Growth of employment opportunities, Microeconomics


Several disquieting features are observed in the Indian labour market over the past two decades particularly during the 1990s. These are discussed below: 

• The growth of employment has shown a downward trend. The 55th round of the National Sample Survey Organisation (NSSO) reveals that there has been a sharp decline in the growth rate of employment (UPSS) from 2.04 per cent per year in the period 1983 to 1993-94, to only 0.98 per cent in the period 1993-94 to 1999-2000. Although this deceleration in employment is accompanied by an equally sharp decline in the rate of growth of labour force from 2.29 per cent in the period 1987-88 to 1993-94 to only 1.03 per cent in the period 1993-94 to 1999-2000, yet the growth rate of employment has been less than the growth rate of the labour force. This indicates an increase in the unemployment rate.  

• The employment elasticity (ratio of employment growth rate to GDP growth rate), mainly due to increasing capital intensity, has considerably declined over the years and more so after the liberalisation and globalisation of the economy. It declined from 0.41 during 1983-84 to as low as 0.15 during 1994-2000. This indicates a sharp decline in the employment absorption of the economy. The organised sector's employment generating capacity came down to near zero and in the public sector has been negative in most cases. 

• Slow down of employment growth in rural sector in general and agriculture in particular in post-liberalisation period (1999-2000) is a serious issue of concern because still the population pressure on the agrarian sector is higher than anywhere else despite its declining contribution in the GDP. This will further widen rural-urban divide, which is already large and on the rise. The slow pace of employment diversification outside agriculture has been an important concern. However, it seems that in recent years there has been an acceleration in the shift of employment from agriculture to other sectors. The share of non-farm sector employment rose from about 14 per cent in 1977-78 to nearly 24 per cent in 1999-2000, which is substantial, considering the initial base.  

•  The relatively faster decline in the employment growth of women in post- liberalisation period is another serious issue. For rural males, employment growth declined from 1.94 per cent during 1983/1993-94 to 0.94 per cent during 1993-94/1999-2000 and for females, it went down from 1.41 to a mere 0.15 per cent. In urban areas, the decline was from 3.22 per cent to 2.61 per cent for males and from 3.44 to 0.94 per cent for females. Whatever addition to female employment has taken place during this period has largely been confined to the informal sector. 

Posted Date: 11/10/2012 4:59:32 AM | Location : United States

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