Agri sector spoils Modi's achche din dream

While overall employment rose from 456 mn to 463 mn between FY11 and FY15, with farm employment falling by 26 mn over the same period, the net addition to employment over the entire four year period was a mere 7 mn.

Illustration: Uttam Ghosh/Rediff.com

The labour market in India is undergoing a structural transformation.

A staggering 33 million jobs were created in the non-farm sector between 2010-11 and 2014-15 finds a new study by McKinsey Global Institute. This implies that roughly eight million jobs were created on average each year.

But, with farm employment falling by 26 mn over the same period, the net addition to employment over the entire four year period was a mere 7 mn. Overall employment rose from 456 mn to 463 mn over the period.

At the aggregate level, the increase in non-farm jobs is simply not enough to absorb the millions entering the labour force each year.

“At any rate, the movement of workers from farm to non-farm jobs has not been rapid enough to account for growth in the working-age population,” said the report.

The employment estimates in the report are based on employment and unemployment surveys carried out by the National Sample Survey Office as well as the annual surveys of the labour bureau.

Job growth between FY11 and FY12, the years when economic growth slowed down, was minuscule with only 11 mn jobs being created.

But, growth rebounded subsequently with 22 mn jobs being created over the next two years.

Bulk of these jobs were created in sectors such as trade and hospitality, construction and transportation, while sectors such as mining and manufacturing saw declines.

Overall labour force participation rate actually fell from 55.4 per cent in 2011 to 52.4 per cent in 2015, with much of the fall occurring the initial years of economic slowdown.