35.

Trends in organised sector employment as revealed by Table 2.13 show that organised sector employment is decelerating. It grew only at 1.20 per cent per annum during 1983–1994 but then slowed down further to 0.53 per cent per annum between 1994 and 2000. It is, however, important to note that the deceleration was entirely due to the slowdown in employment in the public sector from an annual growth rate of 1.52 per cent between 1983 and 1994 to a negative growth of –0.03 per cent during 1994–2000. In sharp contrast, the trend in the organised private sector was the reverse. It had grown by only 0.45 per cent per year between 1983 and 1994 but accelerated to an annual rate of 1.87 per cent between 1994 and 2000. It is important to recognise that public sector employment is unlikely to accelerate in the future as both central and state governments are already burdened with excess staff and both face severe financial constraints which would eventually lead to downsizing in the government. Employment in public sector enterprises is also unlikely to expand as most public sector undertakings are considerably over-staffed. In fact,

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49

as the task force on employment opportunities rightly points out, the very survival of public sector undertakings in the more competitive economic environment depends on their being able to trim excess labour. Rapid expansion of organised sector employment in the future, therefore, depends crucially upon employment growth in the private sector. The experience of the 1990s does show higher growth in organised sector employment in the private sector. However, this growth needs to be accelerated substantially if it is to offset the continued stagnation in public sector employment and generate higher growth in total organised sector employment. This clearly depends upon the rate of growth of the economy as a whole and the growth rate of the organised sector within the total.

Elasticity of Employment Before we conclude our discussion on the growth of employment in the Indian economy during the post-reform period, a brief reference may be made to the elasticity of employment. Elasticity of employment indicates the percentage growth in total employment (or sectoral employment) to be expected from a one per cent growth in GDP (or GDP in individual sectors). Employment elasticities are typically expected to be lower than unity because productivity per person employed is expected to increase over time, a proposition which implies that employment increases proportionately lower than output. Since productivity per person employed is an important determinant of wage rate and therefore the quality of employment, it is important to recognise that higher employment elasticities are not necessarily the best way of achieving employment objectives. Ideally what is required is a growth rate of GDP high enough to allow employment to expand while also allowing for growth in productivity to ensure rising real wages and growth of income per person employed in self-employment (Planning Commission of India 2001: 44). According to one view, under Indian conditions, what should be aimed for is an ‘all sectors’ elasticity of the order of 0.5 to 0.6 (Bhalla 1998: 28). In Table 2.14, we present the planning commission’s estimates of employment elasticities for the major sectors of the economy and also

50

EMPLOYMENT AND UNEMPLOYMENT IN INDIA Table 2.14 Elasticity of employment to GDP by sector

Sector

1983 to 1993–94

1. Agriculture 2. Mining and quarrying 3. Manufacturing 4. Electricity 5. Construction 6. Whole and retail trade 7. Transport, storage and construction 8. Finance, real estate, insurance and business services 9. Community, social and personal services All sectors

Estimated elasticities 1993–94 to Elasticity of employment 1999–2000 projected for the future

0.50 0.69 0.33 0.52 1.00 0.63 0.49

0.00 0.00 0.26 0.00 1.00 0.55 0.69

0.10 0.00 0.22 0.00 0.60 0.50 0.40

0.92 0.50 0.41

0.73 0.07 0.15

0.50 0.30 0.22

Source: Planning Commission, ‘Report of the Task Force on Employment Opportunities’, 2001, p. 46. Note: Manufacturing includes workers engaged in repair services.

for the economy as a whole, based on data on employment growth and GDP growth for three different periods spanning the past two decades. The low employment elasticity during the 1990s reflects the fact that employment growth decelerated in this period while GDP growth accelerated. The planning commission has adopted a set of employment elasticities (Table 2.14) for projecting future employment. The rationale for their choice is as follows (Planning Commission of India: 2001 48–49). 1. Although employment elasticity in agriculture was zero during the period 1993–94 to 1999–2000, the Planning Commission has assumed a small positive elasticity of 0.1 for the future primarily because a structural shift towards non-cereal agriculture which is more labour-using is expected in the future. The elasticity value projected, however, is very low because productivity in this sector is relatively low due to the large-scale prevalence of underemployment. 2. Employment elasticities have been assumed to be zero in mining and quarrying, and in electricity. These are sectors in which there is much over-manning at present reflecting the dominance of public sector enterprises and in which rationalisation of the labour force size is unavoidable. Keeping total employment constant in these sectors would enable the absorption of the excess labour by expansion of these sectors over the next ten years.

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3. The elasticity of employment in manufacturing assumed to be 0.22 by the planning commission, is slightly lower than the 0.26 observed during the period 1993–94 to 1999–2000. Such a reduction is justified, according to the Planning Commission, because liberalisation has accelerated the process of technological modernisation and industrial restructuring. However, the decline in the assumed elasticity of employment in manufacturing is kept at a moderate level because, according to the forecast of the Planning Commission, manufacturing growth in the future would involve a shift away from the highly capital-intensive industries towards more labour-using industries. 4. Elasticities for other sectors are projected on the basis of expected further decline. The only exception is community, social and personal services which showed an employment elasticity of only 0.07 during the period 1993–94 to 1999–2000. This category includes public administration and defence where growth in employment may well be zero or even negative; it also includes health and education services which would certainly need to expand and are likely to generate considerable additional employment. An employment elasticity of 0.30 has, therefore, been assumed for this sector.

The Planning Commission has also made alternative projections for employment in the period 2002–03 to 2011–12 using three additional assumptions about the rate of growth, namely (i) a base line scenario in which GDP grows at 6.5 per cent; (ii) a high growth scenario with GDP growth at 8 per cent; and (iii) a rapid growth scenario with GDP growth rate at 9 per cent. As of now, the first assumption seems to be the more realistic. We shall, however, not delve deeper into the merits of this exercise since the focus of the present study is not total employment as such but rather the nature and composition of employment and the effect of growth on the different players during the immediate postreform period.

Summary and Conclusions The decline in the worker-population ratio in all the four population segments during the post-reform period has been due to a rise in the student-population ratio, particularly among rural girls. Reforms had a very positive impact on urban female employment in the tertiary sector; however female workers still depend on agriculture to a much greater extent than males.

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EMPLOYMENT AND UNEMPLOYMENT IN INDIA

Trade, hotels and restaurants have emerged as the major avenues of employment for males as well as for females, both rural and urban. The fall in the annual rate of growth of employment during the postreform period was due to the slower growth of employment in two major sectors, namely agriculture and services. The proportion of the self-employed declined in all the four population segments, but more strikingly in the rural sector. The lower rate of growth of public sector employment has been the main reason for the deceleration in the growth of regular employment. The share of casual employment has gone up for all the four population segments. Casual labour is more prevalent among female than among male workers; it is also more widespread among rural than among urban workers.

Chapter Three

Unemployment and Underemployment

Introduction In the previous chapter we had a fairly detailed discussion of the levels and growth, structure and distribution, and status of employment in the Indian economy during the post-reform period, with special reference to all the four segments of the population based on gender, and location of residence; namely rural male, rural female, urban male and urban female. We now proceed to examine the unemployment and underemployment situation during the period. While employment is measured by worker-population ratios, unemployment is indicated by the ratio of the unemployed to the labour force. Corresponding to the three measures of employment used by the NSS, three measures of unemployment capture the different facets of unemployment: (i) the number of persons usually unemployed based on ‘usual status’ classification; (ii) the number of persons, unemployed on an average in a week, based on ‘weekly status’ classification; and (iii) the number of person-days unemployed on an average based on ‘daily status’ classification. These and related concepts are explained in the appendix.

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EMPLOYMENT AND UNEMPLOYMENT IN INDIA

The present chapter is organised in the following order: Section I presents a broad comparison of unemployment rates in the Indian economy during the pre-reform and the post-reform periods. Section II examines the unemployment rates of the educated. A related issue, that of the unemployment rates of the youth, is addressed in Section III. The manner in which the unemployment scenario changes when the criterion of education is combined with age composition of the work seekers, is the theme of Section IV. Section V and VI deal with visible and invisible underemployment respectively. Section VII presents the main findings of the decision.

Unemployment Rates in the Indian Economy during the pre-Reform and post-Reform Periods Unemployment Rate We present in Table 3.1 the unemployment rates according to three recent quinquennial surveys of the National Sample Survey Organisation. It may be noted that we have excluded the 43rd round (1987–88) from Table 3.1 Unemployment rates during 1983 to 1999–2000 in different NSS rounds Unemployment rate NSS round and year

Male US US(adjusted ) CWS

Rural 38 (1983) 50 (1993–94) 55 (1999–2000)

21 20 21

14 14 17

37 31 39

75 56 72

14 13 15

7 9 10

43 29 37

90 56 70

Urban 38 (1983) 50 (1993–94) 55 (1999–2000)

59 54 48

51 41 45

67 52 56

92 67 73

69 83 71

49 61 57

75 79 73

110 104 94

CDS

Female US US(adjusted ) CWS CDS

Source: NSSO, Employment and Unemployment in India 1999–2000, Key Results, 2000, Table 14, p. 28.

UNEMPLOYMENT AND UNDEREMPLOYMENT

55

our review since 1987–88 was not a normal year (the year was characterised by a major drought). Unemployment rate is defined by the NSSO as the number of persons unemployed per 1,000 persons in the labour force (which includes the employed and the unemployed). On the basis of Table 3.1 a comparison of unemployment rates in 1983 and 1993–94 is attempted. It is observed that between rural and urban unemployment rates, urban rates were much higher than rural rates. Similarly it is also noted that unemployment rates of females were significantly higher than those of males, with the sole exception of US (adjusted) rate of unemployment. It is seen that compared to 1983, there was a fall in 1993–94 in unemployment rates for rural males as well as for rural females in terms of all the four measures except US (adjusted) which showed a slight increase in the unemployment rate of females. For urban males the trend was also the same during this period. However, for urban females the situation in 1993–94 was distinctly different from what it had been during 1983. All the four measures of unemployment with the sole exception of CDS (which declined from 110 to 104) showed higher rates in 1993–94 than in 1983. According to CDS— which has been accepted as the most inclusive rate of unemployment— the rate of unemployment had fallen during 1983 to 1993–94, for all the four population segments. Turning to the period between 1993–94 and 1999–2000, which may be treated as the post-reform period, it is seen from Table 3.1 that in the rural sector there has been a fairly sharp rise in the unemployment rates of males as well as of females, according to all the four measures the CDS showing the highest rate of increase. However, for the urban population a marked contrast existed between males and females. While the unemployment rate of females fell in terms of all the four measures, that of males underwent an increase in terms of all measures except usual status. As already noted, current daily status (CDS) unemployment rate is a widely accepted measure of open unemployment. At the all-India level, CDS was worsening over the 1990s in three out of the four population segments, with urban women as the sole exception. The rate of increase in the daily status unemployment was the highest for rural males (29 per cent) followed by unemployment of rural females (25 per cent). For urban males, the CDS unemployment rate showed an increase of

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EMPLOYMENT AND UNEMPLOYMENT IN INDIA

only 9 per cent. According to some observers, the increase in the unemployment rate for rural males has to be seen in the context of the rise in the share of casual labour from 338 to 362 per 1,000 of the usually employed (principal plus subsidiary status) and a decline in the share of the self-employed among rural male workers on usual status (principal plus subsidiary) basis from 577 to 550 per 1,000 during the period 1993–94 to 1999–2000. Given that the daily status unemployment rate captures unemployment among casual labourers better than that among the selfemployed (often characterised by ‘work spreading’), the rise in the daily status unemployment rate among rural males could well be due to the change in the status-composition of the workforce (cited by Sundaram 2001: 936).

Unemployment Rates among the Educated Unemployment Rate among the Educated The educated are persons who have attained an educational level of secondary school or above. Normally one can attain this level at the age of 15 years or above. The NSSO has, therefore, restricted the study of the educated to persons of age 15 years and above. A striking feature of the results of the 50th and 55th NSS rounds relating to the rate of unemployment of the educated is that the rate has been higher for females than for males. This observation is valid for all the four population segments. Among graduates and higher categories, the disparity was even more glaring. Over the 1990s, the rate of unemployment among the ‘secondary and above’ category generally fell. However, the ‘graduate and above’ level of education presented a different picture. While the rate of unemployment (per thousand) in the ‘graduate and above’ category among rural females increased from 274 to 298, that among urban females showed a decline from 189 to 147. Further, in the same category, there was a slight increase in the unemployment rate of urban males from 56 to 63 (per thousand). A probable explanation for the higher rate of unemployment among rural female graduates is that non-farm employment opportunities, as explained earlier, declined since the advent of

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the reforms, while it is likely that the slight increase in the unemployment rate of urban male graduates was due to the stiffer competition from urban females with similar qualifications. With further opening up of the economy and the parallel modernisation process, women began to compete with men having identical qualifications with greater success. At the same time, it is important to note that the level of unemployment among the ‘graduates and above’ category of urban males was of a very low magnitude, as may be seen from Table 3.2. Table 3.2 Unemployment rates (usual adjusted) of the educated of age 15 years and above Sector and NSS round Rural: 50th 55th Urban: 50th 55th

Secondary and above Male Female round round round round

65 56 60 62

160 146 182 143

Graduate and above Male Female 98 82 56 63

274 298 189 147

Source: NSSO, Employment and Unemployment Situation in India 1999–2000, Part I, NSS 55th round, May 2001, Table 7.4, p. 132.

Unemployment Rates of the Youth In India persons aged 15–29 years, who are considered ‘youth’, account for 25 to 29 per cent of the population. According to the 2001 census, persons in this age group formed 26.58 per cent of the total population of 1,028.61 million. A substantial proportion of them attain some low levels of education and enter the labour market. Given that the Indian economy is a labour-surplus economy, many of the youth remain unemployed and continue to look for employment opportunities. Table 3.3 presents the unemployment rates (per 1,000) among them for the four population segments at the all-India level. It may be pointed out that for the purpose of the present discussion only two measures of unemployment, U.S. (adjusted) and CDS are used in Table 3.3. It is seen that (i ) the unemployment rate was much higher among the youth compared to that in the overall population (see Table 3.1); (ii) the rate of unemployment was higher for the urban

58

EMPLOYMENT AND UNEMPLOYMENT IN INDIA Table 3.3 Unemployment rates (usual adjusted) among the youth (15–29 Years)

NSS round and year 50 (1993–94) 55 (1999–2000)

Rural Male Female US (adj) CDS US (adj) CDS 35 43

90 111

19 27

76 106

Urban Male Female US (adj) CDS US (adj) CDS 96 108

137 147

150 139

212 191

Source: NSSO, Employment and Unemployment Situation in India 1999–2000, Part I, NSS 55th round, May 2001, Table 7.5, p.134.

youth than for the rural youth; and (iii) compared to female youth, unemployment rate for the male youth was higher for the rural population but lower for the urban population. The most significant finding arising from Table 3.3, however, is that over the 1990s unemployment rates among the youth have increased for all population segments except urban females for whom, there happened a decrease ranging from 7.3 per cent according to the usual status (adjusted) approach and 9.9 per cent according to the current daily status approach. It will be recalled that during the period between 1993–94 and 1999–2000 there was a fall in the unemployment rate of the entire urban female category regardless of age. The present finding regarding the fall in the unemployment rate of the urban female youth should not, therefore, be surprising. Further, the reality that female unemployment rates are significantly higher than male unemployment rates irrespective of the measure adopted, should not be lost sight of. Undoubtedly, the difference has narrowed down over time and was almost completely eliminated in the rural sector by 1999–2000 (see Table 3.1). As the number of women entering the labour force is very likely to increase, especially in the urban areas, it is pointed out that employment policy in future would have to pay special attention to creation of employment opportunities for women in urban areas. Higher unemployment rates among the younger age groups reflect the phenomenon that new entrants into the labour force, except those from the lowest income groups, are more likely to wait until they find a job which matches their aspirations. The extent of the mismatch between jobs available and the job preferences of the aspirants is best captured by the level of unemployment rate among the youth (Planning Commission of India 2001: 26).

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UNEMPLOYMENT AND UNDEREMPLOYMENT

Criterion of Education Combined with Age The mismatch referred to previously emerges in a more glaring manner when the criterion of education is combined with the age composition of the work seekers. As shown in Table 3.4, the unemployment rate for the educated (secondary and above) in the age group 15–29 in 1993–94 was as high as 18.5 per cent. Table 3.4 Unemployment rates (usual status) among educated youth (per cent)

Year

Secondary education and above Rural Urban Combined

All types of technical education Rural Urban Combined

1983 1993–94 1999–2000

20.4 17.0 12.5

25.0 29.0 22.8

30.0 20.8 18.3

20.2 18.5 14.8

23.9 25.9 24.5

24.4 27.3 23.7

Source: Planning Commission: Report of the Task Force on Employment Opportunities, 2001, Table 2.9, p. 29. Note: Technical education consists of additional diploma or certificates in agriculture, Engineering/technology, medicine, crafts and other subjects.

If the focus of attention is persons in the age group 15–29 who have also undergone some form of technical education, the unemployment rate is seen to have been even higher at 27.3 per cent in 1993–94. However, according to the NSSO, the incidence of unemployment among educated youth in terms of both general and technical education declined sharply between 1993–94 and 1999–2000. Unemployment rates for educated youth in 1999–2000 were still high at 14.8 per cent for secondary education and above, and 23.7 per cent for all types of technical education; but both the rates were significantly lower than in earlier years. The educated youth face high unemployment because their aspirations are high; they do not just want to take up whatever employment that is available. The problem can be solved only if high quality employment is created (Planning Commission of India 2001: 28–29).

Unemployment by Income Level Using NSS data, the Planning Commission’s task force on employment opportunities examined the incidence of unemployment among different

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sections of the labour force according to the per capita consumption class of their households. It was observed that the lower consumption groups showed lower unemployment rates on the basis of US (adjusted) measure; but the pattern is reversed according to the CDS approach. According to the task force, this difference reflects two features of the labour force in the lower income groups: (i) The lower consumption groups obviously constitute the poorer sections of the population, the majority of them consisting also of lesser educated or illiterate persons. Their survival instinct makes them the least choosy in the matter of gainful employment and their poverty makes it impossible for them to wait indefinitely for appropriate work to become available. They are, therefore, likely to take up any work that becomes available even if it is the least attractive in the normal, conventional sense. This explains their lower rate of unemployment on the US (adjusted) measure. (ii) The nature of employment that they get makes them more vulnerable to the uncertainties of labour demand in the market for casual labour. They always have to be on the look out for work literally on a day-to-day basis with no assurance of the outcome. This is what results in the higher rate of unemployment on the CDS measure, which clearly brings out the intensity of unemployment (Planning Commission of India 2001: 29).

Underemployment Visible and Invisible Underemployment Some of the persons categorised as usually employed may not have work throughout the year due to seasonality in work or other factors. Such persons are, therefore, considered underemployed. Their underemployment is termed visible underemployment if they report themselves to be available for work with respect to a shorter reference period. The NSS measures visible underemployment by cross-classifying persons by (i) their usual and current weekly statuses; (ii) their usual and current daily statuses; and (iii) their current weekly and current daily statuses. Some employed persons, especially the self-employed, may appear to work throughout the year. But the work they are pursuing may not fully meet their needs in terms of generating sufficient income (e.g., owner cultivators of tiny holdings). If opportunities are available, such persons

UNEMPLOYMENT AND UNDEREMPLOYMENT

61

may opt for additional and/or alternative work. Such underemployment is termed invisible underemployment and is not directly measurable. The NSS calculates invisible underemployment through a set of indications arrived at through probing questions addressed to persons categorised as usually employed on their availability for additional/alternative work and reasons for seeking such additional/alternative work, status of their present employment, etc. (Invisible underemployment is discussed in Section VII).

Visible Underemployment: Underemployment among the Usually Employed Usually Employed found to be not Employed during the Week Preceding the Date of Survey As pointed out earlier, some persons categorised as usually employed might not have work throughout the year. They might remain without work during some weeks of the year or go without work on some days of the different weeks of the year. The first dimension is brought out through the distribution of the usually employed by their current weekly status. Table 3.5 gives the relevant all-India results for usually employed persons (usually employed in both the principal and subsidiary status) for 1999–2000. Corresponding results based on the NSS 50th (1993–94) and 43rd (1987–88) rounds are also presented in the table. It is seen from Table 3.5 that the proportion of the usually employed who were found to be not employed during the week preceding the date of survey, declined gradually during the period 1987–88 to 1999–2000. While for females the decline was less between 1993–94 and 1999–2000, for males the rate of underemployment remained almost the same between 1993–94 and 1999–2000 (after having declined between 1987–88 and 1993–94). Further, the problem of underemployment is seen to have been more serious among the usually employed females than among the usually employed males and more in rural than in urban areas. During 1999–2000, underemployment among usually employed females was 17 per cent in rural India and 10 per cent in urban India (unemployed + not in labour force). The corresponding percentages for the usually employed males were 4 and 2 only. Most of the usually employed females

957 15 28 1,000

Employed 956 Unemployed 22 Not in labour force 22 All 1,000

931 23 46 1,000

(4) 832 21 148 1,000

(5) 807 14 179 1,000

(6) 675 8 317 1,000

(7) 977 11 12 1,000

(8) 976 11 12 1,000

(9)

Male 1987–88 1999–2000 1993–94

967 17 16 1,000

(10)

900 9 91 1,000

(11)

884 9 107 1,000

(12)

Female 1987–88 1999–2000 1993–94

Urban

Source: NSSO, Employment and Unemployment Situation in India 1999–2000, Part I, NSS 55th round, 2001, Table 8.1, p. 155.

(3)

Rural Male Female 1999–2000 1993–94 1987–88 1999–2000 1993–94

(2)

(1)

Current weekly status

Table 3.5 Per 1,000 distribution of usually employed (PS+SS) by their broad current weekly status

768 17 215 1,000

(13)

1987–88

62 EMPLOYMENT AND UNEMPLOYMENT IN INDIA

UNEMPLOYMENT AND UNDEREMPLOYMENT

63

who were currently not working withdrew from the labour force and did not report themselves as currently unemployed.

Usually Employed Found to be not Employed during Different Days within the Reference Week The activity pattern of the usually employed during different days within the reference week is indicated by the distribution of their days by current daily status. The relevant results for rural and urban India are presented in Table 3.6. It is observed that the proportion of person-days of the usually employed utilised for work was quite low for females as compared to males throughout the period 1987–88 to 1999–2000. During 1999–2000 the proportion was 68 per cent and 79 per cent for females in rural and urban India respectively as against 90 and 94 per cent for males in rural and urban India respectively. As already noted, when work is not available, a large proportion of females withdraw from the labour force rather than report themselves as unemployed.

Underemployment of Persons Categorised as Working according to Current Weekly Status but not Working for the Entire Week Some persons classified as working during a week might not have been working for the entire week. The distribution of persons working according to current weekly status by their current daily status, therefore, would indicate the proportion of person-days on which they had remained without work. As shown in Table 3.7, in 1999–2000 the percentage of person-days on which persons with some work during the reference week (according to weekly status) were without work (underemployed) was estimated at about 6.4 for rural males and 19.2 for rural females, 3.7 for urban males and 12.7 for urban females. It may be noted that between 1987–88 and 1999–2000, in rural areas, the proportion of unemployed days showed a rising trend for both males and females, the increase being lower between 1993–94 and 1999–2000. This indicates that during the postreform period the rate of growth of underemployment in rural India had slowed down compared to the pre-reform period. For urban females the proportion rose between the period 1987–88 and 1993–94 and then

909 40 51 1,000

Employed 897 Unemployed 53 Not in labour force 51 All 1,000

926 27 47 1,000

(4) 676 41 283 1,000

(5) 663 30 306 1,000

(6)

Female 1987–88 1999–2000 1993–94

Rural

638 26 336 1,000

(7) 942 27 31 1,000

(8) 949 27 25 1,000

(9)

Male 1987–88 1999–2000 1993–94

938 37 25 1,000

(10)

791 22 187 1,000

(11)

766 24 210 1,000

(12)

Female 1987–88 1999–2000 1993–94

Urban

Source: NSSO, Employment and Unemployment Situation in India 1999–2000, Part I, NSS 55th round, 2001, Table 8.2, p. 155.

(3)

Male 1999–2000 1993–94

(2)

(1)

Current daily status

Table 3.6 Per 1,000 distribution of person-days of usually employed (PS+SS) by their broad current daily status

716 37 247 1,000

(13)

1987–88

64 EMPLOYMENT AND UNEMPLOYMENT IN INDIA

949 26 24 1,000

Employed 936 Unemployed 32 Not in labour force 32 All 1,000

995 4 1 1,000

(4) 808 25 167 1,000

(5) 819 21 158 1,000

(6)

Female 1987–88 1999–2000 1993–94

Rural

945 26 29 1,000

(7) 963 16 21 1,000

(8) 970 15 13 1,000

(9)

Male 1987–88 1999–2000 1993–94

969 22 9 1,000

(10)

873 15 112 1,000

(11)

860 17 122 1,000

(12)

Female 1987–88 1999–2000 1993–94

Urban

Source: NSSO, Employment and Unemployment Situation in India 1999–2000, Part I, NSS 55th round, 2001, Table 8.3, p. 156.

(3)

Male 1999–2000 1993–94

(2)

(1)

Current daily status

922 29 49 1,000

(13)

1987–88

Table 3.7 Per 1,000 distribution of person-days of current weekly status employed persons by their broad current daily status

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fell a little in 1999–2000. This shows that during the post-reform period, the extent of underemployment did not show any significant variation. For urban males categorised as working according to CWS, the rate of underemployment showed a declining trend over the period 1987–88 to 1999–2000. Some experts do not consider the difference between CDS and CWS unemployment rates as a satisfactory measure of the extent of underemployment. According to this view, the CDS and CWS estimates of employment can be used together to work out the extent of underemployment provided those estimates are converted into units of standard eight-hour days and six standard days in a week. It is assumed that an average regular employee works for six standard days in a week. It is also assumed that the self-employed and the casual labourers also want to work for six standard days in a week if work were available (Ghose 2004: 5110). The estimates of the rates of unemployment based on this method, presented in Table 3.8, show the overall rate of underemployment to be high; 13.3 per cent of the available labour days remained unutilised in 2000. Table 3.8 Rate of underemployment (per cent) by status of employment and gender

Males Females Employed persons

Self-employed

Casual labourers

Regular employees

All employed persons

5.0 21.7 11.7

21.7 28.3 25.0

0.0 0.0 0.0

10.0 21.7 13.3

Source: Ghose, Ajit K., The Employment Challenges in India, Economic and Political Weekly, Vol. XXXIX, No. 48, 27 November–3 December, 2004, p. 5110. Note: The estimates are based on the assumption that all workers would want to work on six, eight-hour days in a week.

According to these estimates, the rate of underemployment is the highest for casual female workers and the lowest for self-employed male workers. Both NSS estimates and estimates made by Ghose show that female workers suffer from underemployment to a greater extent than male workers. Obviously, the main objection one might raise against Ghose’s alternative measure of underemployment is his assumption that all workers would want to work on six eight-hour days in a week.

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Invisible Underemployment: Some Indicators Number of Employed Persons Who Did Not Work More or Less Regularly In the 55th round (1999–2000) of the NSS, the usually employed were asked ‘whether they worked more or less regularly throughout the year’. The proportion of workers who did not work more or less regularly would give an indication of the extent of under-employment. The responses to this question are summarised in Table 3.9. In the same table, the corresponding data from the NSS 50th round (1993–94) are also presented. Table 3.9 brings out certain interesting aspects of underemployment experienced by usually employed persons who did not work more or less regularly throughout the year. 1. The proportion of such persons was higher in rural areas than in urban areas and higher among females than among males. 2. Among the various categories of the employed, the proportion was the highest for casual labourers. As high as 23 and 20 per cent of female casual labourers engaged in public works did not work regularly throughout the year in urban and rural India respectively in 1999–2000. 3. On the other hand, the proportion was the lowest among the regular wage/ salaried employees especially for those engaged in non-agricultural sector in which the proportion ranged from 31 to 51 per cent.

The results of the quinquennial survey of the NSS on employment and unemployment, 1999–2000, indicate that invisible underemployment was most serious among female casual labourers, both in rural as well as in urban areas (NSSO 2001: 156–57). Compared to the results of the NSS 50th round (1993–94), the extent of underemployment is seen to have declined for all the four population segments during 1999–2000 except in respect to urban males for whom there was a marginal rise from 6.1 to 6.5 per cent. It cannot be denied that the fairly rapid growth of the economy in the 1990s led to a reduction in underemployment, indicating a fuller utilisation of the existing workforce.

79 61

55 31

170 158 105

64 25

340 240 120

1999–2000

61 57

1993–94

Male

Rural

590 292 174

15 28

77 77

200 177 133

48 51

82 64

Female 1993–94 1999–2000

177 221 61

19 21

61 36

1993–94

Male

152 164 65

35 37

66 52

1999–2000

Urban

137 247 96

82 21

45 58

232 156 89

54 40

80 80

Female 1993–94 1999–2000

Source: (1) NSSO: Employment and Unemployment Situation in India 1999–2000, Part I, NSS 55th round, July 1999–June 2000, 2001, Table 8.4, p. 157. (2) NSSO: Employment and Unemployment in India 1993–94, 5th Quinquennial Survey, NSS 50th round, 1997, Table 8.5.

Self-employed in: Agriculture Non-agriculture Regular wage/salaried in: Agriculture Non-agriculture Casual labour in: Public work Others All

Broad usual principal status

Table 3.9 Number of employed persons who did not work more or less regularly throughout the year per 1,000 employed persons in the usual principal status by gender and location of residence

68 EMPLOYMENT AND UNEMPLOYMENT IN INDIA

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69

In the NSS 55th round (1999–2000) the usually employed who were under-utilising their available labour time due to lack of enough work or who were having enough work but were not getting sufficient return, were asked whether they sought or were available for, (i) additional work; and (ii) alternative work. The proportion of usually employed who reported themselves as available for additional work or alternative work, therefore, could serve as two indicators of underemployment.

Indicators of Invisible Underemployment: The Proportion of Usually Employed Who Report Themselves as Available for Additional Work One of the indicators of underemployment among those classified as workers on the usual (principal plus subsidiary) status, available from the NSS employment surveys, is the proportion of such workers (persons aged 15 years and above) who had sought or were available for additional work—either on most days or on some days of the year. They are further classified by reason for seeking or being available for additional work, the reasons specified being ‘to supplement income’, ‘not enough work’ and ‘not enough work and to supplement income’. The usual status workers who had not sought (nor were available for) additional work may be considered to constitute persons who perceive themselves to be fully employed during the reference period. Table 3.10 presents for 1993–94 and 1999–2000 the per 1,000 distribution of working persons of age 15 and above between persons who had not sought (nor were available for) additional work, persons who had sought or were available for additional work on most days, and those who were available for additional work on some days. To focus on the self-perceived underutilisation of labour time, the proportion of persons who had sought additional work is also presented—separately for persons who did so on most days and persons who did so on some days—who reported either ‘not enough work’ or ‘not enough work and to supplement income’ as the reason. This information is presented separately by gender and rural–urban location and within each population segment separately for the self-employed workers and casual labourers, in addition to for all workers.

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Table 3.10 Per 1,000 distribution of usually working persons of 15 years of age and above (PS+SS) who had sought or were available for additional work by gender and location of residence, 1993–94 and 1999–2000

Category Rural male Self-employed Casual labourers All workers Rural female Self-employed Casual labourers All workers Urban male Self-employed Casual labourers All workers Urban female Self-employed Casual labourers All workers

Not sought

1993–94 Sought on most days

Sought on some days

948 887 929

22(8) 44(15) 29(9)

30(11) 69(37) 42(16)

925 829 894

28(10) 71(21) 43(14)

47(20) 99(46) 64(28)

968 912 945

12(5) 35(13) 22(8)

20(8) 53(31) 33(12)

957 874 924

20(5) 47(19) 31(11)

23(10) 79(35) 45(20)

959 890 955

23(11) 55(21) 24(9)

19(8) 55(18) 21(7)

940 861 938

24(11) 53(18) 25(10)

37(15) 86(38) 37(15)

953 903 945

23(10) 47(19) 29(11)

24(10) 50(12) 26(8)

943 884 939

24(10) 46(13) 27(10)

33(15) 70(23) 34(10)

Not sought

1999–2000 Sought on Sought on most days Some days

Source: (1) NSSO: Employment and Unemployment in India 1993–94, 5th Quinquennial Survey, NSS 50th round, 1997, Appendix Table 7.9, pp. A441–49. (2) NSSO: Employment and Unemployment in India, 1999–2000, Key Results, NSS 55th round, December 2000, Appendix A, Table 9, pp. A60–70. Note: Figures in parentheses relate to the sum of the proportion of persons (per 1,000) who sought or were available for additional work for reasons of ‘not enough work’ or ‘not enough work and to supplement income’.

A striking aspect which emerges from Table 3.10 is the reduction in the proportion of usual status workers who had not sought additional work (i.e., an increase in the proportion of persons who sought additional work). This points to an unambiguous increase in self-perceived underemployment among persons classified as workers on the usual status (principal and subsidiary). The decline in the proportion of workers who had not sought additional work (i.e., the rise in the proportion of those who had sought additional work) was the highest for casual labourers in each of the four population segments. Further, among casual labourers the rise in the proportion of workers who sought or were available for additional work was the highest for rural males, followed by rural females, urban males and urban females, in that order.

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Another important finding emerging from Table 3.10 is that with the sole exception of rural female self-employed, a major proportion of the reduction of workers who had not sought additional work was accounted for by an increase in the proportion of those who had sought additional work on ‘some days’. This is true for all categories of urban workers. It is also important to note that even in rural areas where there was some rise in the proportion of persons who had sought or were available for additional work on most days over the period between 1993–94 and 1999–2000, the proportion of persons citing either ‘not enough work’ or ‘not enough work and to supplement income’ among them (those seeking additional work on most days) formed only about a third of such cases. Persons citing either of these reasons, however, accounted for 50 per cent or more of the rise in the proportion of persons who had sought additional work on ‘some days’ in almost all cases, the category ‘all urban female workers’ being the only exception (Sundaram 2001: 936–37). There is thus clear evidence of an increase in self-perceived underemployment over the period 1993–94 to 1999–2000, much of which is reflected in an increase in the proportion of usual status workers (principal and subsidiary) who sought additional work on ‘some days’ rather than most days. Even among persons who had sought additional work ‘on most days’, the motive was the need to supplement income rather than lack of work as such. The NSS tabulation of the increase in the proportion of usual status workers who had sought additional work between 1993–94 and 1999–2000, has to be presented with care. In the first place, the discussion is of a phenomenon which is rightly referred to as ‘invisible’ underemployment—a concept which does not lend itself to any precise measurement. This is why the concept is sometimes referred to as ‘self-perceived’ underemployment. Second, as already pointed out, much of the increase in self-perceived underemployment between 1993–94 and 1999–2000 is reflected in the proportion of usual status workers who sought additional work on ‘some days’ rather than ‘on most days’. Third, the increase in self-perceived underemployment does not necessarily mean any significant reduction in the number of days worked. According to one estimate, while the average number of days worked by rural males marginally declined from 331 in 1993–94 to 327 in 1999–2000, that for rural females registered a slight increase from 241 to 246; during the

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same period, the corresponding figures for urban males were 345 and 343, and those for urban females 279 and 288 respectively (Sundaram 2001: 939).

Indicators of Invisible Underemployment: The Proportion of Usually Employed Persons of Age 15 Years and Above Seeking or Being Available for Alternative Work It is observed that according to this criterion, between 1993–94 and 1999–2000, there was an increase in underemployment for all the four population segments. As between males and females, the increase in underemployment was more among males; rural males experienced a greater increase than to urban males (Table 3.11). Among the reasons for seeking or being available for alternative work, for well over 50 per cent of such persons ‘present work not remunerative enough’ was the overriding one. Interestingly, the importance of this consideration increased for all the population segments between 1993–94 and 1999–2000. Urban women outnumbered others in this respect. Though not constituting a large number of workers, there was an increase in the number of persons seeking or being available for alternative work owing to lack of job security among all the four population segments between 1993–94 and 1999–2000. Females were more influenced by this consideration than males. The results of the recent quinquennial surveys on employment and unemployment clearly indicate that lack of job security has become an increasingly serious problem in the post-reform period, especially for women workers. In a recent study referred to earlier, Ajit Ghose has shown that the overall level of underemployment in the Indian economy declined during 1983 to 1994 and increased during 1994–2000. On the other hand, the share of regular wage employment in total employment declined during the first period (1983–94) and increased during the second period (1994–2000). From these facts, Ghose has inferred that the level of underemployment of the self-employed and casual labourers declined significantly during 1983–94 and rose significantly during 1994–2000. The real wage rate for casual labour showed fairly rapid growth in both the periods.

55 43 42 42

91 60 68 60

529 582 500 634

565 589 589 673

Present work not remunerative enough 1993– 1999– 94 2000 94 93 125 98

109 88 96 55

No job satisfaction 1993– 1999– 94 2000 75 46 75 48

80 102 114 106

Lack of job security 1993– 1999– 94 2000 0 0 0 0

7 10 4 2

Work place too far 1993– 1999– 94 2000 132 46 125 98

140 86 116 97

Want wage/ salary job 1993– 1999– 94 2000

170 233 175 122

70 91 43 37

Others 1993– 1999– 94 2000

Per 1,000 distribution of workers who sought or were available for alternative work by reason

1,000 1,000 1,000 1,000

Total

Source: (1) NSSO: Employment and Unemployment in India 1993–94, Fifth Quinquennial Survey, NSS 50th round, July 1993–June 1994, 1997, Table 8.6.2, p. 150. (2) NSSO: Employment and Unemployment Situation in India 1999–2000 (Part I), NSS 55th round, July 1999–June 2000, 2001, Table 8.6, p. 158.

Rural male Rural female Urban male Urban female

Sex and sector

Per 1,000 no. of workers who sought or were available for alternative work 1993– 1999– 94 2000

Table 3.11 Number of usually working persons of age 15 years and above who sought or were available for alternative work per 1,000 usually employed persons in the principal status (15 years and above) and their per 1,000 distribution by reason for seeking or availability for alternative work

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According to the same author, the increase in underemployment during 1994–2000 was accounted for partly by the slow down in the growth of crop production and partly by the fact that person-days of wage employment generated in rural areas under the special employment schemes declined substantially. In both the periods, 1983 to 1994 and 1994 to 2000, overall underemployment essentially reflected the trend in underemployment in agriculture (Ghose 2004: 5113).

Summary and Conclusions The post-reform period was characterised by a sharp rise in the unemployment rate of all population segments except urban females for whom the rate of unemployment fell in terms of all the four measures. While the rate of unemployment among those with secondary and higher levels of education showed a fall in all population segments except that of urban males, the rate of unemployment of the graduate and above category among rural females increased and that among urban females showed a decline. There was a slight increase in the unemployment rate of urban males followed by a slight fall in that of rural males. Economic reforms have led to a higher rate of unemployment for the youth (15–29) in all the population segments except urban females who experienced a decline in the rate of unemployment. Visible underemployment declined in general for all the population segments with rare exceptions. Three indicators are used for measuring invisible underemployment: (i) In terms of the number of employed persons who did not work regularly, the extent of invisible underemployment declined for all segments except urban males (ii) In terms of the proportion of usually employed reporting themselves as available for additional work there was an increase in self-perceived underemployment much of which was reflected in an increase in the proportion of usual status workers who sought additional work on ‘some days’ rather than on ‘most days’ and (iii) In terms of the proportion of the usually employed persons reporting themselves as available for alternative work, there was an increase in underemployment for all the population segments, rural males showing the highest rate of increase.

Chapter Four

Casualisation

Introduction In the preceding two chapters we discussed the central themes in employment and unemployment in the Indian economy with particular reference to the post-reform period, namely levels, statuses and structure of employment, and the rates of unemployment and underemployment among the four population segments. While higher growth of employment is a desirable objective of economic policy, the composition or complexion of employment constitutes a serious issue too. It could be that employment has grown but working conditions including wage rates have not. Or, it could be that more employment is generated but with less employment (job) security. In the following chapters a few such major questions are taken up for detailed examination. In the present chapter a brief discussion on casualisation is attempted; it is followed in the ensuing chapters by issues such as feminisation and informalisation. We have earlier noted that on the basis of the ‘status’ of employment, workers are classified into regular employees, self-employed and casual labour. These are distinct categories which are mutually exclusive. For instance, a worker cannot be self-employed and casual labour at the same time. According to the National Sample Survey, a casual labourer

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is a person who is casually engaged in others’ farm or non-farm enterprises (both household and non-household) and, in return, receives wages according to the terms of a daily or periodic work contract (NSSO 2001: 8). The difference between regular and casual employment is not based on the level but on the mode of payment. Those who are paid a wage/salary on a regular basis are treated as being in regular employment; others who are paid on the basis of daily or periodic renewal of work contract are treated as being in casual employment. Whereas both regular and casual workers are ‘hired’ by an ‘employer’, the self-employed have no employers; they are independent, ‘own-account’ workers who enjoy full autonomy. Casual employment in India has been traditionally associated with agriculture in which farm operations are not organised on a continuous, regular basis. In fact, it is the seasonality of farm operations which makes casual labour unavoidable. However, the institution of casual labour has also spread to other sectors. Today, though agriculture still accounts for the largest share of casual labour, it is not confined to agriculture alone. For instance, large numbers of casual labourers are engaged in the construction industry. It may be helpful to draw a distinction between casual labour and casualisation of labour. At any given point of time there would exist a certain level of casual employment which is simply referred to as casual labour. On the other hand, ‘casualisation’ refers to the process of extending the scope of casual labour not only in the same, but also in newer or additional sectors. The chapter is organised as follows: Section II discusses the rationale of casualisation briefly. In Section III, variations in the levels and the proportions of casual labour over the years are examined on the basis of NSS data. Section IV addresses questions relating to the gender dimension, the educational level, the sector of employment and the wage differentials relating to casualisation. Section V summarises the main findings.

Why Casualisation Broadly speaking, the move to casualise employment arises from the employer’s attempts to reduce costs by denying altogether, or cutting

CASUALISATION

77

substantially, all or some of the benefits of regular employment to workers, such as pension, provident fund, bonus, annual increments, dearness allowance and medical and house rent allowances. Once workers are designated as ‘casual’ labour, law enforcement bodies do not insist on these kinds of benefits. Casual employment is, to a large extent, unavoidable in enterprises like agriculture which are characterised by seasonality. In carrying out farm operations, for example, a certain sequence is strictly followed. It is customary, under Indian conditions, to engage different teams of workers for different operations with the result that the same set of workers is not engaged continuously throughout the year (e.g., ploughing, sowing, transplanting, weeding, manuring, harvesting, threshing etc. are done by different sets of workers under traditional rice cultivation). While for some operations such as ploughing adult male labour is engaged, for lighter operations female labour is preferred. Obviously under such a system casual labour cannot be avoided. A closely related motive underlying casualisation is surmounting the difficulties posed by militant workers’ unions and stringent labour laws. There exist certain labour laws, especially laws relating to retrenchment, which are stiff and hence highly inconvenient to employers. Once workers are categorised as casual, the legal provisions become less worrisome. In fact, according to some experts, excessively protective labour legislation is one of the major factors inhibiting the growth of employment in the organised private sector of the Indian economy (Visaria and Minhas 1991; Planning Commission of India 2001: 41). Even prior to the introduction of economic reforms at the beginning of the 1990s, in many establishments in the country categories of workers like gardeners, cleaners and sweepers, canteen staff, and repair and maintenance personnel used to be treated as casual workers. Increasing casualisation in the post-reform period is seen by many as the outcome of the efforts to bring about labour flexibility and create international competition and the consequent increasing emphasis on reduction of costs—mainly labour costs—in order to retain both domestic and international markets. Along with casualisation, it is usual to resort to contracting and subcontracting of labour, home working and lengthening of working hours (Dev 2000b: 42). Evidently insecurity of income is one of the major characteristics of casual labour.

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EMPLOYMENT AND UNEMPLOYMENT IN INDIA

Trends in Casualisation The level and the proportion of casual labour have varied over the years according to the results of the quinquennial surveys on employment and unemployment of the National Sample Survey. The percentage distribution of the usually employed by category of employment as shown by the various NSS rounds is presented in Table 4.1. Table 4.1 Percentage distribution of usually employed (PS+SS) by category of employment, gender and location of residence, NSS rounds 1983 to 1999–2000 Self employed

Rural males Regular employees

Casual labour

Self employed

Rural females Regular employees

Casual labour

38(1983) 43 (1987–88) 50 (1993–94) 55 (1999–2000)

60.5 58.6 57.7 55.0

10.3 10.0 8.5 8.8

29.2 31.4 33.8 36.2

61.9 60.8 58.6 57.3

2.8 3.7 2.7 3.1

35.3 35.5 38.7 39.6

38 43 50 55

40.9 41.7 41.7 41.5

Urban males 43.7 43.7 42.0 41.7

15.4 14.6 16.3 16.8

45.8 47.1 45.8 45.3

Urban females 25.8 27.5 28.4 33.3

28.4 25.4 25.8 21.4

NSS round and year

(1983) (1987–88) (1993–94) (1999–2000)

Source: NSSO, Employment and Unemployment Situation in India 1999–2000 (Part I), NSS 55th round, July 1999–June 2000, 2001, Table 6.6, p. 73.

A close examination of the table brings out several significant aspects of casualisation in the pre-reform as well as in the post-reform period. 1. It is seen that in any given period, the extent of casual employment among rural workers is much higher than among urban workers regardless of gender. While the share of casual labour among rural males has been 14 to 20 percentage points higher than the corresponding share of urban males, the share of rural females has been 7 to 18 percentage points higher than that of urban females. This is largely due to the predominance of agriculture as a source of employment in the rural areas. 2. The extent of casual employment is more widespread among females than among males. It is also observed that the difference in the extent of casual employment between males and females is much sharper among urban workers than among rural workers. While the share of casual labour among

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79

rural females was 3 to 6 percentage points higher than that of rural males, the share of urban females has been 5 to 13 percentage points compared to urban males. 3. Over the years the extent of casual employment increased significantly among rural workers, both male and female. While between 1983 and 1999–2000, the percentage of usually employed (PS+SS) rural male workers in casual employment increased from 29.2 to 36.2 per cent (an increase of seven percentage points), the corresponding increase for rural females was from 35.3 to 39.6 per cent (an increase of 4.3 percentage points). The trend of declining self- employment for both males and females noticed in rural areas during the pre-reform period, continued during the post-reform period. In fact, the steady rise in the share of casual employment of rural workers over the years was almost entirely at the expense of the share of self-employment. The only exception was in 1999–2000 when a rise in the share of casual employment was also accompanied by a rise in the share of regular employment of rural females. 4. On the other hand, casualisation has either risen very slowly or declined substantially among urban workers. As against a proportion of 15.4 per cent of urban male workers in casual employment in 1983, the corresponding proportion marginally rose to 16.8 per cent in 1999–2000. In sharp contrast, the proportion of usually employed (PS+SS) urban females in casual employment registered a fall from 28.4 per cent in 1983 to 25.8 per cent in 1993–94 and to 21.4 per cent in 1999–2000. The slight increase in casual employment of urban male workers during the post-reform period was largely at the cost of regular employment which registered a fall from 43.7 per cent in 1987–88 to 41.7 per cent in 1999–2000. For females, on the other hand, the percentage of those engaged in regular employment increased sharply. According to some observers, this is reflective of the feminisation process at work as a result of which increasing proportions of the new urban jobs go to young female employees (Ghosh 1999: 346–47). The large numbers of female workers employed in the IT sector including call centres is probably the best example of this phenomenon. 5. Interestingly, the decrease in the proportion of casually employed urban female workers was more than made up by an increase in the proportion of regular employees from 25.8 per cent in 1983 to 33.3 per cent in 1999–2000. Some scholars have, however, cautioned that this increase in the share of regular salaried workers among women should not be interpreted as reflecting a process of absorption of women in formal organised activities. This is because, according to the NSS definition, ‘regular workers’ include persons engaged on a regular contractual basis even within the informal sector at low wages such as domestic servants and helpers of petty traders. The wages of regular women workers were estimated at about 20 per cent lower than wages of males in the late 1980s. Hence, according to these critics, an

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increasing percentage of regular workers need not necessarily suggest high wage rates and better working conditions for women (Kundu 1999: 68). In fact, in several urban sectors regular female workers were paid the same wage rates as those of male casual workers or even lower during the late 1980s.

Casualisation: Gender Dimensions, Educational Level and Sector of Employment and Wage Differentials As has been already noted, a larger proportion of women workers are in casual employment than men. Though it is difficult to judge whether a shift from the self-employed to the casual category suggests an improvement or a deterioration, an increase in casualisation is viewed, in general, as indicating a deterioration in the quality of employment. However, to the extent that casualisation means a movement of workers from subsistence agriculture or other low productivity occupations to casual, yet substantial, employment in the more productive and more remunerative work in other sectors and occupations, it is unclear whether casualisation should necessarily imply a deterioration in the quality of employment. While a shift from secure and stable employment in the organised sector to casual work in the unorganised sector would certainly indicate deterioration, the trends in employment of women do not necessarily suggest so. Further the phenomenon of casualisation seems to have slowed down in the case of women (Papola and Sharma 1999: 8). The increase in the share of casual workers has been much smaller in the case of women than in the case of men. On the other hand, a shift from the regular employee category to the casual labour category was discernible among male workers (see Table 4.1). However, it has been pointed out that in the case of women, there has been a shift away from the manufacturing sector to low-paid service sector jobs, of course, with an increased incidence of casual employment (Hirway 1996: 583). Agriculture still accounts for the bulk of the total employment in India. A large majority of the self-employed and the casual labourers work in agriculture while a large proportion of the regular employees are employed in industry and services. The type of employment also

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corresponds to the level of education of workers. While regular employees have higher levels of education, casual workers have low levels of education. The level of education of the self-employed is on the average higher than that of casual labourers, but substantially lower than that of regular employees. As these facts would imply, there exists close correspondence between the level of education of workers and the sector of their employment. Agricultural workers have the lowest level of education while service sector workers have the highest levels. Overall, casual labourers in agriculture are the lowest educated and the regular employees in industry and services are the most educated. These relationships are well brought out in Table 4.2. Table 4.2 Structure of employment (UPS) and level of education of workers by sector Structure of employment ( percentage)

Average years of education of workers

Agriculture All workers Self-employed Casual labourers Regular employees

100.0 54.9 43.6 1.5

2.6 3.2 1.7 7.0

Industry All workers Self-employed Casual labourers Regular employees

100.0 36.8 35.8 27.4

4.5 4.3 2.2 7.9

Service All workers Self-employed Casual labourers Regular employees

100.0 45.1 10.8 44.1

5.8 4.7 2.3 7.9

Source: Ajit K. Ghose, ‘The Employment Challenges in India’, Economic and Political Weekly, Vol. XXXIX, No. 48, 27 November–December 2004, Table 6, p. 5109.

Wage differentials between men and women are far less significant in the case of regular employees than in the case of casual labourers. On an average, a female regular employee earns 92 per cent of the wage earned by a male employee of the same category in rural areas and 89 per cent in urban areas. In contrast, a female casual labourer earns on

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average only 65 per cent of the wage earned by a male casual labourer in rural areas and 60 per cent in urban areas (Ghose 2004: 5110). While dependence on casual labour may have increased, this increase was accompanied by sufficient growth of productivity and tightening of the labour market to allow growth in real wages (Planning Commission of India 2001: 40). The task force of the planning commission on employment opportunities has also observed that the quality of a major part of wage employment in the country is very low. The quality could be improved only if there is a progressive shift from casual employment to regular wage/salary employment; but the possibility of such a shift depends upon the growth of the organised sector relative to that of the unorganised sector and partly also upon the pace of reform in labour laws. The emerging tendencies in employment in the post-reform period in India indicate that in the future, service sector employment would grow much more rapidly than industrial employment. Workers quitting agriculture would be absorbed more by service sector activities rather than by the manufacturing sector. It is most likely that casualisation of labour will increase further. Besides, casual workers would report the highest incidence of poverty (Dev 2000c: 141). Apart from low wages and the consequent poverty, increasing casualisation of labour has added to the uncertainty of employment in rural areas (Rao 1998c: 148). In concluding the discussion on casualisation, it seems most appropriate to cite Mahendra Dev, who has well summed up the situation: ‘Casualisation has been increasing even before the economic reforms started. However, it seems to have got accentuated in the post-reform period’ (Dev 2002: 36). Although an overall decline in unemployment took place, it was accompanied by an increase in casualisation of jobs and underemployment. And the poorest segment of the population continues to rely on wage labour in agriculture, ‘which as an economic sector is growing only slowly and does not have high employment generation potential…. in addition to being subject to low wages’ (Dev 2002: 32).

Summary and Conclusions Although the basic motivation for casualisation is the urge to reduce costs, in the case of certain enterprises like agriculture, casualisation becomes unavoidable also due to seasonality.

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While casualisation among both rural males and females continued to rise significantly during the post-reform period, that among urban males registered only a marginal increase. A notable exception was urban females whose share of casual labour registered a substantial decline. There exists a close correspondence between the level of education of workers and the sector of their employment. Casual labourers in agriculture are the lowest educated and the regular employees in industry and services the highest educated.

Chapter Five

Feminisation of Labour Force

Introduction Under globalisation there is a strong presence of multinational companies which move their capital from country to country in search of relatively cheap labour. In order to keep their labour costs down, these employers impose a very strict and exacting work schedule on their workers. Further, because they want to keep open the option of moving their capital whenever they find a greater cost advantage elsewhere, the companies are reluctant in general to offer the workers long term, protected work contracts. In most countries it is only the women workers who would opt for such types of employment; therefore in countries which join this competitive trade regime with the participation of multinationals, the workforce of the export-oriented manufacturing industries comes to be dominated by women workers. Apart from this global competition that induces flexible work contracts resulting in feminisation, it is pointed out that with the new economic policies employers try to reorganise production on the domestic front through more decentralised, sub-contracted units in which they can avoid the extra costs imposed by labour laws. This is supposed to induce feminisation of the workforce because, once again, these poorer

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work conditions would find a readier acceptance among women workers (Banerjee 1999: 304–97). It is thus seen that feminisation has been proceeding at two different levels—national and international. This chapter is organised as follows: Section 1 traces the origin and development of the concept of feminisation. In Section 2 a brief account of the favourable global environment which promoted feminisation is presented. This is followed in Section 3 by a discussion on the relationship between labour market flexibility and feminisation. Section 4 examines the data base of the feminisation hypothesis as advanced by Guy Standing. Sections 5 and 6 deal with alternative hypotheses on the concept. Section 7 offers some general comments on feminisation in India. An attempt is made in Section 8 to critically examine the extent to which feminisation in India is real, on the basis of NSS data. Section 9 presents a brief note on feminisation in terms of the sectoral distribution of the workforce followed by distribution of employment by gender and broad industry division in Section 10. The manner in which export-related industries provide a favourable environment for feminisation is the theme of Section 11. A summary of the main findings is given in the final section.

Feminisation: The Genesis and Development of the Concept Feminisation refers to a rise in female labour force participation and a relative, if not absolute, fall in men’s employment; it also implies feminisation of many jobs traditionally held by men. The term was used, and brought into prominence, probably for the first time, by Guy Standing in two papers published in World Development, the first in 1989 and the second a decade later. In deconstructing the term ‘feminisation’ into its constituents, it may be noted that a type of job could either be feminised or that men could find themselves in feminised positions. More women could find themselves in jobs traditionally taken by men or certain jobs could be changed to acquire characteristics associated with women’s historical pattern of labour force participation. The characteristics include the type of contract, the form of remuneration, the extent and forms of security provided, and the access to skill (Standing 1999: 583). However, the gender

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outcomes in the labour market should not be interpreted as reflecting material or objective differences between men and women; rather they reflect the outcome of discrimination and disadvantage. The earliest manifestation of feminisation is sometimes traced to supply-side economies which dominated policy-making in several countries during the 1980s. One outcome of the supply side agenda has been identified as the stabilisation and structural adjustment package urged on many developing countries by the IMF, World Bank and other donor agencies. The strategy involved a focus on cost-cutting international competitiveness leading to a strenuous search for ways of lowering unit labour costs. Such ways have included resort to casual or temporary workers, sub-contracting and contract workers. The ‘outward-oriented development strategies’ based on export-led industrialisation, another plank of structural adjustment programme, have brought about a rapid growth of low-wage female employment, sometimes to the tune of three-fourths of the workforce as in the case of export-processing zones in many countries. According to Standing, the socially and economically oppressed young women of the newly industrialised countries are prepared to work for low wages for long work weeks. Market deregulation, another theme of the orthodox structural adjustment strategy, also has led to feminisation in many ways. It is pointed out that with growing privatisation along with deregulation, women’s wages would fall absolutely and relatively as a consequence of cut-backs in the public sector or as a result of privatisation. Feminisation of labour relations has been accompanied by a corresponding growth of vulnerability, precariousness and insecurity. The major forms of vulnerability to which women workers are exposed in multinational export-oriented enterprises include the following: 1. Women are employed largely in semi-skilled static jobs with little or no chance to develop skills or aptitude that they would use subsequently. 2. There are three sectors in which women are vulnerable to invisibility. For instance, large numbers of women workforce in agricultural small holdings, in family farm or business and in petty trade, tend to be inadequately recorded or recognised when policies are being devised or reformed. 3. Women are also peculiarly vulnerable by virtue of their social status. One common stratifying influence is migrant status. Women make up a majority of migrants in many developing countries.

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4. Many women are vulnerable to poverty and labour market marginalisation by virtue of their dependency status in families. The story is essentially the same across the world: single mothers, widows and migrant women dependent on their own resources are the most vulnerable of all, not only to poverty, but to exploitation and labour marginalisation. 5. Workers are also vulnerable by virtue of their ‘labour status’. As a consequence of increasing ‘labour flexibility’, secure, protected, well-paid wage employment is being displaced by other labour relations. For instance, women are more likely to be hired as marginal and casual wage workers.

Favourable Global Environment Promoting Feminisation Apart from supply-side agenda directly resulting in structural adjustment policies, there have been global developments that shaped the process of growing feminisation of the labour market. There has taken place a phenomenal growth in international trade in goods and services as a share of national incomes, paralleled by a similar growth in the share of foreign or multinational investment in total investment, in most countries. Trade and investment have been directed increasingly towards economies in which labour costs have been relatively low, putting a premium on the level of wages, non-wage labour costs and labour productivity. Prior to the 1970s trade between countries was predominantly in complementary goods or between countries with similar labour rights and therefore roughly equivalent labour costs. Since the 1970s, labour rights in industrialised countries came to be increasingly perceived as reason for escalation of costs of production, to be avoided in the interest of maintaining national trade competitiveness. In the past few years, there has occurred a ‘technological revolution’ based on micro-electronics which, among other things, has permitted a wider range of technological-managerial options in working arrangements; cost considerations of alternatives have thus become increasingly significant determinants of allocations and divisions of labour. In consequence, patterns of employment in industrialised and industrialising economies have been affected, accentuating tendencies to allocate to areas in which labour costs are the lowest.

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A steady erosion in the legitimacy of the welfare system of the industrialised countries is also observed. The rising costs of social protection in the context of high employment has been one of the major causes of the erosion of that model. In the place of the welfare state model, growing privatisation of special protection and an individualisation of social security have emerged, whereby more workers are constrained to depend on their own contributions and entitlements. These contextual developments, in Standing’s view, have both shaped the gender division of labour and got influenced by the labour market developments themselves. This has led to more importance being attached to labour costs.

Labour Market Flexibility and Feminisation A reference was made earlier to moves on the part of employers to reduce their commitments regarding the terms and conditions of employed labour. These moves have been collectively termed attempts at labour market flexibility. According to several analysts including Standing, feminisation is one major form of labour market flexibility. The following are some of the ways in which labour market flexibility is accompanied by feminisation. In the developed industrial countries, increasing selectivity or targeting of state benefits has meant fewer people having entitlements. It is argued that this trend has caused an ‘additional worker effect’—pushing more women into the labour market during recessions and inducing more women to remain in the labour market because of increase in income insecurity. Obviously this argument is not of much relevance in the case of developing countries. Pursuit of labour market flexibility has weakened trade unions and made it possible for governments everywhere to dismiss workers (i.e., unionised male workers). ‘Downsizing’ has become a familiar catch word. Income security of the employed has been reduced by the weakening of the minimum wage legislation resulting from low-wage employment. One of the direct effects of the present-day emphasis on trade liberalisation and export-led growth has been successful industrialisation through mobilisation of large numbers of low-paid women workforce.

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Of course, increasing recourse to hiring of women workers is part of the search for ways of lowering labour costs which is so essential for survival in the international market. In this process, enterprises around the world introduce production techniques that change skills and job structure in particular ways: 1. There has been a decline in the proportion of jobs requiring ‘craft’ skills learned through apprenticeship or prolonged on-the-job training which have traditionally constituted a male domain. The decline of on-the-job continuity has been a determinant of the tendency to collapse job classifications into more broadly based job clusters so that workers can be shifted from time to time from one set of tasks to another. Thus the shift to more flexible labour markets causes increasing income and employment insecurity, which in turn is accompanied by growth of job insecurity (Standing 1999: 586). 2. There has been a trend towards skill ‘polarisation’ with a minority of workers required to possess specialist skills and a majority required to possess only minor training.

It is important to note that the feminisation hypothesis is based on a series of causations: the growing labour market flexibility leading to diverse forms of insecurity which, in turn, lead to greater female labour force participation and employment.

Data Base of the Feminisation Hypothesis A major finding of Standing, based on his analysis of national data for many countries, is that for the past 3–4 decades or so, the trends across the world have been for female labour force participation to rise while the male participation rate was continuously falling. In 51 per cent of the developing countries the female labour force participation rate rose while the male participation rate fell. He has also noted that in all the three regions of the developing countries studied—Latin America, Africa and Asia—there has been a tendency for the female share of non-agricultural employment to rise even though women still comprise a minority of such employment. For India, the percentage share of women in non-agricultural employment, on the basis of his data, remained in the range of 10 per cent in 1975 to 13 per cent in 1989.

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Regarding the data base of the feminisation hypothesis, as postulated by Standing, the following observations seem to be pertinent. 1. At the global level it is a hazardous exercise to compare economic trends among countries because of the diversity in economic conditions and social values. Of course, there exists a greater degree of identity among developed countries on the one side and among developing countries on the other. But even within the two groups there are notable differences, especially regarding the role of women in the family, in the society and in the country’s economy. Reducing complex and diverse economic and social phenomena to statistical values has limitations. 2. Standing has based his hypothesis on the observation that in 51 per cent of the developing countries the female labour force participation rate rose while the male participation rate fell. Could it be inferred that so long as the female labour force participation rate was 50 per cent or lower there no feminisation at work had taken place and that the moment it crossed the 50 per cent mark feminisation had arrived? If feminisation is a process it should be interpreted as an ongoing continuous movement having its own logic. 3. The problem seems to be with the appropriate level to which the concept is to be applied. The extent of ‘feminisation’ as a phenomenon is actually relevant only in relation to sectors or sub-sectors of the economy in which, for economic reasons, more females are employed than males. In other words, feminisation should not be judged on the basis of the entire economy but only in terms of sectors or sub-sectors. 4. In highly traditional societies where the role of women is confined to attending to domestic chores, it is but natural that the rate of female labour force participation is very low. As the sway of tradition loosens, more females seek gainful employment. Such a transitional stage cannot be viewed as feminisation of labour force. 5. Standing has observed that in all the three regions of developing countries, namely Latin America, Africa and Asia, a tendency is observed for the female share of non-agricultural employment to rise even though women had already comprised a majority of such employment. There is nothing unusual about this process. Elsewhere we had noted that agriculture employs the least educated persons. As long as females remain distinctly less educated than men, they are absorbed mostly in agriculture since a large part of agriculture consists of unskilled operations. Once the level of female education improves, more female workers move on to non-agricultural enterprises which require higher levels of education. Such movement should not be seen as constituting ‘feminisation’. This is not a shift in employment based on gender but on competence or credentials.

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6. Standing has used national level official data for several countries. There exists, however, no means of assessing the quality or reliability of such data. For India, he has relied entirely on Census data and has made no use of NSS data. 7. The core of feminisation, as explained by Standing, consists in a rising of women’s labour force participation rate while male equivalent participation rate falls. However, it appears that on the basis of data presented by him the phenomenon has been more relevant in respect of developed countries (see Table 2 in Standing 1989: 1082).

Alternative Hypotheses on Feminisation (1): Contributions of Nilufer Cagatay and Sule Ozler According to Cagatay and Ozler, one consequence of the structural adjustment programme is the expansion of the export-oriented sector. And export-oriented industries in developing countries tend to be feminised. These industries are also labour-intensive which use ‘unskilled’ labour. Trade reforms ‘pull women into the labour market’ because they are ‘cheap’ and more ‘flexible’ workers. Of course, a process of defeminisation can result from adoption of techniques that require ‘skilled’ labour or greater mechanisation. Another impact of structural adjustment policies is the pushing of women into the labour force. Cagatay and Ozler argue that because structural adjustment policies lead to a worsening of income distrbution, more members of households among low-income groups are forced to seek paid employment to compensate for declining family incomes. The empirical investigation undertaken by the authors to verify the hypothesis consists of a sample of 96 countries and data pooled for the years 1985 and 1990. They claim that their investigation points to a ‘robust relationship between women’s share of the labour force and the level of economic development’ or what is called the feminisation U. At the same time the authors have found that demographic as well as cultural/ideological factors play a role in determining the degree of feminisation of the labour force. The second finding of the authors is that controlling for the feminisation U, structural adjustment policies are found to have led to an increase in feminisation via worsening income distribution and increased openness.

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Alternative Hypotheses on Feminisation (2): Contributions of Korkut Erturk and Nilufer Cagatay Erturk and Cagatay (1995) have cautioned that in the context of advanced capitalist economies, the evidence on the relationship between cycles and feminisation is complex. They discuss the relationship in terms of three theses: (i) the buffer hypothesis; (ii) the segmentation hypothesis; and (iii) the substitution hypothesis. The buffer hypothesis views women as a flexible reserve army of labour whose labour force participation rate increases during the economic upswing and decreases during the downturn giving rise to a procyclical pattern of feminisation. The segmentation hypothesis, on the other hand, is based on the observation that industries and occupations are gendered so that the gender segmentation of labour market ‘protects’ women from being ‘last-hired’ and ‘first fired’ as the case would be under the buffer hypothesis. This suggests that the impact of recessions or upswings on the gender composition of the labour force would depend on the compositional changes in industries or occupations that accompany cycles. According to the substitution hypothesis, women get substituted for men workers during downswings as a cost-saving measure because of a gender gap in wage rates and the low level of trade union activism and organisation among women. In the case of the newly industrialising countries in which feminisation of the labour force and the intensity of female household labour seem to exhibit a countercyclical pattern, the substitution or the segmentation hypothesis (or some combination of the two) is likely to hold. In such cases, it is assumed that feminisation of the labour force takes place during economic contractions and is replaced by a process of defeminisation once the country revives and growth is restored. Among this group of countries are three possible cases. Based on the feminisation U hypothesis, the authors assume that low-middle income countries have a negative, the high-middle income countries a positive and the middleincome countries a zero secular rate of feminisation. In the poor countries where there exists a negative rate of secular feminisation of the labour force, no cyclical variation exists. Finally in the case of the highincome industrialised countries that are on the upper right segment of

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the U curve, the secular rate of feminisation of the labour force is positive. It is not clear from the authors’ exposition in which group India is included as no income ranges are indicated for each group and hence no definite conclusions can be drawn regarding the feminisation trend in India on the basis of this analysis.

Feminisation in India: General In India, feminisation has been a recurring theme in the writings of several writers (Ahmed 1994; Banerjee 1999; Ghosh 1999; Hirway 1999; Shah et al. 1994). Especially since the formal initiation of the structural adjustment programme, there have been frequent references to the negative impact of the reform on the status of female workers, which have constrained some writers to refer to the debate as the ‘bogey of feminisation’ (Banerjee 1999). The contributions of Standing, Cagatay and Ozler, and Erturk and Cagatay on the theme of feminisation have been already referred to. However, the evidence for India does not indicate, as will be argued shortly, that feminisation poses any ‘threat’ except in certain isolated instances. According to some scholars, the analysis by Standing and other feminists have paid little attention to the diverse economic factors that affected women’s relative employment statuses in different economies. Their arguments rest mainly on drawing analogies between the apparently similar employment trends in different countries without tracing the history or the causal links in each case. Following this lead, Indian scholars who have been analysing the recent trends in women’s employment in India have focused selectively on those sectors, however small in the Indian context, where the trend towards feminisation had been more pronounced in several other countries. In the process, it is pointed out that these scholars have ignored some very serious and persistent problems of Indian women workers (Banjerjee 1999). As has already been pointed out, in much of the literature examined, the focus is seen to have been on women’s employment in the non-agricultural sector. According to Standing, in all the three regions of developing countries he investigated, there had been a tendency for the female share of non-agricultural employment to rise even though women still comprised a minority of such employees. In his view, the female share of non-agricultural employment in developing countries

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remains low because in low-income countries barriers to formal forms of wage labour have remained strong even though it is possible that women have not been seeking such jobs (Standing 1999: 589). This view of Standing does not seem to be valid for India. There are practically no barriers to formal forms of wage labour over most parts of the country. In fact female labour participation rates in non-agricultural employment governed by formal forms of wage labour are highly significant in India.

How Real is Feminisation in India? The essence of feminisation consists in an increasing female labour participation rate. Already, in Chapter 2, it was noted that beginning with the 38th round of the NSS (1983) a steady decline in female labour participation rate had begun to take place. Table 3 of Chapter 2 is reproduced as Table 5.1. Table 5.1 Labour force participation rate (percentage) by gender and location of residence according to usual status (PS + SS), NSS rounds 1983 to 1999–2000 Year and NSS round

Male

Rural Female

Male

Urban Female

1983 (38) 1987–88 (43) 1993–94 (50) 1999–2000 (55)

55.5 54.9 56.1 54.1

34.2 33.1 33.0 30.2

54.0 53.4 54.3 54.2

15.9 16.2 16.5 14.7

Source: Reports of NSS Quinquennial Surveys on Employment and Unemployment for the relevant years.

As far as labour participation rates are concerned, there has only been a slight decline in the female labour participation rate during 1983– 2000, a period which fully covers the post-reform period. It may also be noted that over the same period the male labour participation rate has remained fairly stable (not withstanding the fact that the participation rate of rural males registered a marginal decline from 55.5 to 54.0 per cent). Our basic data on labour participation rates thus do not establish any clear phenomenon of growing feminisation in India.

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The present discussion on feminisation began straight away with female labour force participation rates because Guy Standing, who pioneered the feminisation hypothesis, postulated it in terms of a rising female labour force participation rate. However, the worker-population ratios also may be looked into. Except in the case of urban males—the WPR of which has remained fairly stable over the years—there has occurred a marginal fall in the WPR of all the other three population segments. As far as female WPR is concerned, over the period 1983 to 1999–2000 it has fallen in respect to both the rural and the urban female populations, the decline being steeper in respect of rural females. Thus in respect to worker-population ratio as well there is no evidence of any feminisation of employment as sought to be hypothesised by Standing and kindred scholars.

Sectoral Distribution of Employment It is noted (in Table 5.2) that while the share of females usually employed (principal and subsidiary) in the primary sector has declined over the years for both the rural and the urban populations, no consistent trend is observed in the case of the female share of employment in other sectors. Over the period 1983 to 1999–2000 while the share of rural females employed in the secondary sector increased by 20 per cent, the corresponding variation for urban females was by –4.2 per cent. In contrast, the share of female employment in the tertiary sector for rural females increased by 18.7 per cent and that for urban females by 40.7 per cent. During the same period the male share of employment in the tertiary sector registered a growth of only 10.2 per cent which is far below the growth recorded by females. This trend in respect of urban females in India is comparable to what has happened in the case of their counterparts in USA and Europe. Our data have shown that there has been a greater absorption of female labour into the tertiary sector in recent years than earlier. Now, the question remains: Is the feminisation hypothesis validated entirely on the basis of a higher growth of female employment in the tertiary sector than in the other sectors? A definite answer to the question is problematic. The pattern certainly does not fit in with the hypothesis of Standing.

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FEMINISATION OF LABOUR FORCE Table 5.2 Worker-population ratio (percentage) according to usual status (PS + SS), NSS rounds 1983 to 1999–2000 NSS round and year

Male

Rural Female

Male

Urban Female

1983 (38) 1987–88 (43) 1993–94 (50) 1999–2000 (55)

54.7 53.9 55.3 53.1

34.0 32.3 32.8 29.9

51.2 50.6 52.0 51.8

15.1 15.2 15.4 13.9

Source: NSSO, Employment and Unemployment in India, 1999–2000 (NSS 55th round) Key Results, 2000, Table 4, p. 14.

Distribution of Employment by Gender and Broad Industry Division Besides examining the labour force participation rates and the workerpopulation ratios from the point of view of the feminisation hypothesis, it is also necessary to take a close look at the distribution of workforce by broad industry division. The distribution is based on population estimates derived from the census data for the relevant years and the ratios/ percentages provided by the NSS, as have already been presented in Table 2.6. The distribution of the workforce for the periods 1983 and 1999–2000 is reproduced in Table 5.3 from Table 2.6. The estimates of the workforce (principal plus subsidiary) as presented in Table 5.3 show that while the male workforce rose from 196.41 million in 1983 to 274.45 million in 1999–2000 registering an increase of 39.73 per cent, the female workforce increased from 100.76 million to 124.15 million during the same period registering an increase of 23.29 per cent. Thus for the whole economy the male workforce has grown faster. It cannot, therefore, be argued that there has taken place any feminisation at the macro level. From the growth of employment in broad industry divisions, it is seen, however, that in two divisions, namely services and manufacturing, female employment registered higher growth rate than male employment. Of the two cases, the expansion of female employment in services has been striking. While male employment in services showed an increase of 34 per cent during the period under review, female employment rose

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EMPLOYMENT AND UNEMPLOYMENT IN INDIA Table 5.3 Distribution of usually employed persons (PS+SS) by broad industry division, NSS rounds 38 and 55 (in millions)

Broad industry division Agriculture Mining and quarrying Manufacturing Electricity, gas and water Construction Trade hotel and restaurant Transport storage and communications Services

NSS round and year 38 (1983) 55 (1999–2000) 38 (1983) 55 (1999–2000) 38 (1983) 55 (1999–2000) 38 (1983) 55 (1999–2000) 38 (1983) 55 (1999–2000) 38 (1983) 55 (1999–2000) 38 (1983) 55 (1999–2000) 38 (1983) 55 (1999–2000)

Rural Male Female 116.60 141.81 0.90 1.19 10.53 14.50 0.30 0.40 3.31 8.94 6.62 13.51 2.56 6.36 9.18 12.11

77.59 90.26 0.27 0.32 5.67 8.03 – – 0.62 1.16 1.68 2.11 0.09 0.11 2.48 3.91

Urban Male Female 4.80 4.98 0.56 0.68 12.50 16.91 0.51 0.60 2.38 6.57 9.47 22.19 4.62 7.85 11.57 15.85

3.77 3.23 0.07 0.07 3.25 4.37 0.24 0.04 0.38 0.87 1.15 3.08 0.21 0.36 3.23 6.23

Source: Reproduced from Table 2.6, Chapter 2.

by as much as 77.6 per cent. The other industry division which showed a higher employment growth rate for females was manufacturing; in manufacturing, male workforce rose by 36.4 per cent as against 39 per cent in the case of female workforce. Evidently, compared to the high rate of expansion of female employment in services, male employment in manufacturing expanded only at a modest rate.

Exporter Related Industries and Feminisation On the basis of the changes observed in the distribution of the workforce, it may be noted that there has taken place substantial expansion of female employment relative to male workforce only in the services sector. Whether this change can be interpreted as evidence of feminisation of the labour force is highly debatable. It is, however, not the

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services industry as such that has been cited in the literature as the classic example of feminisation. Supporters of the feminisation hypothesis like Standing have, for instance, argued that outward-oriented development strategies based on export-led industrialisation leads to rapid growth of low-wage employment. It has been particularly highlighted that in the export processing zones of many industrialising countries it is not un-common for three-fourths of all workers to be women (Standing 1989: 1080). The relevance of these assertions is examined hereafter in the Indian context. It is well known that for countries like Hong Kong, Taiwan or Singapore, exports account for a relatively large share of the GDP. For them, the fate of the entire labour force and the shape of the economy as a whole, becomes inextricably interlinked with developments in the export sector. But for India, exports still constitute only a small proportion of GDP. In spite of the impressive growth of the export-GDP ratio (percentage) from 7 per cent during 1991–93 to 9.6 per cent during 1999–2004, the fact remains that exports still form less than one-tenth of the country’s GDP (Mallik 2005: 5486). Just as export-GDP ratio is low, the share of workforce accounted for by the manufacturing industry is also low. Out of a total workforce of 398.60 million in 1999–2000, only 43.81 million (11 per cent) was employed in manufacturing. It is, however, encouraging to note that the proportion of the output of the manufacturing industry exported (i.e., merchandise exports) has been growing rapidly in recent years. Exports of manufactured products accounted for as much as 56 per cent of the GDP originating from the manufacturing sector in 2003–04, as against only 27 per cent in 1990–91. Exports of manufacturers have thus played a ‘lead’ role in the post-reform period (Mallik 2005: 548). It has been pointed out that the growth in the proportion of manufacturing output exported has led to an increase in the employment elasticity in manufacturing. The most significant improvement in employment elasticity is found in the case of the food, beverages and tobacco industry reflecting an increase in the relative demand for unskilled or low-skilled labour (RIS 2005: 3). However, since merchandise exports constitute only a little over half the output of the manufacturing industry, even if the entire export sector came to be fully staffed by women, it is highly doubtful that it would result in feminisation of the Indian manufacturing as a whole (Banerjee 1999: 18).

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One standard argument of the supporters of the feminisation hypothesis has been, as noted earlier, that the outward-oriented development strategies based on export-led industrialisation have led to rapid growth of low-wage female employment, sometimes to the tune of three-fourths of the workforce, as in the case of export-processing zones in many countries. India is certainly not one among such countries in the world. The performance of the export-processing zones in India has been far lower than that of other developing countries in terms of the workforce employed. The total employment accounted for by the export-processing zones of India during the period 2000–03 was only 95,000 as against 820,960 for Philippines, 322,000 for Malaysia, 410,540 for Pakistan, and 30,000,000 for China (RIS 2005: 5). The fact of the matter seems to be that the export sector of India presents instances of domination of male as well as female labour. It has been emphasised that merchandise exports include a number of commodities in which the country’s relative advantage lies in its traditional skills, and not merely in providing cheap labour of any kind. For example, in 2003–04 (April–February), textiles including readymade garments, gems and jewellery, leather and manufacturers, formed about 40 per cent of India’s merchandise exports (Economic Survey 2003–04, Table 6.9). All these items are known mainly for the distinctive use of India’s traditional crafts in their manufacturing processes. It is pointed out that traditionally these are skills of male artisans and that if there are wider marketing opportunities and demand conditions for such products improve, the result would be more work for male workers who possess the traditional skills. With reference to the garment-making industry in Kolkata, it is pointed out that the entire workforce consists of Muslim male workers. This is also true of the garment-making industry around Delhi, which employs predominantly male artisans who hail from Uttar Pradesh (Banerjee 1999: 309–10). Leather and gems and jewellery industries are also known for the predominance of male artisans employed by them. If the garment-making industry in Kolkata and around Delhi are dominated by a male workforce, the Tiruppur Knitwear industry in Tamil Nadu presents a unique case of feminisation of the labour force. Tiruppur is possibly the best example of the ‘sweat shop model’ of development in the knitwear industry in India (Neetha 2002: 2045). It is pointed out that feminisation in Tiruppur is the result of a combination

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of two inter-related processes—women replacing men and the creation of jobs specially for women. The pre-eminence of Tiruppur in knitweat exports is evidenced by the fact that 80–85 per cent of cotton knitwear exports from India are accounted for by Tiruppur. About 60 per cent of the units in the industry consist of knitting/stitching units. Feminisation in the knitwear industry emerged from the early 1990s when ‘power tables’ were introduced for stitching. The adoption of power tables facilitated the entrance of female workers on a large scale. As a result, the proportion of female tailors rose to about 60 per cent in 2002; a total of 40,000 female workers were engaged in the stitching units. There are other operations like checking which involves examining the stitched cloth for defects and is a highly manual and monotonous operation. The degree of dexterity required and the monotonous nature of the work involved has resulted in the labelling of this operation as ‘feminine’. This operation has led to the large-scale absorption of women workers and it has been the first operation in the industry entirely performed by women workers. There are, of course, other operations too, but those are feminised to a lesser extent. Tiruppur has, therefore, come to be described as the best example of the ‘sweat shop model’ of development in the knitwear industry in India. On the basis of data collected through a survey of 290 workers, Neetha has sought to establish how the Tiruppur knitwear industry eminently qualifies for being described as a sweat shop model (Neetha 2002: 2048–52). Briefly, the distinguishing features were the following: 1. Forty per cent of the workers belonged to the age group of 20–35 years. Not a single woman worker was found to be above 45 years. 2. A majority (68 per cent) of the workers had education only upto the seventh standard. 3. A large proportion of women workers were migrants from nearby districts. 4. Of the total number of women workers surveyed, 96 per cent were employed as casual workers. And 68 per cent of them worked for 101–200 days in a year. 5. Eighty three per cent of the women workers employed in less-skilled operations received wages less than or equal to Rs 50 per day. For the skilled category, the average daily wage varied between Rs 40 and Rs 80 as against the prescribed minimum wage of Rs 59.88. 6. Piece rate subcontracting was the most common form among women workers. About 92 per cent of the women workers surveyed came under piece-rate wage contracts.

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Feminisation and Gender Division of Labour Before we conclude this chapter it seems appropriate to emphasise that the feminisation addressed here is altogether different from gender division of labour, an issue widely discussed by sociologists in India. Gender division of labour, it is pointed out, reflects the broader ‘social relations of gender’. The essence of this view is that female industrial workers are hired to do labour-intensive ‘serial production’ with low inputs of capital per worker. The supposed suitability of women for monotonous processes of production is linked to a view that women are naturally endowed with manual dexterity, a quality which renders them adept and the most suitable for meticulous and labour-intensive work (Lindberg 2002: 101–02). The cashew industry in Kerala has been chosen by Lindberg as a typical case of gender division of labour. In her very detailed and meticulous presentation of work processes in the cashew industry, six principal processing operations are highlighted, namely roasting, shelling, drying, peeling, grading and packing. Of the six work processes, roasting has always remained a man’s job. Three of the main processes—shelling, peeling and grading—are ‘unconditionally’ defined as female occupations. Cashew factory owners have always attributed certain characteristics to women, namely deftness, nimbleness of fingers and patience, to justify the fact that the majority of cashew workers consist of women. Women workers have been defined as the antithesis of the able-bodied, machineoriented male workers (Lindberg 2001: 122). It may be specially mentioned that the proportion of female workers in the cashew industry had increased from 73 per cent in 1952 to 97 per cent in 1993–94, a unique record for any industry.

Summary and Conclusions The data base of the feminisation hypothesis, as postulated by Standing and others, is shaky for various reasons, the major reason being the non-comparability of economic trends among countries characterised by wide diversities in economic conditions and social values.

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There has taken place no rise in female labour force participation rates in India; on the other hand, there was a slight decline in them during 1983–2000. The same finding is broadly valid for worker-population ratios also. Over the same period, female WPR declined in respect of both the rural and the urban female populations. Going by broad industry divisions, it was observed that female employment in services and manufacturing registered higher growth rates than male employment; female employment in services particularly registering a far higher growth rate. Exports of manufactured products accounted for as much as 56 per cent of the GDP originating from the manufacturing sector in 2003–04 as against only 27 per cent in 1990–91. However, export-GDP ratio still remained low at 9.6 per cent during 1999–2004. The share of the workforce accounted for by the manufacturing industry was only 11 per cent of the total workforce. Even if the entire export sector came to be staffed by women, it is doubtful whether such a development would result in feminisation of the Indian manufacturing industry as a whole. The workforce composition of the export sector of India presents instances of both male and female domination. While, on the one hand, the textile industry including readymade garments in Kolkata and around Delhi, gems and jewellery and leather and leather manufactures, traditionally depended on skills of male artisans, the Tiruppur knitwear industry in Tamil Nadu on the other presents a conspicuous case of feminisation (the best example of a ‘sweat shop’ model).

Chapter Six

Informalisation of Employment

Introduction In chapters 4 and 5, the meaning and the rationale of the concepts of casualisation and feminisation respectively were discussed with particular reference to the post-reform period. However, it is important to note that casualisation of labour is not a post-reform phenomenon as feminisation is supposed to be. Casual labour is inevitable in enterprises characterised by seasonality such as agriculture. However, with increasing emphasis on cost-cutting competitiveness on both domestic and international fronts, casualisation is no more confined to agricultural operations and has gained wider application as a cost-cutting strategy. With increasing emphasis on cost-cutting competitiveness, globalisation has meant a strenuous search on the part of employers for ways of reducing labour costs. Consequently, firms have placed a greater premium on workers who are prepared or forced to take up low-wage jobs. They have increasingly turned to casual labour, female labour (feminisation), and various forms of sub-contracting such as outsourcing and home-working. Further, globalisation stands for growing mobility of products, capital and technology across national frontiers. It is pointed out that in a nonglobalised setting industrial pricing tended to be on a cost-plus-markup basis so that price adjustment could substitute for cost adjustment.

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But with globalisation, domestic prices are increasingly influenced by international prices and the importance of cost adjustment increases proportionately. Hence the growing emphasis on cost-cutting competitiveness (Ghose 1996: 570). It is against this backdrop of ‘flexibilisation’ that the present chapter introduces a third major form of cost-reduction, namely informalisation. Although the dichotomy of ‘formal’ and ‘informal’ sectors has often remained misleading, a growing proportion of jobs possess what may be called informal characteristics, i.e., absence of regular wages and other benefits, employment protection, etc. The concept of regular full-time wage labour as the growing type of employment has been giving way to a more diverse pattern characterised by ‘informalisation’ of employment through more networking, contract labour, casual labour, part-time labour, home work and other forms of labour unprotected by labour regulations (Standing 1999: 185). The rest of this chapter is organised as follows: In Section 2, the concepts, definitions and approaches are discussed. Beginning with the International Labour Organisation (ILO) employment mission to Kenya, the role played by the ILO as well as the International Conference of Labour Statisticians is also addressed in this section. Section 3 outlines the components of the informal economy which consists of both nonwage and wage employment. In Section 4, attention is focussed on nonwage employment in the non-agricultural sector. An examination of the various forms of wage employment is undertaken in Section 5. How, in apparently formal enterprises, informal arrangements harmful to workers prevail is the theme in Section 6. The interesting as well as the sometimes intriguing phenomenon of invisible groups of informal workers is addressed in Section 7. Some data on such workers are highlighted in Section 8. Section 9 briefly examines wage levels in the informal economy with special reference to findings from earlier studies. The chapter concludes with a review of the prospects of the informal sector in Section 10. Section 11 presents the prospects for the informal sector. The main findings of the discussion are summarised in the final section.

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Informal Sector: Concepts, Definitions and Approaches In the second half of the 1960s, optimism about economic growth prospects began to give way to concerns about persistent widespread unemployment in the developing countries. Reflecting this concern, the International Labour Organisation (ILO) initiated a series of ‘employment missions’ to various countries. The first such mission was to Kenya in 1972. The Kenya mission recognised that the ‘traditional sector’, what it called the ‘informal sector’, had not just persisted but expanded; that the informal sector was not confined to marginally productive activities but included profitable and efficient enterprises (cited in Chen et al. 2002: 1). It may, however, be added that the concept of the informal sector did not originate with the ILO mission to Kenya although they helped popularise it. The term ‘informal sector’ was coined by Keith Hart in his 1971 study of informal sector opportunities in urban Ghana (Hart 1973: 68). It has been observed that during periods of economic adjustments—whether due to economic reforms or economic crises— the informal sector tends to expand because retrenched workers often move into the informal economy when public sector enterprises are closed or the public sector is downsized. Available evidence also suggests that without appropriate institutions and public policies, the informal part of the economy will persist or expand even after macroeconomic stabilisation and economic growth (Chen et al. 2002: 2). The ILO Kenya Mission Report of 1972 defined economic informality as a ‘way of doing things, characterised by: (i) ease of entry; (ii) reliance on indigenous resources; (iii) family ownership of resources; (iv) small-scale of operations; (v) labour-intensive and adapted technology; (vi ) skill acquired outside the formal school system; and (vii) unregulated and competitive markets’ (Lubell 1991: 17). Most subsequent definitions have been only variants of the Kenya report’s list. In order to avoid a multiplicity of criteria, a general definition of the informal sector as small-scale units engaged in the production and distribution of goods and services whose primary objective was to generate employment for the participants rather than to maximise profits, was proposed by S.V. Sethuraman. Accordingly, he would treat all enterprises

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or productive units with less than a maximum number of workers (usually ten) or enterprises with more than the suggested number of workers that satisfied at least one of the following additional criteria as those belonging to the informal sector. They operated illegally; they worked on an irregular basis; they were located in temporary structures or in the open; they did not use electric power; they did not depend on formal distribution networks and most of their workers had less than six years of schooling (Lubell 1991: 17–19). In practice, however, in establishment surveys relating to the performance of the informal sector, the size of the establishment is the criterion most frequently used. Another frequently used indicator is the physical appearance of the enterprise and the kind of structure in which it operates (e.g., temporary structure made of non-permanent material). The surveys of informal sector enterprises made by the ILO and others have reported that the majority of informal sector participants prefer the relative independence their occupations offer to the status of low-paid formal sector factory workers. Further, these surveys showed that many informal sector participants who had worked in the formal sector prior to going into the informal sector had shifted to the informal sector not because they had been redundant to the formal sector but because they chose to be self-employed, using skills acquired in the formal sector to establish themselves as independent producers or traders (Lubell 1991: 111–12). As already noted, the ILO’s definition of the informal sector was descriptive and it implied a multiple criteria. In practice, however, most of the early ILO studies relied on the number of employees. The 15th International Conference of Labour Statisticians (ICLS), 1993, sought to resolve the problem of multiple criteria of the informal sector. They decided to adopt a single statistical definition for the purpose of data collection. A System of National Accounts (SNA), 1993, prepared under the auspices of the International Working Group on National Accounts defined the informal sector as comprising all household sector units that produce for the market. It consists of (i) informal own-account enterprises; and (ii) enterprises of informal employees that do not constitute a separate legal entity outside the household. It thus endorses what is popularly known as ILO’s concept of the informal sector. Restricting the coverage of the informal sector to production for market

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would exclude own-account production for final consumption, production of housing services by owner occupiers, domestic services produced by servants, hidden/illegal production etc. from the purview of the informal sector. The SNA definition of the informal sector, it may be noted, is based on the legal status of the enterprise. Hence, it does not provide any clue about the status and working conditions of the workers in the informal sector. However, it may not be correct to assume that all workers in the formal sector are better off than all workers in the informal sector. The dichotomous definition of the formal and the informal sectors distinguishes the status of the enterprise. This is useful for national accounts and in estimating the gross value originating from the two sectors. The concept of the ‘informal economy’ (a term preferred by writers like S.V. Sethuraman) in fact tries to characterise the workers on the basis of the degree of informality of their work status. This is more useful to persons concerned with wages, working conditions and access to social protection for workers. A second problem with the enterprisebased definition arises when it is used in an establishment survey to distinguish the unit. This definition tends to leave out numerous invisible groups of own-account enterprises such as those operating on the streets or in own house premises (Unni 2001: 2361).

Components of the Informal Economy Workers in the informal economy can be classified into those engaged in non-wage employment and those engaged in wage employment. Non-wage employment (self-employment) comprises own account workers (employers or owners of informal enterprises with at least one hired worker) and unpaid family helpers. An approximation of the measure of non-wage employment may be arrived at by the adding up of employers, own account workers and unpaid family helpers, according to the activity status classification of the NSS. While it may be relatively safe to assume that own account workers and unpaid family helpers are part of the informal economy, this assumption may not be accurate for the category of ‘employer’. Employers, however, form a very small proportion of the workforce (Unni 2001: 2362).

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Wage employment comprises (i) employees in the enterprises of informal employers; outworkers or home workers (i.e., persons working at home or on premises of their choice other than those of the employers to produce goods or services on contract or order for specific employers or contractors); (ii) independent wage workers not attached to any one employer but providing services to many employers (e.g., maids and watchmen); and (iii) informal employment in formal sector enterprises: workers whose pay and benefits do not conform to existing labour regulations. The NSS classifies wage employment into casual and regular. All regular workers do not necessarily belong to the formal economy as they often do not receive a variety of benefits due to the formal worker such as provident fund and paid leave (Unni 2001: 2362). An approximate measure of wage employment in the informal economy may be obtained by assuming that all casual employees definitely constitute a part of the informal economy, since they are the least likely to obtain any of the benefits accruing to the formal economy workers. Another measure of informality is the earnings differentials. The informal economy is characterised by inferior quality of work and correspondingly inferior terms of employment. Inferior technologies lead to low productivity and hence to low earnings or incomes.

Non-wage Employment in Non-agriculture Almost the whole of the agricultural sector may be treated as constituting the informal sector. India has experienced a decline in the share of the agricultural sector in total employment. Hence a good measure of the changes in the informal economy over time would perhaps be conditions in the non-agricultural sector. A rough estimate of the informal economy in the non-agricultural sector is given by the proportion of non-wage workers, self-employed workers and unpaid family workers taken together, to total workers in this sector. The non-agricultural sector is disaggregated into the secondary and the tertiary sectors. The results of the NSS 38th, 43rd and 50th rounds in 1983, 1987–88 and 1993–94 respectively indicate a rise in non-wage employment in the non-agricultural sector (i.e., non-wage workers as a proportion of total non-agricultural labour force) from 20.3 per cent in 1983 to 44.9 per cent in 1993–94 (Unni 2001: 2366). This may be taken as an indication of the growth of

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informalisation in the economy. In the case of industry, the percentage of non-wage workers increased from 19.7 per cent in 1983 to 38.0 per cent in 1993–94.

Casual Employment as a Predominant form of Informalisation Formal employment, as has been noted earlier, is characterised by clearly defined terms and conditions of employment such as pay on appointment and scale of pay, allowances the employee is entitled to (dearness, house rent, and medical allowances), bonus if any, types of eligible leave and benefits attached to each type of leave, retirement benefits including pension, gratuity, provident fund, commutation of a portion of the pension etc., definite norms regarding the age of retirement and provision for extension. These rules are applicable to all levels of employees, from the lowest grade worker to the highest functionary. The process of casualisation begins the moment norms are relaxed, i.e., workers begin to experience denial of benefits. Casualisation of the workforce becomes complete when almost all the privileges/benefits, except the wage attached to the work, are denied. Casualisation is more prevalent in sectors in which workers are unskilled and the least educated, as is true with employment in most agricultural operations. Especially in situations in which excess supply of unskilled labour exists, casualisation becomes easier. As noted in Chapter 4, in India agriculture accounts for the highest proportion of casual labour (43.6 per cent) while the share of casual labour in services is as low as 10.8 per cent. In contrast, the proportion of regular employment in agriculture is only 1.5 per cent of the workforce. No other sector is characterised by such all-pervasive casualisation. In fact, it is the extent of casualisation which qualifies agriculture as the most informal sector in the Indian economy. The trends in casualisation in the Indian economy (Chapter 4) indicate that the proportion of male as well as female casual workers increased in general, in both the rural and the urban sectors during the period from 1983 to 1999–2000, except in respect to urban females whose share of casual employment registered a sharp decline from 25.8

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to 21.4 per cent between 1993–94 and 1999–2000. The sharp fall in casual employment among urban females may be partly due to their absorption in regular employment as a result of their rising educational attainments. It has been reported that educated urban females are employed in increasingly large numbers in IT and IT-enabled services (ITES). Agriculture accounts for the bulk of casual labour in India, but industry is not far behind in this respect. According to one source already referred to in Chapter 4 (Ghose 2004: Table 6), 35.8 per cent of the workforce in industry consists of casual labourers. However, it needs to be emphasised that casualisation of the labour force in industry cannot be pursued to the same extent as in agriculture because of differences in the levels of skills required from different categories of workers. Further, seasonality in operations is not of the same order of magnitude in industry as in agriculture though seasonality exists in varying degrees in industry too (adequate availability of raw materials is a major factor influencing seasonality; e.g., the cashew industry in Kerala). Besides workers directly engaged in the production process, there remain several other limited categories of workers in organised industry who are hired on a casual basis such as maintenance staff (electricians, plumbers, painters etc.), gardeners, sweepers and cleaners, drivers and security staff including watchmen. Casual workers in industry do not always constitute a homogeneous group. Referring to the knitwear industry in Tiruppur in Tamil Nadu, Neetha has distinguished three categories of casual labour—temporary, seasonal and daily (Neetha 2002: 2049). Temporary workers are casual labourers who are employed for a period of more than 6 months; seasonal workers are engaged for 3–6 months and daily workers are hired on a daily basis. Seasonal workers constituted the dominant group among women workers.

Informalising Employment in the Formal Sector One of the processes of informalisation of the labour force has been an attempt on the part of employers in apparently formal enterprises to reduce their liabilities towards workers. Increasingly, workers in formal

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work situations get to be governed by looser contracts involving lower levels of benefits. This process has been exemplified by factories in Ahmedabad and reported in a study by Unni (Unni 2001: 2368). The results of Unni’s study show that only about 21–26 per cent of both the male and female regular employees had written or oral contracts. The corresponding proportion was only about 5 per cent for male and nil for female casual workers. Workers were also asked whether they had security of employment on any particular day. More than 90 per cent of the male and female regular employees felt that their employers would engage them if they appeared at the workplace on any day. The corresponding proportion was much smaller for casual employees— 59 for males and 69 for females. Thus security of employment appeared to be better for female than for male workers. Again the proportion of regular employees entitled to paid leave was much higher among females (50 per cent) than among males (33 per cent). The explanation for the observed disparity was the difference in the nature of the regular employment held by women (which was mainly in the government and in registered factories) and by men (who were engaged in the government sector and in unregulated enterprises). The extent of disparity was very small in the case of casual workers—only about 4 per cent. Receipt of social security benefits such as provident fund, pension, medical assistance etc. was reported by only about 24–30 per cent of the regular employees. In the case of casual workers the corresponding proportion was negligible. Thus a large proportion of regular employees were in fact informally employed without the benefits that formal workers are eligible for.

Invisible Groups of Informal Workers The international attention on invisible groups of informal workers has been increasingly getting concentrated on home-based workers and street vendors. Their invisibility arises partly from the fact that they are often women and work in not clearly designated ‘business places’ (e.g., within homes or in the street). The ILO adopted a convention on home work in 1996. It defined a home worker as a person who worked for

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remuneration in premises of his/her own choice, other than the work place of the employer, resulting in a product or service as specified by the employer, irrespective of who provided the equipment, material or inputs used. Home workers are a sub-category of home-based workers. Home workers constitute an intermediate category between the selfemployed and the employed. They share with the rest of the workers (employees) the backing of contracts, prescribed remunerations/wages and employers. They differ from other workers/employees in respect of ownership of the means of production and supervision. Remuneration paid to the home worker stands for remuneration for work stipulated in the contract as in the case of any other worker/employee. In contrast, the self-employed person earns his/her income from the sale of his/her produce or product, the price of which is market-determined. Home workers like the self-employed own tools and equipment and work in their own houses/places meeting certain costs (actual or imputed rent, lighting, power etc.). They are not supervised, a characteristic which is true also of the self-employed. Home-based workers form a broad category of workers of which home workers are but one component. They are defined as those ownaccount workers and unpaid family helpers who are engaged in gainful economic activities within their homes (their places of work are their home). It is important to note that employers working at their homes are excluded from this category. Street vendors are another category of invisible workers that are difficult to capture. They may have a fixed location or may be mobile (e.g., vegetable vendors, fish mongers). Besides street vendors, there may exist other kinds of own-account workers whose place of work is on the street (e.g., auto-drivers, cycle-rickshaw drivers, hand-cart pullers).

Some Empirical Data on Invisible Workers It is difficult, as pointed out by Unni, to obtain empirical data on these different specific groups of invisible workers (Unni 2001: 2369). Conceptually, labour force surveys like NSS would capture street vendors as persons engaged in retail trade (industrial classification). Unless the labour survey asks a question on the ‘place of work’, it is not possible to estimate the proportion of traders who are also street vendors. The occupational

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classification at the three digit level has a specific code (431) for street vendors, canvassers, etc. Published data, however, at this level of disaggregation are difficult to obtain. It is not clear either as to how home workers and home-based workers are captured in the official data. In the study of Ahmedabad city by Unni (1998), referred to earlier, the percentage of the self-employed among non-agricultural workers was 29 for males and 34 for females. Along with unpaid family workers, they formed 34.2 per cent among male non-agricultural workers and 58.6 per cent among female non-agricultural workers. Among women workers, home-based workers formed about 8 per cent of the nonagricultural workers while among male workers, they were only about 3 per cent. The largest proportion of women workers consisted of home workers and unpaid workers; 24 per cent. About 15 per cent of the male non-agricultural workers worked on the streets. For females the corresponding proportion was relatively small, only 2.2 per cent. Street vendors constituted almost all the women workers on the street (2.2 per cent) but only 6.3 per cent of the male workers. The rest of the male workers on the street were mainly auto-rickshaw and cycle-rickshaw drivers and hand cart-pullers. Self-employed workers with a separate business place formed only 5 per cent of male workers and a negligible proportion of women.

Unpaid Work: SNA Norms The UN system of National Accounts, 1993 (SNA 1993 cited in Unni 2001) defines the production boundary for purposes of national accounts. In defining the production boundary, the 1993 SNA includes the production of all goods within the production boundary and the production of all services except personal and domestic services produced for own final consumption within the boundary of households other than those of the services of owner-occupiers and by paid domestic staff. Production also included the gathering of wild fruit or berries, and firewood and carrying of water from one location to another. All these activities included in the production boundary are called SNA activities and considered labour force participation in the official data. Women’s work in domestic duties and caring of the sick, the aged and

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children, is excluded from the definition of work and labour force participation. According to the methodology adopted by the NSSO in India, the SNA activities consist of primary production activities like crop production, animal husbandry, manufacturing, trade, business and services. Extended SNA activities include household maintenance and care of children, the sick and the elderly. Activities related to learning, social and cultural activities, work in news media, personal care and selfmaintenance are categorised as non-SNA activities.

Wages and Incomes in the Informal Economy The major criticism against informalisation is that it generally results in lower earnings and greater poverty for those who work in this sector. It has been observed: ‘Average incomes are lower in the informal economy than in the formal economy. As a result, a higher percentage of people working in the informal sector relative to the formal sector, are poor .... Informal incomes worldwide tend to decline as one moves across the following types of employment: from employer to self-employed to informal and casual wage workers to industrial out workers’ (Chen et al. 2002: 12).

In the study of Ahmedabad city already referred to, about 64 per cent of the male and 40 per cent of the female employees were engaged in informal enterprises spread out in 19 industry groups. Of the 10 industry groups in which male workers were engaged in both the sectors, the wages in the formal enterprises were higher in eight. In general, males in the informal enterprises also received wages above the minimum fixed in 1994. The scenario, however, changes if the indexed minimum wage at the lower end of the range, Rs 45 or the poverty line wage in 1998, Rs 52 is considered. The average male wage in the informal units, Rs 46.80, was just about equal to the indexed wage but below the poverty line wage. In the 19-industry group, male workers in only nine industries received wages higher than Rs 45. For all the women in the informal units the situation was obviously much worse. The only industry groups in which workers received wages above Rs 100 were those employed in the municipal corporation area and in a petrol pump.

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In the same study, 188 home workers, working on piece rates, were also covered. About 85 per cent of them were women concentrated in garment, kite and hair rubber-band making, and bidi and agarbatti rolling. Of these only garment-making and bidi-rolling, which accounted for 37 per cent of the home workers in the sample, were covered under the Minimum Wages Act. The results of the survey revealed that the daily net wages received by female garment-makers was only Rs 31.50, an amount lower than the daily minimum wage rate of Rs 33.80 fixed in 1994 for garment manufacturing establishments with more than three workers. The illustrations given are meant only to indicate the vulnerability of workers in the informal sector. They, however, suggest that any increase in informalisation would lead to further vulnerability of the informal sector workers. According to some observers, along with informalisation, feminisation of work is also on the rise. It is pertinent to note that writers who trace the growth of informalisation of work relations also necessarily dwell upon feminisation. New work opportunities for female workers are generated in the ‘informal segments’ of the organised sector. These new opportunities are ‘embedded in perpetual job insecurity, de-unionised, low wage, low-skilled jobs’ (Vanamala 2001: 2378). While Unni selected Ahmedabad city for the study of informalisation, Vanamala did a study of one particular industry in Andhra Pradesh, namely engineering, which is an expanding industry both in terms of domestic and export markets (Vanamala 2001: 2378–89). Among the findings of this study the following are of interest. 1. The industry’s recruitment system coupled with the prescribed pre-requisites for workers to get qualified for recruitment is very tactical. Unmarried girls in the age group of 16 to 17 years with educational qualification of Secondary School Leaving Certificate (SSLC) are recruited for training on a consolidated stipend of Rs 520 per month in the first year; the amount of stipend is enhanced in subsequent years. During the training period no job protection whatever is provided. A three-year period of training is stipulated by the management though the trainees report that only a three-month period of training is sufficient. The worst part of the arrangement is that the period of training could be extended beyond three years. The stipend that the trainees receive during the period of training falls far short of the minimum wage of Rs 60 per worker per day. 2. The industry does not employ female employees on the management side, not even at the supervisory levels. Women are put to work on the operation side at the tail-end of the production process.

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3. The working conditions in the industry are exploitative. The girls recruited work for 8 to 16 hours continuously in a standing position. 4. The unmarried workers, who live with parents, are naturally provided shelter, health care and other support by parents; thus these industrial units are heavily subsidised in an indirect form by the families of the women workers. 5. The industry has resorted to several manoeuvres for deterring the workers from organising. It has segregated them in terms of nature of employment, wages, annual increments and system of wage payments. Differences also exist in terms of non-wage benefits such as eligible leaves and provident fund. 6. In spite of the industry earning profits, it is resorting to rapid informalisation practices resulting in expansion of casual workers.

The Prospects for the Informal Sector The National Sample Survey (NSS) and the Central Statistical Organisation (CSO) collect information on three categories of informal enterprises: (i) own account enterprises (OAE), owned and operated without the help of any regularly employed or hired workers; (ii) non-directory establishments (NDE) enterprises which employ a maximum of five workers of which at least one is a regularly employed hired worker; and (iii) directory establishments (DE), which employ six or more workers of which at least one is hired. It may be noted that own account enterprises form the vast majority in terms of the number of units and workers, closely followed by non-directory establishments, which form the second largest group. The view has been widely expressed that with structural adjustment and the related economic reforms, the informal sector would generate employment sufficient to compensate for the reduction in organised employment. This view is now being questioned; it is observed that a large number of industries in the informal sector, both own-account manufacturing enterprises (OAME) and non-directory manufacturing enterprises (NDME) employing at least one but not more than five workers, have shown a significant decline in the number of workers as well as units since the late 1980s (Kundu et al. 2001: 122). In the rural informal manufacturing sector, between 1984–85 and 1994–95 both the number of units and employment they provided declined; more than 4 million informal manufacturing jobs were lost and just over

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4 million units were closed down. In rural areas where more than 80 per cent of all the informal sector manufacturing units are located, ownaccount enterprises accounted for the overwhelming majority of job losses as shown in Tables 6.1 and 6.2. Table 6.1 Rural unorganised sector manufacturing enterprises and employment, growth rates per annum by category of enterprises

Description Units

Workers

Period

OAME

1978–79 to 1984–85 1984–85 to 1989–90 1989–90 to 1994–95 1978–79 to 1984–85 1984–85 to 1989–90 1989–90 to 1994–95

15.28 –3.44 –3.31 15.52 –2.27 –1.79

Enterprises category NDME DME 12.59 –6.37 –1.97 0.96 –1.64 –3.41

4.23 4.56 5.61 0.96 6.66 –2.28

Total 14.80 –3.20 –3.03 13.17 –1.42 –1.98

Source: S. Mahendra Dev, Pro-Poor Growth in India: What do we know about the Employment Effects of Growth 1980–2000? Working Paper 161, Overseas Development Institute, London, March 2002, Table 7. Note: OAME: Own Account Manufacturing Enterprises. NDME: Non-directory Manufacturing Enterprises (employing at least one but not more than 5 workers). DME: Directory Manufacturing Establishments (employing at least 6 workers). Table 6.2 Rural unorganised sector trading enterprises and employment, growth rates per annum by category of enterprises

Description Units

Workers

Period

OATE

1978–79 to 1984–85 1984–85 to 1989–90 1989–90 to 1994–95 1978–79 to 1984–85 1984–85 to 1989–90 1989–90 to 1994–95

8.80 3.95 –1.77 9.85 2.85 –3.01

Enterprises category NDTE DTE 10.06 3.61 –3.34 10.55 2.19 –3.31

n.a. 18.0 –0.88 – 11.57 0.85

Total 8.60 3.91 n.a. 8.93 2.76 n.a.

Source: S. Mahendra Dev, Pro-Poor Growth in India: What do we know about the Employment Effects of Growth 1980–2000? Working Paper 161, Overseas Development Institute, London, March 2002, Table 8. Note: OATE: Own Account Trading Enterprises. NDTE: Non-directory Trading Enterprises (employing at least one but not more than 5 workers). DTE: Directory Trading Enterprises (employing at least 6 workers).

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With respect to the number of units, it is seen that rural unorganised sector manufacturing enterprises with the sole exception of directory establishments, registered a consistent decline since 1984–85. The annual growth rate of the number of directory manufacturing enterprises was consistently positive since 1978–79; during 1989–90 to 1994–95 it registered the highest rate of growth, namely 5.61 per annum. However, the employment scenario presents an altogether different picture. In sharp contrast to the growth in the number of directory manufacturing enterprises, the workforce in all categories including directory enterprises declined during the period 1989–90 to 1994–95 (Table 6.1). In the case of rural unorganised trading enterprises also, the trends are broadly identical. Compared to the previous periods, the annual growth rates of the number of enterprises in all the categories—OATE, NDTE and DTE—registered a decline. The annual growth rate of the workforce in all the categories except directory trading enterprises was negative during 1990–91 to 1995–96 (Table 6.2). Thus in general there has been a marked decline in the number of unorganised sector manufacturing as well as trading enterprises during the post-reform period followed by a general decline also in the number of workers during each category. Naturally there has taken place job loss in respect to most categories as shown in Table 6.3. Table 6.3 Informal sector job losses in manufacturing and trade, numbers by category of enterprises Sector

Rural or Urban

Manufacturing Rural Urban Trade Rural Urban

OAE

NDE

DE

All enterprises

4,067,803 497,921 1,330,671 nil

533,418 nil 122,728 nil

299,522 nil n.a. n.a.

4,900,743 497,921 1,453,399 n.a.

Source: S. Mahendra Dev, Pro-Poor Growth in India: What do we know about the Employment Effects of Growth 1980–2000? Working Paper 161, Overseas Development Institute, London, March 2002, Table 9. Note: 1. The gross numbers given in the table exclude the effect of any gains in other segments. 2. OAE: Own Account Enterprises; NDE: Non-Directory Enterprises DE: Directory Enterprises. 3. No DTE data is available for 1995–96. 4. For all enterprises rural trade figure does not include DTE.

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It may be noted that in stark contrast to the trend during the period between 1979–80 and 1984–85, both the number of units and the number of workers employed declined during the period between 1984–85 and 1994–95; more than 4 million informal manufacturing jobs were lost and just over 4 million units were closed down. Besides, in rural areas where more than 80 per cent of all informal sector manufacturing units are located, own account enterprises accounted for an overwhelming majority of job losses. Two significant changes in the structure of the workforce in the nonfarm informal sector seem to have been thus taking place in India during the post-reform period: (i) a decline in the number of rural manufacturing and trading units as a result of their moving to urban areas; and (ii) within the rural informal sector, loss of more jobs in manufacturing than in trade. Further, within manufacturing and trade, job losses were concentrated among the self-employed in family operated enterprises, due partly to the very low literacy levels in rural areas. Rural manufacturing and trade were diversifying from traditional agro-processing to modern sector activities as the result of which the prevailing education levels of rural labour were no longer found sufficient. While most of the rural manufacturing and trade units were family-operated enterprises, the new rural jobs were, by and large, casual. This is a major factor contributing to the increasing casualisation of the rural labour force or a withdrawal, in the case of women, of workers from the labour market. It may also be noted that the decline in rural manufacturing and trade units particularly affects women who are not moving out of agriculture as much as men are, and are not major participants in the high-employment sectors (Dev 2002: 31).

Summary and Conclusions Informal economy is made up of (i) non-wage (or self-employment) employment consisting of informal employers, own account workers and unpaid family helpers; (ii) wage employment comprising workers hired by informal employers and independent wage workers; and (iii) informal workers in formal sector enterprises.

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Casualisation is a predominant form of informalisation. Though agriculture accounts for the bulk of casual labour in India, industry is not far behind it; 36 per cent of its workforce consists of casual labourers. Informalisation has been making inroads into the formal sector. A study on industries in Ahmedabad has confirmed that a large proportion of regular employees in organised industries were in fact informally employed without the benefits enjoyed by formal workers. Some informal workers such as home-based workers and street vendors constitute an ‘invisible’ group. Their invisibility arises partly from the fact that they are often women who work in not clearly designated business premises. It was also noted from the findings of a sample survey of industries in Ahmedabad that formal sector wages were higher than wages in the informal sector and that wages of male workers were higher than wages of female workers. However, the average male wage was only about equal to the ‘indexed minimum wage’. A study on the engineering industry in Andhra Pradesh has revealed that unmarried young female workers were subjected to harsh discriminatory treatment in terms of the number of hours of work, amenities provided at the workplace, job protection, customary service benefits like annual increment, upward mobility, etc. There has been in the post-reform period thus a decline in the activities of the manufacturing and trade units of the non-farm, rural, informal sector, as a result of their moving to urban areas; and within the rural informal sector itself, manufacturing has been losing more jobs than the trade sector. Further, within manufacturing and trade, job losses were concentrated among the self-employed in family-operated enterprises.

Chapter Seven

Emerging Opportunities for Employment: The Case of IT and IT-enabled Services with Special Reference to Business Process Outsourcing

Introduction In the three preceding chapters, casualisation (Chapter 4), feminisation (Chapter 5) and informalisation (Chapter 6) were identified as important and emerging labour market tendencies in the Indian economy during the post-reform period. Employers resorted to these practices as costcutting measures with respect to unskilled labour. Undoubtedly these are ‘negative’ policies adopted in the pursuit of maximising returns and are in varying degrees exploitative in nature. The excess supply of unskilled labour, coupled with limited labour mobility in most cases, has rendered these inequitable practices relatively easy to pursue. If the opening up of the Indian economy to global competition has had certain negative impacts as far as unskilled labour is concerned, it has also had tremendous ‘positive’ impacts with respect to highly skilled

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labour in such fields as information technology (IT) and IT-enabled Services (ITES). According to one commentator, In the next millennium the industrial age will give way to the virtual age. The creation of wealth through physical and financial assets will give way to wealth creation through knowledge management and reduction in interaction costs. Organisations will optimise talent globally through remote services. Any activity that does not require face-to-face interaction between a service and its receiver is good for remote processing (Veer Sagar, The Hindu, 25 March 2005: 17).

The task force on employment opportunities appointed by the Planning Commission of India in its report ( July 2003) has highlighted travel and tourism, information technology, housing and real estate development, construction, road transport, distribution, trade and education and health services as areas which have vast potential for employment generation in the post-reform period. From this group information technology (IT) is singled out for focused discussion because at the official as well as the non official levels in India, the arrival of IT is widely welcomed as a positive development. The rest of this chapter is organised in the following order: In Section 2 the contribution of IT towards generation of employment and revenue is briefly indicated on the basis of projections made. In Section 3 a simple presentation of IT-enabled services currently in vogue in India is made, mainly for the benefit of the uninitiated. The prospects of business processing outsourcing (BPO) in India is the theme of Section 4. Section 5 sums up the main findings.

Potential of the IT Sector: Employment and Income The potential employment opportunities provided by IT cover areas of highly skilled activities such as software development, and several ITenabled services (ITES) including call centres, customer relations management, back office accounting, and medical transcription. A study commissioned by the National Association of Software and Service Companies (NASSCOM) in 1999 and conducted by the internationally

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renowned management consultancy firm McKinsey and Company, has projected that total employment in IT and ITES would increase to 2.2 million consisting of highly skilled, skilled and semi-skilled workers by 2008. The quantitative significance of this projection can be well appreciated only if we consider that the growth in the total organised sector employment in the private sector between 1994 and 1999 was less than one million (Planning Commission of India 2001: 94). Apart from the substantial employment generated, according to the McKinsey report, by 2005 India’s software and services sector would have earned revenues to the order of US dollars 87 billion. The software and services sector alone would contribute to 7.5 per cent of the overall GDP growth. Further, this sector is expected to attract foreign direct investment (FDI) of more than US dollars 4 to 5 billion in 2008, more than the current FDI in all industries put together. While growth in IT services will generate most of the expected revenue of US dollars 87 billion, other sectors will also make significant contributions. Indian companies will make a large thrust into IT-enabled services increasing the export revenue to more than US dollars 17 million in 2008 (NASSCOM Strategic Review 2001: 33).

IT and IT-enabled Services in Vogue in India Basic Concepts Information Technology may be defined as computing and telecommunication technologies that provide automatic means of handling information. IT thus represents equipment: both the tangible hardware and the intangible software. A computer linked to other computers on a local area network (LAN) represents one example of IT (Heeks 1998: 5). Information Systems (IS) are defined as systems of human and technical components that accept, store, process, output and transmit information. They may be based on any combination of human endeavours, paperbased methods and IT. Thus, as Heeks puts it, IT on its own does not do anything useful; in order to do anything, it must become part of an information system. Information systems do not necessarily involve computers and telecommunications equipment.

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Business Process Outsourcing (BPO) Outsourcing is said to be the business tool of the 21st century. Business process outsourcing involves delivering higher quality business processes at lower costs by delegating back-office processes and related technology to external providers.

Onshore and Offshore Operations The precedent for offshore outsourcing was set several years ago when companies in the US rarely built manufacturing plants in the United States. Instead, China, Eastern Europe, India, the Philippines, South Korea and Taiwan were chosen by them as the locations for the manufacturing plants. Just as the physical supply chain had moved to the bestshore location in the 1980s, the information supply chain including IT and software application, development and maintenance moved offshore in the 1990s. A major chunk of business process outsourcing done today involves finance and accounting. In addition to the pay roll which is outsourced by half of all the companies, more than one-third of the companies currently outsource some or all of their tax work. The most widely accepted types of tasks of BPO include employment benefits, administration, travel service, pay roll processing, tax processing, accounts payables and even collections.

What can be Outsourced The traditional approach to identifying what to outsource was based on the notion that by outsourcing the non-core activities, a firm is able to focus on activities that are core to the business and hence get better at them. New firms are increasingly identifying the functions that provide them a competitive edge or strategic value and keep these functions inhouse while all other processes are considered viable for outsourcing. The most popular tasks to outsource are in general repetitive and prone to economies of scale when performed by one and the same company.

Outsourcing in India Most success stories of outsourcing to India have been centred around call centres and data entry. Higher value work like finance and accounting is yet in its infancy. It is pointed out that international companies are still wary of giving out higher value processes to Indian outsourcing

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providers. However, it should be remembered that offshore BPO is still barely a 6-year old industry. The following are some of the common business processes outsourced in India. 1. Medical Transcription: It involves the process of converting a doctor’s dictation to a transcribed file. A medical report is a permanent legal document that formally states the results of a medical investigation. The main purpose of medical records is to facilitate communication among health care professionals, aid and advance the science of medicine, comply with laws and serve in support of insurance claims. Medical records must be completed promptly after the physician sees the patient so that the chances of omission are minimised. Documentation has to be legible and accurate. Hospitals and physicians have been held liable because handwritten notes in medical records were unclear. Hence the need for computerised transcription which allows for transcription of medical dictation to be done quickly, accurately and legibly. 2. Call Centres: Due to globalisation, the world has become one large market and competition comes in from different countries and technologies. Moreover, globalisation has led to more and more open systems and product standardisation. Multinationals have been setting up call centres to answer customer queries on products, services and logistics. It is estimated that the call centre business has a potential of creating 5 million jobs. The countries that are likely to compete with India in this business consist of Ireland, Australia, Singapore and Malaysia. 3. Insurance Claim Processing: Insurance companies have two basic activities that require internal efforts (i) creating and setting up an insurance policy and then (ii) processing the large volume of insurance claims and accounting for the insurance claims. Apart from processing, there is a large amount of logistics involved in this task. The guidelines to the process are wellestablished and hence may be done remotely. In this business also there is an element of help desk, providing annual appraisal update services of all property, creation of low cost property value estimates and providing for claims reporting centres round the clock. 4. Back Office Operations: These include almost any non-core activity from accounts, finance and inventory management to sales process management, to human resources, payroll accounting, expenditure revenue accounting, airline reservation, credit appraisals, hospitality management, loyalty programmes and invoicing. It has been suggested that the following back office operations could be taken up in India: (a) Medical: In addition to transcription, other areas which could be done offshore are patient billings and records, bed management and inventory control.

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(b) Human resource services: These include recruitment screening, administration and relocation services, payroll processing, compensation administration, benefit planning and administration and regulating compliance. (c) Banking services: These comprise treasury processing like retail fund transfer processing, wholesale payment and cash management, custody and security processing, data processing, remote network management, credit and processing and asset management. (d) Sales and marketing: These consist of telemarketing and database searching, cold-calling and appointment fixing, billing, collection call centres subscriber management, call centres and help desk, logistics tracking, account monitoring and follow-up, pre-editing and lay out design of point of sale material, receivable management and customer feedback.

Prospects of BPO in India According to many observers, India is uniquely placed to offer a wide range of quality and cost-effective outsourced services such as IT and IT enabled services. Some of the biggest Fortune 500 companies are outsourcing their business processes to India due to: 1. The availability of a large, young, well-educated and English-speaking workforce. India’s English-speaking population numbers 30–50 million (almost as large as the population of a medium-sized country), and its labour costs are low by western standards; a major attraction for firms in the developed world. 2. The availability of reliable telecom and infrastructure facilities. 3. Government support in the form of subsidies and exemption for the IT-enabled services industry.

India has become a major player in the global software outsourcing industry, accounting for 24 per cent of the global offshored IT/ITES services in 2002. The industry, it is pointed out, had an impressive compound annual growth rate of about 50 per cent during the 1990s, earned US dollars 15.9 billion in revenues and achieved exports of US dollars 12.5 billion (IT and ITES combined) in 2003–04 (Upadhyay 2004: 5141). This still constitutes, as has been already noted, only a relatively small sector of the Indian economy in terms of output and employment but is significant in terms of its contribution to exports, which came to 19 per cent of the total during 2003–04.

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NASSCOM has highlighted the following strengths of the Indian software sector (NASSCOM 2001: 45–47). 1. High quality knowledge workers and attractive price performance have been and will continue to be a key component of India’s value proposition. 2. India’s main competitive advantage is its abundant, high quality and costeffective IT manpower. The IT software and services industry employed more than 410,000 professionals (as of 31 December 2000) compared to 6,800 knowledge workers in 1985–86. This is the second largest Englishspeaking, IT workforce in the world. 3. The majority of the Indian software companies use state-of-the-art technologies, including the latest in client-networking, e-commerce, Internet, application service provider (ASP), capability maturity model (CMM), CASE tools, etc. 4. Indian software professionals easily adapt themselves to new techniques. In the software industry in which technological obsolescence is the order of the day, flexibility to adapt to new technologies is a major strength. 5. Software programmes from India are able to provide expertise for small or large projects with dollar savings. 6. Off-shore software development in India especially through high-speed datacom (satellite links), provides immense cost and time saving. 7. Indian companies in increasingly large numbers are demonstrating their ability to handle large projects. 8. Software exports as well as the domestic demand in the last few years have been consistently growing at an annual growth rate of about 50 per cent. 9. A base of national institutes, engineering colleges and universities has laid a strong foundation of education in engineering skills amongst Indian software professionals. 10. India’s success in providing efficient software solutions may also be attributed to the mathematical and logical ability of Indians. 11. Indian entrepreneurs have done wonders in India as well as in the US’s Silicon Valley. More than 38 per cent of the Internet and e-commerce startups in Silicon Valley are initiated by Indians. 12. Since 1991 the Government of India accorded ‘thrust area’ status to the software sector. The government has amended the copyright law to make it one of the toughest in the world; it has eliminated import duty on computer software and exempted profits derived from software exports from income tax, etc. 13. Whereas in 1990 only 23 Fortune 500 companies were getting their software developed by Indian companies, in 1999–2000, more than 185 Fortune 500 companies outsourced their software requirements to India. This is a clear demonstration of the high level of respect global companies are according to Indian software companies.

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The NASSCOM in its latest ‘strategic review’ for 2006 (reported in The Hindu, dated 10 February 2006: 18) has painted a still more rosy picture of the IT and IT-enabled services sector. The sector, it is claimed, would account for 4.8 per cent of the GDP in the 2005–06 financial year, exports constituting nearly two-thirds of the total. It continues to chart a double digit growth and is expected to exceed US dollars 36 billion in annual revenues in the current financial year; out of this, software and services exports are estimated to grow by 32 per cent to reach US dollars 23.4 billion. IT services exports are likely to grow at 35 per cent and to touch US dollars 63 billion. Above all, the IT and ITES industry would employ 12.87 lakh workers during the current financial year. In fact, according to NASSCOM sources, the industry is currently facing a dearth of skilled labour; NASSCOM has been, therefore, working with academic institutions across the country to encourage greater industry interaction. The optimistic note struck by NASSCOM is not shared, however, by every one who has expertise in the field. Dr V.S. Arunachalam (former scientific adviser to the Ministry of Defence in the Government of India) in an article published in The Hindu dated 24 March 2004, cited Daniel Pink’s view that Indian IT professionals lack innovation and creativity. He has raised the question: why should Indian software corporations not initiate a few serious developmental problems like automating the call centre itself ? Such programmes, according to him, have all the ingredients of cutting edge computer technology: speech recognition, language translation, cognitive reasoning and artificial intelligence. Though it may not be practicable to automate all call centre transactions, according to Arunachalam, some are ripe for automation. From being mere underemployed operators in call centres, young professionals will become designers, fabricators, testers and maintenance engineers of autonomous call answering systems. India shall not then lose the call centre jobs that are anyway getting ‘commoditised’; instead, such efforts would provide value additions through technological innovations. The BPOs, particularly the call centres, have been criticised also on the ground that although they have achieved phenomenal success in offering English-speaking college graduates quick employment with comparatively high wages, they have transformed Indian urban labour into a ‘global proletariat’ (McMillin 2006: 235–41). On the basis of an ‘in-depth’ interview of 40 employees from six call centres in Bangalore,

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McMillin has concluded that working during the night while the workers have to attend to their domestic chores during the day, is the most glaring drawback of the job (The fact that India is 9–12 hours ahead of the United States and the United Kingdom and around 4–9 hours ahead of South-East Asia and Australia, necessitates call centre operations during the night). The survey has revealed that the majority (53 per cent) worked a 9-hour shift while some employees reported working even 10–12 hour shifts. A total of a one-hour break was allowed in most cases—30 minutes for a meal and 15 minutes each for two coffee breaks. Working conditions in the call centres, according to McMillin, resembled those of sweatshop labour and the employees worked for MNC ancillary factories on the outskirts of Bangalore city. The employees in the call centres complain not only of long, monotonous hours of labour and work in the night but also of abusive conversations from callers. Many of them also suffer from an identity crisis as they speak and work with an American name (McMillin 2006: 239; Thomas 2005: 129). If an environment that demands nocturnal labour for a remote clientele, devoid of interpersonal familial and social interaction, still seems attractive to the majority of the workers, it is because of the immediate material rewards it brings. While workers are aware of the drawbacks of the system they recognise that equally lucrative alternatives are almost non-existent. The US administration passed a law in 2004 banning out-sourcing of government contracts to foreign countries. Data on the impact of this legislation on India are not yet available. It is widely presumed that this legislation would have only a marginal effect on the employment situation in India. The actual loss of jobs in the US due to outsourcing has been estimated at 2.3 million since 2001 but the actual numbers that have gone offshore are estimated at only 200 thousand. In other words, the fall in employment in the US appears to have been due to a host of other factors. As far as the reaction of the Indian industry is concerned, there appears to be little concern over any decline in outsourcing. On the contrary, the ambit of outsourcing is actually broadening. From the stage of mere call centres handling back-office work, the scope of activity is now covering a much wider range including marketing; and companies are becoming strategic suppliers. Bangalore-based companies are even looking at the BPO backlash as a ‘back-handed compliment’ giving them a brand equity which they never had in the past (The Hindu, 29 February 2004).

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As long as India remains highly cost-effective for companies from the US and Europe, they will continue to ‘flock’ here and establish service facilities for clients back home. As of now, market forces have gained a ‘tsunami-like momentum’ on the BPO front with global industry turning to India as probably the most competitive service market in the world. However, there is no guarantee, it is pointed out, that India will continue to enjoy the status of being the favourite destination for outsourcing. Countries like the Philippines, Romania, Israel and also China are strongly competing with India to secure a part of the global outsourcing market (Thomas 2005: 129). Computer software and business process outsourcing form two sectors in which companies are on a hiring spree. But this hectic activity is essentially a phenomenon concentrated in less than a dozen cities, the number of employees varying considerably from centre to centre. The more prominent of these cities include Bangalore, New Delhi, Mumbai, Chennai and Hyderabad. While the information technology boom has made a significant difference to the employment prospects of the urban educated youth, the rural labour force still depends mainly on agriculture and related activities for their livelihood. BPO consists of different levels of value addition. It is pointed out that the Indian BPO industry consists of mostly low-value addition like call centres. According to Kiran Karnik, the President of NASSCOM, Indian vendors are making a conscious effort to move up the value chain, either vertically (offering more critical services in the same domain) or horizontally (expanding service portfolios by moving into sophisticated areas that require deployment of highly skilled professionals (such as persons required in complex claims, risk analysis and under-writing processes). At the same time, it is reminded that India continues to have considerable competitive advantages in the so-called ‘low-end’ of the value chain and there is no reason to vacate this space which provides considerable employment opportunities (The Hindu, 29 February 2004). The contribution of IT to GDP and employment is not currently high. But IT holds great promise for the future. IT is seen by many as a powerful catalyst for economic growth. ‘The balance of power is shifting from labour-intensive to intellectual-intensive. In twenty years, India will be unrecognisable. It will thrive in the age of the knowledge workers’ (cited by Upadhyay 2004: 5148).

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Summary and Conclusions The view is now widely held in India that the IT sector has tremendous potential in terms of employment and income generation. A study commissioned by the National Association of Software and Service Companies (NASSCOM) in 1999 and another conducted by McKinsey and Company had projected that total employment in IT and ITES would increase to 2.2 million workers by 2008. The NASSCOM in its strategic review for 2006 estimated, however, that the IT and ITES industry would employ only 1.3 million workers at the end of the current financial year. We have also presented in the foregoing chapter a brief factual account of the common business processes outsourced in India like medical transcription, call centres, and insurance claim processing. Among all such services, the ITES call centres seem to be the most prominent with an em-ployment potential of half a million jobs. Regarding the prospects of BPO in India, the prevailing mood is upbeat. It is claimed that India enjoys many advantages such as availability of a large English-speaking workforce, availability of reliable telecom and infrastructure facilities, and government support in the form of subsidies and exemptions for the IT-enabled services industry. However, the optimistic note struck by organisations like the NASSCOM is not shared by all. One pessimistic observation is that the Indian IT professionals lack innovation and creativity. The question is raised, for instance, as to why Indian software companies should not initiate the process of automation of its call centres. Another criticism levelled against the call centres is the nocturnal nature of the employment and the challenges it poses for the workers and their families. In spite of the impressive growth of the IT and ITES industry in India in the post-reform period it needs to be specially emphasised that the industry is almost wholly an urban phenomenon and is concentrated in less than a dozen centres, the rural labour force still depending primarily on agriculture and related activities for livelihood.

Chapter Eight

Summary and Conclusions

This study was undertaken to identify and objectively analyse on the basis of available data the emerging tendencies in employment and unemployment in the Indian economy during the post-reform period. At the time the reforms were introduced conflicting views had been expressed regarding their likely impact on the economy. Over more than a decade of reforms a clearer perception is now possible of their outcomes. In the course of the discussion, focused attention was given to various aspects of the emergent employment situation in terms of trends in employment, unemployment and underemployment with specific reference to issues such as casualisation, feminisation and informalisation. The role of IT and ITES has also been highlighted as a conspicuous example of an area of emerging employment opportunity in the country.

Trends in Employment The discussion of the trends in employment during the immediate postreform period has highlighted a few interesting developments. The worker-population ratios in all the four population segments have been

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declining due primarily to a rise in the student-population ratios particularly among rural girls. While between the 43rd (1987–88) and 50th (1993–94) NSS rounds, the workforce had registered a substantial increase in all the four population segments, during the latter period between 50th (1993–94) and 55th (1999–2000) rounds, the employment situation deteriorated for all the segments, except urban males. This deterioration, when viewed against the trends in the labour force participation rates, provides fresh insights. The annual rate of growth of population in India had declined from 2.14 per cent during 1981–91 to 1.93 per cent during 1991–2001. Evidently this meant a slower growth rate of the working age population which, in turn, led to a slower growth of the labour force.

Structure and Status of Employment Among the four population segments, reforms had the most salutory impact on urban female employment in the tertiary sector. Although for the country as a whole, dependence on agriculture for employment has declined in the 1990s, female workers continued to depend on agriculture to a much greater extent than males. A major reason for this trend has been the fact that rural male workers are more keen than female workers to quit agriculture in favour of rural non-agricultural avenues of employment at the earliest opportunity. This bias is confirmed by the fact that the sub-sector ‘trade, hotel and restaurant’ emerged as the major avenue of employment for males as well as females, both rural and urban. During the post-reform period the proportion of the self-employed declined in all the four population segments in both rural and urban areas, but more strikingly in the former. This outcome has been attributed to the decline in the average size of land holdings and the consequent rise in the proportion of small and marginal holdings. However, it is highly probable that self-employment in the urban areas will remain a major source for growth of employment in the years to come especially for women, as a consequence of the increasing growth rate of female education. The lower rate of growth of public sector employment during the post-reform period was the main reason for the deceleration in the growth rate of regular employment.

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Employment in rural areas, in sharp contrast to urban areas, was characterised by high degrees of casual labour among both male and female workers. While casual employment among urban males registered only a marginal increase from 15.4 per cent in 1983 to 16.8 per cent in 1999– 2000, casual employment among urban females declined steeply from 28.4 per cent to 21.4 per cent during the same period.

Growth of Employment At the macro level the annual rate of growth of employment declined sharply from 2.34 per cent per annum during the period 1983 to 1993–94 to 0.86 per cent per annum during 1993–94 to 1999–2000. The deceleration cannot be dissociated, however, from the sharp decline in the rate of growth of the labour force. This inference is supported by the fact that the gap between the rates of growth of labour force and employment was negligible. The analysis has also shown that the slow down in the growth rate of employment during 1993–94 to 1999–2000 was almost entirely due to slower growth rates in employment in two major sectors, namely agriculture and services. In the face of the slow growth of agricultural employment, interest shifted to the role of non-agriculture in rural employment. But there was deceleration in the growth rate of non-agricultural employment too. A major reason for the collapse of casual non-agricultural employment was the decline of employment under public works, the decline being sharper in the case of female workers. The setback in employment in services was caused by a decrease in employment in communityrelated social and personal services. Organised sector employment forms only about 7 per cent of total employment, due to the predominance of agriculture in the economy. However, even manufacturing is dominated by the unorganised sector which accounts for 86 per cent of the employment generated in manufacturing. In view of the fact that public sector employment is unlikely to expand in future, rapid expansion of the organised sector employment would depend crucially upon employment growth in the private sector.

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Trends in Unemployment It was noted that between 1981 and 1993–94, the rate of unemployment reckoned in terms of current daily status (CDS) had fallen for all four population segments. However, the period between 1993–94 and 1999– 2000 witnessed a marked rise in the unemployment rate among rural workers, male as well as female, according to all the four measures of the rate of unemployment, the CDS showing the highest increase. For the urban population the rate of unemployment had fallen for both males and females, with minor differences in the degree of the rate of decline. At the all-India level, the CDS measure of unemployment—a widely accepted measure of open unemployment—indicated a worsening of the unemployment situation over the 1990s in three out of the four population segments, with urban women as the sole exception. As regards the impact of the level of education on unemployment, it was seen that over the 1990s while the rate of unemployment among the ‘secondary and above’ category declined, the ‘graduate and above’ group presented an entirely different picture. In this latter category, the rate of unemployment increased for rural females while it declined for urban females. A marginal increase is observed in the rate of unemployment of urban males, but a slight fall in the rate of unemployment of rural males. It is likely that the slight increase in the unemployment rate of urban males was due to the stiffer competition from urban females with comparable educational qualifications. Over the 1990s, unemployment rates among the youth increased for all population segments except urban females for whom a decrease is observed, which ranged from 7.3 per cent according to the usual status (adjusted) approach and 9.9 per cent according to the CDS approach. The criterion of education combined with age shows that unemployment rates are higher for youth with secondary and higher education. However, it needs special mention that the incidence of unemployment among educated youth with general and technical education declined between 1993–94 and 1999–2000. Unemployment rates for educated youth in 1999–2000 were still high at 14.8 per cent for those with secondary education and above and 23.7 per cent for persons with all types of technical education; but for this latter group, the unemployment rates were significantly lower than in the earlier years.

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Underemployment It was found that underemployment of the usually employed (PS+SS) by their current weekly status was declining gradually during the period 1987–88 to 1999–2000; for the females the decline was low between 1993–94 and 1999–2000, while for the males the rate remained unchanged. The problem of underemployment was seen to be more serious among usually employed females than among usually employed males and more in rural than in urban areas. With regard to underemployment of the usually employed by current daily status, it was observed that the proportion of person-days utilised for work was quite low for females compared to that of males throughout the period 1987–88 to 1999– 2000. When work became unavailable, a large proportion of females withdrew from the labour force rather than reporting themselves as unemployed. In the case of persons categorised as working according to current weekly status, between 1987–88 and 1999–2000, the proportion of unemployed days showed a rising trend for both males and females in the rural areas, the rise having been lower between 1993–94 and 1999– 2000. Thus, during the post-reform period the rate of growth of underemployment in rural India slowed down compared to the pre-reform period. But for the urban workers, for both males and females, the extent of underemployment declined during the post-reform period, though only marginally. The proportion of persons who did not work more or less regularly was higher in rural areas than in urban areas and higher among females than among males. The proportion was the highest for casual labourers and the lowest for regular wage/salaried employees. Compared to the results of the NSS 50th round (1993–94), the extent of underemployment declined for all the four population segments in 1999–2000 over 1993–94 except in respect to urban males. Between 1993–94 and 1999–2000, there was a reduction in the proportion of usual status workers who had not sought additional work. This points to an unambiguous increase in self-perceived underemployment among persons classified as workers in the usual status. According to the criterion of usually working persons seeking or being available for alternative work, there was an increase in underemployment for all the

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four population segments between 1993–94 and 1999–2000. The increase in underemployment was more among males; rural males experienced a greater increase compared to their urban counterparts. According to some observers, the increase in underemployment during 1999–2000 was partly due to the slow down in the growth of crop production and partly on account of the decline in employment generated in rural areas under special employment schemes.

Casualisation While a higher growth rate of employment is a desirable objective, the composition of employment remains a serious issue. Increasing casualisation in the post-reform period is the outcome of the efforts to bring about ‘labour flexibility’ and to create international competition and the consequent increasing emphasis on reduction of costs. It was noted that during any given period, the extent of casual employment is much higher among rural workers than among urban workers and is more widespread among females than among males. Over the years, the extent of casual employment increased among the rural work force—male as well as female. In contrast, casualisation either rose very slowly or declined substantially among urban workers. The slight increase in casual employment of urban male workers was largely at the cost of regular employment. For urban females, on the other hand, the proportion of persons engaged in regular employment increased sharply—a process reflective of ‘feminisation’ according to some observers. Critics have cautioned that an increase in the proportion of regular workers among urban females need not necessarily suggest high wages and better working conditions. The discussion on casual employment has highlighted the rather close correspondence between the level of education of workers and the sector of their employment: casual labourers in agriculture are the least educated and regular employees in industry and services are the most educated. According to one study, while the average number of years of education of casual workers in agriculture was only 1.7, that of regular workers in industry and services was 7.9. It has also been noted that the wage differentials between men and women were far less significant among regular

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employees than among casual labourers. The emerging tendencies in employment in the post-reform period in India indicate that casualisation of labour would increase further and that casual workers would report the highest incidence of poverty.

Feminisation According to some experts (e.g., Guy Standing), the stabilisation and structural adjustment policies urged on many developing countries by the IMF, the World Bank and other donor agencies, have involved focussing on cost-cutting international competitiveness and led to a strenuous search for ways of lowering unit labour costs. Such outwardoriented development strategies based on export-led industrialisation have brought about a rapid growth of low-wage female employment. According to this line of thinking, market deregulation leads to a widening of gender inequality in earnings. With growing privatisation along with deregulation, women’s wages tend to fall both absolutely and relatively. This process is known as feminisation of labour relations. How real is feminisation in India? Our discussion has shown that, if anything, there has taken place only a slight decline in the female workforce participation rate during 1983–2000. Over the same period the male workforce participation rate has remained fairly stable. Female WPR (worker-population ratio), over the period 1983 to 2000, declined in respect to both the rural and the urban female populations, the decline having been more rapid for rural females. Has the sectoral distribution of employment shown any evidence of feminisation? While the share of females usually employed in the primary sector declined over the years for both the rural and the urban populations, no consistent trend was discernible in respect to the share of women’s employment in other sectors. However, it is noteworthy that the share of female employment in the tertiary sector rose much more rapidly than the male share during 1983 to 2000. In fact, the share of urban females rose by 40.7 per cent during this period. It is observed that this trend in respect to urban females in India is comparable to what happened in the case of their counterparts in USA and Europe. The argument that in export-oriented economies an unmistakable trend was observed towards feminisation has no relevance for India

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since the export sector is too small to absorb any sizeable proportion of the female labour force. Besides, it is also emphasised that in the case of several traditional merchandise exports, there is heavy dependence on the skills of male artisans (e.g., the garment-making industry in Kolkata and around New Delhi).

Informalisation According to some writers, a major factor stimulating the growth of female employment consists of informalisation. During periods of economic adjustments the informal sector tends to expand because retrenched workers often move into the informal economy when public sector enterprises are closed or the public sector is downsized. Defining the informal sector is problematic; according to many experts the essence of the informal sector consists in the size of the enterprise. The 15th International Conference of Labour Statisticians, 1993, adopted a new system of national accounts (SNA). Accordingly, the informal sector was treated as part of the household sector which constitutes unincorporated enterprises owned by households. Within the household sector, the informal sector comprises (i) own-account enterprises that do not hire workers on a continuous basis; and (ii) enterprises of informal employers employing one or more employees on a more or less continuous basis. The SNA definition of the informal sector is based on the legal status of the enterprise. Hence it does not provide any clue about the status and working conditions of the workers in them. It will not be correct to assume that all workers in the formal sector are better off than all workers in the informal sector. A second problem with the enterprise-based definition is that it tends to leave out large numbers of invisible groups of own-account enterprises such as those operating on the streets or in homes. Work in the informal economy may be broadly classified into nonwage employment and wage employment. Non-wage employment refers to own-account workers engaging at least one hired worker, and unpaid family helpers. Wage employment applies to (i) employees in the enterprises of informal employers; out workers or home workers (persons

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working at home or on premises of their own choice other than the employer’s to produce goods or services on contract or order for specific employers or contractors); (ii) independent wage workers not attached to any one employer but providing services to many, such as maids and watchmen; and (iii) informal workers in formal sector enterprises: workers whose pay and benefits do not conform to existing labour regulations. Casual employment is the predominant form of informality in the Indian economy. One of the processes of informalisation of the labour force has been an attempt on the part of employers in apparently formal enterprises to reduce their liabilities towards workers. Jeemol Unni’s study on factories in Ahmedabad city has shed light on this process. There has been a growing international focus on ‘invisible’ groups of informal workers such as home-based workers and street vendors. Their invisibility arises partly from the fact that they are often women and that they work in places not clearly designated as ‘business places’. It is difficult to obtain empirical data on such workers. The major criticism against informalisation is that it generally results in lower earnings and greater poverty for those who work in this sector. According to some observers, with informalisation feminisation of work also increases. New opportunities for female workers are generated in the informal segments of the organised sector. These new opportunities, unfortunately, are characterised by job insecurity, de-unionised low wage rates and low skilled jobs. Regarding the prospects of the informal sector in terms of employment generation, it was noted that a large number of industries in the informal sector, both own-account manufacturing enterprises (OAME) and non-directory manufacturing enterprises (NDME) employing at least one but not more than five workers, had shown a significant decline in the number of workers employed as well as units in operations since the late 1980s. In rural areas where more than 80 per cent of all informal sector manufacturing units are located, own-account enterprises accounted for an overwhelming majority of job losses. We have seen that in the case of rural unorganised trading enterprises as well the trends were broadly similar. Two significant changes in the non-farm informal sector workforce situation seem to have been taking place in India: (i) a shift of non-farm jobs from rural to urban locations; and (ii) in the rural informal sector, loss of more jobs in manufacturing than in trade.

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Information Technology and IT-enabled Services A brief discussion was made of the emerging opportunities for employment in the field of information technology with special focus on business process outsourcing (BPO). A study commissioned by the National Association of Software and Service Companies (NASSCOM) in 1999 and conducted by McKinsey and Company projected that total employment in the IT and the IT-enabled services (ITES) would increase to 2.2 million by 2008. Business process outsourcing is said to be the business tool of the 21st century which delivers higher quality business processes at lower costs by delegating back-office processes and related technology to external providers. The most widely accepted forms of BPO include medical transcription, call centres, insurance claim processing and back office operations. Most success stories of oursourcing to India have been in call centres and data entry. It is pointed out that India possesses certain advantages in business process outsourcing such as (i) the availability of a large, young, welleducated and English-speaking low-cost workforce; (ii) the availability of reliable telecom and infrastructure facilities; and (iii) government support in the form of subsidies and exemption for the IT-enabled services industry. However, it is also pointed out that the Indian BPO industry consists of mostly low-value addition services. In the light of this adverse observation, Indian vendors have been making conscious efforts to move up the value chain. Call centres have also been criticised for the nocturnal nature of the employment they provide, a work schedule which interferes with traditional familial values. At the same time, it is agreed that India continues to have considerable competitive advantage in the so-called ‘low-end’ and there is no reason to vacate this space which provides considerable employment opportunities.

Some Important Findings and their Implications We noted that between the 50th (1993–94) and 55th (1999–2000) NSS rounds, a significant fall took place in the worker-population ratio of

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rural workers (both males and females) and urban females, and a marginal decline in the case of urban males. It has been pointed out that the reduction in WPRs reflects a rise in the student-population ratios, not only in the 5–9 years and 10–14 years age groups covering the primary and middle school stages, but also in the 15–19 years and 20–24 years age groups, indicating rising enrolment trends at all levels of school and college education, especially among rural girls. Since students do not form part of the labour force, higher enrolment implies a fall in the labour force which results in less pressure on given employment opportunities and, other things remaining the same, a fall in the rate of unemployment. If this trend continues it could lead to a further fall in WPRs along with a fall in the rate of unemployment. The annual rate of growth of population in India fell from 2.14 per cent during 1981–91 to 1.93 per cent during 1991–2001. Under the socio-economic conditions prevailing in the Indian society today, it is almost certain that the annual rate of growth of population would register a further fall during the decade from 2001 to 2011. A sustained fall in the rate of growth of population would be associated with falling growth rates of the working age population. But this process would take at least say, 2–3 decades for its effects on the working age population to manifest fully. It will be noted that a sustained fall in the annual rate of growth of population (as indicated by the decennial population census) coupled with a steady increase in enrolment in schools and colleges (as a result of deliberate policy), would decisively limit the growth of the labour force in the country with its concomitant impacts on the employmentunemployment situation. One of the more important findings of the present study has been the emergence of ‘trade, hotel and restaurant’ as a major avenue of employment for all segments, males as well as females, and in rural as well as urban areas. This outcome should not be dismissed as accidental. Against the backdrop of the recent record of high growth rates of the Indian economy, one is justified in viewing the emergence of ‘trade, hotel and restaurant’ with much optimism. With the proportion of the population below poverty line rapidly falling (currently it is around 25 per cent) and the top 20 per cent of the population having fairly high incomes, India has emerged as a huge market for consumption goods as well as consumer durables. If the present pace of GDP growth of 8.1 per cent is sustained, there is no doubt that the ‘trade, hotel and

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restaurant’ sub-sector would continue to serve as a significant provider of employment. Besides giving a boost to domestic trade, retail as well as wholesale, rising income levels for large sections of the population have also had a positive impact on the sub-sector represented by ‘hotel and restaurant’ as at higher income levels (i) eating out becomes more common; and (ii) people travel a lot more within the country (for reasons well known). This process is further accelerated by the arrival of foreign tourists in increasingly large numbers. In all the major tourist centres in India, the number of restaurants and hotels are growing in number as well as in size contributing to the generation of additional employment. The growth of employment (usual plus subsidiary status) in agriculture has been much lower than in most other sections. While it had grown at an annual rate of 1.7 per cent during 1983–94, the rate of growth turned negative at –0.11 per cent during 1994–2000. The dismal performance of agriculture in generating employment was due to the low growth rate of this sector. According to one estimate (Panda 2005) the average annual growth rate of agriculture was 2.7 per cent during 1992–93 to 2002–03, 2.0 per cent during 1997–98 to 2001–02 and 1.2 per cent during 1997–98 to 2002–03. The Economic Survey has estimated a growth rate of 2.3 per cent for 2005–06 over the previous year, in stark contrast to 0.7 per cent for 2004–05 over 2003–04 (Economic Survey 2005–06: 4). While this turnaround augurs well for the economy, it is being emphasised by the bureaucrats in the government that any GDP growth rate beyond the present 8.1 per cent may hinge upon an agricultural growth rate of at least 4 per cent. Realisation of agricultural growth of such a magnitude certainly calls for much larger investment in agriculture. In this connection, it is pointed out that investment in agriculture has fallen to 1.3 per cent of the GDP in recent years due mainly to stagnation in public investment (Panda 2005). With the initiatives taken by the government recently including the measures proposed in the Union Budget for 2006–07, it is hoped that agriculture would witness a new phase of accelerated growth. Casual labour is mostly a rural phenomenon. The share of casual labour among rural males went up from 29.2 to 36.2 per cent during 1983 to 1999–2000 and that among rural females from 30.3 to 39.6 per cent. It was also noted that casual labourers in agriculture have the lowest average years of schooling, namely 1.7 years. These propositions placed

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in juxtaposition lead to the conclusion that it is the low level of education of the rural labour force, especially that of rural females, which results in their being absorbed into the casual labour force. Promotion of education especially of the rural females at all possible levels, is likely to go a long way in preventing further casualisation of employment. Further, a decline in the number of non-farm enterprises in rural areas was also observed consequent on their movement towards urban centres. Educational backwardness of the rural labour force is a major factor which contributed to this movement. All these considerations point to the need for upgrading the educational status of the rural population. It was noted that regular employment increased substantially among urban females, followed by a corresponding fall in casual employment. However, this trend has not been viewed as a positive development by some writers (e.g., Kundu). They argue that the NSS classification of regular workers include also persons engaged on a regular contractual basis even within the informal sector and at low wages, such as domestic servants, helpers of petty traders. And such workers were paid the same wages as those of male casual workers or even lower in late 1980s. In this category of workers, some white collar workers like receptionists and sales girls/shop assistants could also be included. It may be largely true that the widely prevalent preference for white collar jobs serves as a powerful motivation for many high school and college educated urban girls to take up regular employment of the foregoing type. However, the fact that the number of urban females who occupy senior positions in industry, business, academia and the professions have been growing significantly cannot be overlooked. Maybe they are concentrated in the cities and compared to the size of the country’s population, their number is negligible. But the signal should not be lost sight of.

Lacunae in the Existing Literature and Areas of Future Research: A Brief Note One major lacuna in the existing literature which deserves special mention is the level of aggregation at which certain issues are analysed. For instance, status of employment is discussed under three heads, namely self-employment, regular employment and casual employment. It is well

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known that these are not at all homogeneous, but highly heterogeneous categories. Under the self-employed, all levels of the self-employed are included—self-employed professionals like lawyers, doctors, chartered accountants and architects—along with vegetable and fruit vendors and traders of pan, cigarettes, soft drinks etc. The same is true of the category of regular salaried/wage employment. Under this highly inclusive category come company executives drawing annual salaries amounting to several lakhs of rupees, civil servants belonging to all-India services, professionals like engineers and doctors and university professors, on the one hand, and low-paid ‘salaried’ employees like clerks, messengers and helpers, on the other. With respect to casual labour, a distinction is sometimes drawn between temporary, seasonal and daily casual labourers in industries. However, in the literature this distinction is not made, in general. Another gap relates to the sharp inter-state differences in existence. The all-India picture portrayed is often found to be at wide variance from the situation existing in specific regions or states. True, the exceptions are indicated but often not adequately elaborated or highlighted. Such a situation is likely to distort the overall picture and lead to misleading inferences. One way out of this predicament is to present groupings of states or regions or industries into high, medium and low, with regard to various parameters employed like employment, unemployment and rate of growth. Yet another inadequacy encountered in the existing literature on employment-related problems is the lack of attention paid to problems relating to growth itself. In the short run it may be possible to increase labour absorption by resorting to labour intensive-techniques in production. But this process cannot be stretched beyond a point without compromising on efficiency. Especially in the present globalised environment, excessive application of labour-intensive techniques has serious limitations. Achieving a higher rate of growth of GDP on a sustained basis is the surest means of ensuring high and growing employment levels. However, since elasticity of employment with respect to income is seldom equal to unity, a given rate of growth of GDP may not result in a proportionate increase in employment. Given the prevailing low employment-income elasticities, a very high GDP growth rate would be needed for solving the unemployment problem in India within a reasonable time horizon.

Appendix

Concepts and Definitions As the concepts and definitions pertaining to employment and unemployment used in this study are the ones followed by the National Sample Survey, this appendix is presented for the benefit of the uninitiated reader (based on NSS Report No. 458, Employment and Unemployment Situation in India, 1999–2000, Part I, Chapters 2, 5, 6, 8, New Delhi 2001).

Economic Activity Any activity which results in production of goods and services that add value to the national product constitutes an economic activity. Such activities include production of all goods and services for market (market activities) and the production of primary commodities for own consumption and own account production of fixed assets (non-market activities).

Activity Status Refers to the activity situation in which a person is found during a reference period. Three activity statuses are distinguished: 1. Engaged in economic activity (working). 2. Not engaged in economic activity (not working), but either seeking ‘work’ or available for ‘work’. 3. Not engaged in any economic activity and also not available for work.

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Activity statuses mentioned in (1) and (2) are associated with ‘being in the labour force’ and the last category is associated with ‘not being in the labour force’. Within the labour force, activity status (1) and (2) are associated with ‘employment’ and ‘unemployment’ respectively.

Categories of Activity Status Determination of the activity status of a person poses a problem when more than one activity status applies to a person. In such cases, the identification is done by adopting either the major-time-spent criterion or the priority criterion. The former criterion is used for classification of persons according to the usual activity status approach and the latter for classification of persons according to the ‘current activity status’ approach. For a person pursuing more than one activity during the week, the activity status is decided by adopting a priority-cum-major time rule. Under the priority rule, the status of ‘working’ gets priority over the status of ‘not working’ but ‘seeking/available for work’, which in turn gets priority over the status of ‘not working and not seeking/available for work’.

Workers (or Employed) Persons who are engaged in any economic activity or who despite their attachment to an economic activity abstain from work for reasons such as illness, injury or other physical disability and bad weather, constitute workers. Unpaid helpers who assist in the operation of an economic activity in the household farm or non-farm activities are also considered workers.

Seeking or Available for Work (or Unemployed) Persons who, owing to lack of work have not worked but either sought work through various channels like employment exchanges and friends or made applications to prospective employers, are considered persons ‘seeking or available for work’ (or unemployed).

Labour Force Persons who were either working (or employed) and persons who were seeking/ available for work (or unemployed) together constitute the labour force. Persons who were neither working nor seeking/available for work for various reasons during the reference period are considered ‘out of labour force’ (students, those engaged in domestic duties, rentiers, pensioners, recipients of remittance, persons living on alms, infirm or disabled persons, persons who are too young or too old to work, prostitutes, smugglers etc.); and casual labourers not working due to sickness are also treated as persons outside the labour force.

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Broad Classification of Workers Self-employed Persons who operate their own farm or non-farm enterprises or are engaged independently in a profession or trade on own-account or with one or a few partners, are deemed to be self-employed. Self-employed persons are categorised as follows: 1. Own-account workers: Self-employed persons who operate their own enterprises alone or in partnership with one or a few persons and who, during the reference period, by and large, run their enterprises without hiring any labour; 2. Employers: Self-employed persons who work on their own account or with one or a few partners and who, by and large, run their enterprises by hiring labour. 3. Helpers in household enterprise: Self-employed persons (mostly family members) who are engaged in their own household enterprises, working full or part time and do not receive any regular salary or wages in return for services rendered. They do not run the household enterprise on their own but assist the related persons in the same household in running the household enterprise.

Regular Salaried/Wage Employees Persons who work in others’ farms or non-farm enterprises and in return, receive salary or wage on a regular basis. This category includes not only persons getting time wage but also those receiving piece wage and paid apprentices.

Casual Wage Labourer A person casually engaged in others’ farm or non-farm enterprises (both household and non-household) and, in turn, receiving wages according to the terms of the daily or periodic work contract, is a casual wage labour.

Approach to Activity Status The persons surveyed by the NSS are classified, on the basis of the activities pursued by them during the three reference periods, namely (i) one year; (ii) one week; and (iii) each day of the previous week. Based on these three periods, three different measures of activity status are arrived at—usual status, current weekly status and current daily status.

Usual Activity Status (US) Relates to the activity status of a person during the reference period of 365 days preceding the date of survey. The activity status on which a person spent longer

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time during the 365 days preceding the date of survey is considered the principal usual activity status (PS) of the person. A person whose principal usual status as determined on the basis of the major time criterion could have pursued some economic activity for a relatively shorter time during the reference period of 365 days preceding the date of survey. The status in which such economic activity was pursued is termed the subsidiary economic activity status (SS) of that person.

Current Weekly Activity Status (CWS) The current weekly activity status of a person is the activity status obtaining for a person during a reference period of 7 days preceding the date of survey. It is decided on the basis of a certain priority-cum-major time criterion. According to the priority criterion, the status of ‘working’ gets priority over the status of ‘not working but seeking or available for work’ which, in turn, gets priority over the status of ‘neither working nor available for work’. A person is considered working (or employed) if he/she while pursuing any economic activity, had worked for at least one hour on at least one day during the 7 days preceding the date of survey. A person is considered ‘seeking or available’ for work (or unemployed) if, during the reference week, no economic activity was pursued by the person but he/she made efforts to get work or was available for work any time during the reference week though not actively seeking work in the belief that no work was available. A person who had neither worked nor was available for work any time during the reference week is considered ‘not in the labour force’.

Current Daily Activity Status (CDS) The activity pattern of the population, particularly in the unorganised sector, is such that during a week, and sometimes even during a day a person could pursue more than one activity; the current daily activity status of a person is determined in such a situation on the basis of his/her activity on each day of the reference week using a priority-cum-major time criterion (day-do-day labour-time disposition). The following points are considered in determining the daily activity status of a person: 1. Each day of the reference week is looked upon as comprising either two ‘half-days’ or a ‘full-day’ for assigning the activity status; 2. A person is considered working if he/she worked for 4 hours or more during the day. 3. If the person has worked for one hour or more, but less than 4 hours, he/ she is considered ‘working’ for half day and seeking or available for work (unemployed) or neither seeking nor available for work (not in the labour force) for the other half of the day depending on whether he/she was seeking/available for work or not.

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4. If a person was not engaged in any ‘work’ even for 1 hour on a day, but was seeking/available for work even for 4 hours or more, he is considered unemployed for the entire day. But if he/she was ‘seeking or available for work’ for more than 1 hour and less than 4 hours only, he/she is considered ‘unemployed’ for half day and ‘not in the labour force’ for the other half of the day; and 5. A person who neither had any ‘work’ to do nor was available for ‘work’ even for half a day is considered ‘not in the labour force’ for the entire day and assigned the one or two of the non-gainful activity statuses which he/ she had during the day. The aggregate of person-days so classified under the different activity categories for all the seven days of the week divided by seven gives the distribution of persons (strictly speaking person-days) by activity category on an average on one day of the survey period of one year. For example, the estimate of person-days or the number of persons per day unemployed gives an estimate of the number of persons unemployed on an average on one day over the survey period of one year. This estimate is the most inclusive rate of unemployment. It captures the unemployed days of the chronically unemployed, the unemployed days of the usually employed who become intermittently unemployed during the reference week and the unemployed days of persons classified as employed according to the priority criterion of current weekly status.

Categories of Activity Status The detailed activity categories under each of the three broad activity statuses used in the NSS Survey 55th round, along with their codes, are given below:

Working or Being Engaged in Economic Activities (Employed) 1. 2. 3. 4. 5.

Worked in household enterprises (self-employed) as own account worker (11) Worked in household enterprises (self-employed) as employer (12) Worked as helper in household enterprises (unpaid family worker) 21 Worked as regular salaried/wage employee (31) Worked as casual wage labourer (i) in public works (41) or (ii) in other types of work (51) 6. Had work in household enterprises but did not work due to: (i) sickness (61); (ii) other reasons (62) 7. Had regular salaried/wage employment but did not work due to: (i) sickness (71); (ii) other reasons (72)

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Being not Engaged in Work but Seeking or Available for Work (Unemployed) 1. Sought work (81). 2. Did not seek but was available for work (82).

Being not Available for Work (Not in Labour Force) 1. Attended educational institutions (91). 2. Attended domestic duties only (92). 3. Attended domestic duties and was also engaged in free collection of goods (vegetables, roots, firewood, cattle feed etc.) sewing, tailoring, weaving etc. for household use (93). 4. Rentiers, pensioners, remittance recipients etc. (94). 5. Not able to work due to disability (95). 6. Beggars, prostitutes (96). 7. Others (97). 8. Did not work due to sickness (for casual workers only) (98).

The Labour Force and Workforce Participation Rates Labour Force Refers to the population which supplies or seeks to supply labour for production and therefore includes both the ‘employed’ and the ‘unemployed’. For measuring the labour force participation, all the three measures adopted for classification of the population, namely usual status, current weekly status and current daily status, are used. The current daily status gives only the labour force person-days. However, the labour force measured in terms of usual status includes (1) persons who had, for a relatively longer part of the year, either worked or were looking for work; and (2) also persons from among the remaining population who had worked at least for some time with some regularity. On the basis of usual status, there are thus two sets of estimates—one set based on the principal status only and the other set considering both the principal and the subsidiary statuses.

The Labour Force Participation Rate (LFPR) It is defined as the number of persons in the labour force per 1,000 persons. The rate is estimated on the basis of different concepts namely usual status (principal status only—PS), usual status (principal and subsidiary status—PS+SS), current weekly status (CWS) and current daily status (CDS).

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155

Based on the three approaches used in the classification of the activity statuses of the persons surveyed, there could be three different estimates of the employed. These are: 1. the number of persons usually employed in the principal status (PS) and all workers taking into account the employed according to both the principal and the subsidiary statuses (PS+SS); 2. the number of persons employed on an average in a week; and 3. the number of person-days employed per day on an average during the reference period of 7 days preceding the date of survey.

Workforce Participation Rate The number of persons/person-days employed per thousand persons/person-days is referred to as the workforce participation rate (WFPR) or the worker-population ratio (WPR). In discussions on employment, work-force participation rate or workerpopulation ratio is used as an index of the level of employment. The merit of this concept consists in the fact that the number of persons employed is related to the size of the population. It is thus not the absolute number of persons employed that determines the level of economic activity but the percentage of the population that is employed.

The Unemployed Three approaches are used, as in the case of the employed, for the unemployed also; three kinds of estimates of the unemployed are obtained on the basis of the three approaches to activity status: 1. number of persons usually unemployed based on ‘usual status’ approach; 2. number of persons unemployed on an average in a week based on the ‘weekly status’ approach; and 3. number of person-days unemployed on an average during the reference period of seven days preceding the date of the survey based on the ‘daily status’ approach.

Usual Status Of the three, the first estimate indicates the magnitude of the number of persons unemployed for a longer period during a reference period of 365 days and provides an indication of the chronically unemployed. However, some of the unemployed on the basis of this criterion might have been working in a subsidiary capacity. Therefore, another estimate of the unemployed could be made excluding persons employed in a subsidiary capacity during the reference period. The former is called the usually unemployed according to the Principal status (PS) and the latter, the usually unemployed

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excluding the subsidiary status workers or US (adjusted), which would conceptually be lower than the former.

Weekly Status The second estimate is based on the weekly status and gives the average weekly picture during the survey year. It includes both chronic unemployment and also intermittent unemployment of persons categorised as usually employed caused by seasonal fluctuations in the labour market.

Daily Status The third estimate based on the daily status concept gives the average level of unemployment on a day during the survey year. It captures three aspects of unemployment, namely 1. unemployed days of the chronically unemployed; 2. unemployed days of the usually employed who become intermittently unemployed during the reference week; and 3. unemployed days of persons classified as employed according to the priority criterion of current weekly status. This estimate may be considered the most inclusive rate of unemployment.

Rate of Unemployment Unemployment rate is defined as the number of persons unemployed per thousand persons in the labour force (which includes both the employed and the unemployed). This, in effect, gives the unutilised portion of the labour force.

Underemployment Underemployment is commonly defined as the under-utilisation of labour time of the workers. For instance, some of the persons categorised as usually employed, do not have work throughout the year due to seasonality in work and thus their labour time is not fully utilised; they are thus underemployed. Their underemployment is termed visible underemployment if they report themselves to be available for work with respect to a shorter reference period. The NSS measures visible underemployment by cross classifying persons by (1) their usual and current weekly statuses; (2) their usual and current daily statuses; and (3) their current weekly and current daily statuses. Some employed persons, particularly the self-employed, may appear to be working throughout the year. But their work may not fully meet their needs in terms of generating sufficient income, giving a sense of fulfilment to them, etc.

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157

They may, therefore, look for additional and/or alternative work. Such underemployment is termed invisible underemployment which is not directly measurable. The NSS calculates the indicators of invisible underemployment through a set of probing questions addressed to persons categorised as usually employed on their availability for additional/alternative work and reasons for seeking such additional/ alternative work.

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Index

Ahmed, I., Technology and Feminisation of Work, Economic and Political Weekly, Vol. XXIX, No. 18, 30 April 1994. agricultural sector, reforms impact on, 19–20 Arunachalam, V.S., 130

directory establishments (DE) enterprises, 118, 120 directory manufacturing establishments (DME), 119 directory trading enterprises (DTE), 119–20

Bank of England, 17 business process outsourcing (BPO), 126– 33, 144; onshore and offshore operations, 126; outsourcing in India, 126– 28; prospects in India, 128–33

economic activity, concept of, 149 economic crisis, balance of payments situation, 16; characteristics of, 15–17; debt service burden, 16; fiscal deficit, 15; foreign exchange reserves, 16; internal debt, 15; liquidity crisis, 16 economic reforms, capital market reforms, 119; financial sector reform, 119; foreign investment and foreign technolog y policy, 18; impact on employment, 19–21; industrial policy reform, 18; trade policy reform, 18 economy, reforms impact on, 20 educational level, casualisation and, 80–82 elasticity of employment, 49–51; in agriculture sector, 50; in manufacturing sector, 51; in mining, quarrying, and electricity sector, 50 employed, 153 employed persons (usual status), by broad industry group/ sector, 30–37; by category, 78; growth by gender and residence, 27, 29, 34–36, 78; by sector, 30–31 employment, in agriculture, 43–44; casual labour, 38, 40, 42–43; data sources, 22;

Cagatay, Nilufer, 92–94 call centres, 130–31 capital market reforms, 119 cashew industry in Kerala, gender division of labour in, 102 casual employment: as informalisation, 111–12 casualisation 111, 112, 122, educational level, 80–82; employment sector, 80–82; rationale of, 76–77; significant aspects of, 78–80; trends in, 78–80; wage differentials, 80–82 casual labour, 38, 40, 42–43; in agriculture sector, 111–12; categories, 112 casual wage employees, 151 cost-cutting competitiveness, 105–06 Dev, Mahendra, 82 Development, sweat shop model of, 100-01

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EMPLOYMENT AND UNEMPLOYMENT IN INDIA

distribution of, 97–98; economic reforms impact, 19–21; elasticity, 49–51; emerging opportunities, 123–33; employment generation, 21; existing literature and future research areas, 147–48; feminisation of, 22; by gender, 97–98; generation of, 21; growth of, 27– 29, 137; important findings and their implications of study on, 144–47; informalisation of, 22, 105–22; IT and IT-enabled services (ITES), 123–33; levels growth of, 25–30; manufacturing sector, 46; objective of study, 21–22; organised vs. unorganised sector, 47–49; regular employment, 38, 40–42; rural non-farm employment, 43–47; sectoral distribution of, 96–97; by sectors/ broad industry group, 34–38, 40, 97–98; self-employment, 38–41; ser vices sector, 44–45; status, 38–43, 136–37; structure and distribution of, 30–34, 136–37; trends in, 21–22, 25–52, 135– 36; underemployment, 21, 60–74; unemployment, 21, 57–60 employment market information (EMI) programme, Ministry of Labour, 47–48 employment sector, casualisation by, 80–82 Erturk, Korkut, 93–94 exporter related industries and, feminisation, 98–101 feminisation, 141–42; alternative hypotheses, 92–94; data base of hypothesis, 90–92; exporter related industries and, 98–101; gender division of labour, 102; genesis and development of concept, 86–88; global environment promoting, 88–89; in India, 94-96; labour force, 85– 103; labour relations, 87–88 financial sector reform, 119 foreign direct investment (FDI), 125 foreign investment and foreign technology policy, 18 formal employment, 111 formal sector, informalising employment, 112–13

gender dimensions, casualisation, 80–82 Ghose, Ajit, 72 globalisation, 105–06 Hart, Keith, 107 home-based workers, 114–15, 117 ILO mission to Kenya, 107 income level, unemployment by, 59–60 incomes, in informal economy, 116–18 Indian software sector strengths, 129 industrial policy reform, 18 informal economy, wages and incomes in, 116–18 infor malisation, 142–43; casual employment as, 111–12; employment, 22, 105–22 informal sector, casual employment, 111– 12; components, 109–10; concepts, definitions and approaches, 107–09; invisible groups, 113–14; non-wage workers in non-agriculture, 110–11; prospects for, 118–21; unpaid work, 115–16; wage and incomes in, 116–18 informal workers, invisible groups of, 113–14 Intelligent Person’s Guide to Liberalisation, 15 International Conference of Labour Statisticians (ICLS), 1993, 108 International Labour Organisation (ILO), 106–08, 113 International Monetar y Fund (IMF), stabilisation programme, 17–18, 87 invisible groups, 113–14, 122 invisible underemployment, 60–61, 67–74, 157 invisible workers, 114–15 IT and IT-enabled services (ITES), 112, 144; basic concepts, 125; business process outsourcing, 126–33; employment in, 123–33; income in, 124–25; potential of, 124–25; vogue in India, 125 Karnik, Kiran, 132 knitwear industry in India: development of, 100–01

165

INDEX labour, gender division and feminisation, 102 labour force, feminisation of, 85–103; gender and location of residence, 28– 29; growth of, 29-30; informalisation of, 112–13; outward-oriented development strategies, 87 labour force participation rates (LFPR), 28– 30, 37, 154–55; by gender and ruralurban residence, 95 labour relations, feminisation of, 87–88 Lindberg, A., 102 manufacturing sector employment, 46 market deregulation, 87 McKinsey report, 125, 133 McMillin, D.A., 131 Minimum Wages Act, 117 National Association of Software and Service Companies (NASSCOM), 124– 25, 129–30, 132–33, 144 Neetha, N., 100–01 non-agricultural sector, reforms impact on, 20 non-agricultural workers, self-employed among, 115 non-directory establishments (NDE) enterprises, 118, 120 non-directory manufacturing enterprises (NDME), 118–19, 143 non-directory trading enterprises (NDTE), 119–20 non-farm employment, 43–47 non-wage employment, 109–11, 121; in non-agriculture, 110–11 outsourcing in India, 126–28; back office operations, 127; banking services, 128; call centres, 127; human resource services, 128; insurance claim processing, 127; medical transcription, 127; sales and marketing, 128 own account enterprises (OAE), 118, 120 own account manufacturing enterprises (OAME), 118–19, 143

own account trading enterprises (OATE), 119–20 Ozler, Sule, 92, 94 Pink, Daniel, 130 Planning Commission, 39, 50–51, 124 reforms, See economic reforms regular full-time wage labour, 106 Reserve Bank of India, 17 rural employment, in agricultural and nonagricultural, 44 rural non-farm employment, 43–47

self-employment, 38–41, 52, 109, 121 services sector employment, 44–45 Sethuraman, S.V., 107, 109 software sector, in Indian, 129 Standing, Guy, 86–92, 94, 99 Structural Adjustment Programme of, World Bank, 17–18 System of National Accounts (SNA), 108– 09; norms for unpaid work, 115–16 Task Force on Employment Opportunities Report, 47 trade policy reform, 18 underemployment, 21, 156–57; employed but not work more or less regularly, 67–69; invisible, 60–61, 67–74; persons of current weekly status employed by current daily status, 63, 65–66; by status of employment and gender, 66; trends in, 139–40; usually employed but available for additional work, 69–72; usually employed by current daily status, 63–64; usually employed by current weekly status, 61–62; usually employed persons of age 15 years and above available for alternative work, 72–74; visible, 60–67, 74 unemployment, amongst youth, 57–58; by education and age, 59; by income level,

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EMPLOYMENT AND UNEMPLOYMENT IN INDIA

59–60; in pre-reform and post-reform periods, 54–60; rates, 54–58; trends in, 138 Unni, J., 113–15, 117 unpaid work, SNA norms, 115–16 Vanamala, M., 117 visible underemployment, 60–67, 74 wage differentials, 80–82 wage employment, 110, 121

wages and incomes, in informal economy, 116–18 worker-population ratio (WPR), 26–27, 51, 97 work force participation rate (WFPR), 26, 155 working in economic activities, 153 World Bank, 87; Structural Adjustment Programme, 17–18 World Development, 86 Youth, unemployment amongst, 57–58

About the Author

E.T. Mathew is Honorary Fellow, Centre for Development Studies, Thiruvananthapuram. In his long and distinguished career, he has held many important positions, notable amongst them being, Head, Department of Economics, University of Kerala; Honorary Director, Comprehensive Scheme on the Study of the Cost of Cultivation of Principal Crops in Kerala, under the aegis of the Ministry of Agriculture, Government of India (1978-88); Senior Fellow, Indian Council of Social Science Research. Professor Mathew was a recipient of the Fulbright Travel Grant and Ford Economic Fellowship for Graduate Study at Vanderbilt University, USA, in 1959. His publications include, Financing Higher Education: Sources and Uses of Funds of Private Colleges in Kerala (1991), Employment and Unemployment in Kerala: Some Neglected Aspects (1997) and (with K.C. Zachariah and S. Irudaya Rajan) Dynamics of Migration in Kerala: Dimensions, Differentials and Consequences (2003).

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