According to a recent study, there has been a decline in the number of people employed in India’s agricultural sector. The data from the National Statistical Office’s Periodic Labour Force Surveys indicate a shift of labour force from the agricultural sector to construction sites and the informal economy, rather than factories.
Agriculture Sector: A Major Provider of Employment
In 1993-94, the agricultural sector accounted for approximately 62% of India’s employed labour force. However, over the years, this percentage dropped significantly, reaching 41.4% between 1993 and 2018. Despite this decline, the agricultural sector still remains one of the biggest employment providers in India.
Reversal of Trend: Increase in Agricultural Employment
Despite the overall decline, the last two years have witnessed a reverse trend. The share of those employed in farms rose to 44-45% in 2020-21, largely due to economic disruptions caused by the Covid-19 pandemic.
Lack of Structural Transformation
The movement of the workforce from agriculture to other sectors does not qualify as a “structural transformation”, which involves the transfer of labour from farming to sectors with higher productivity, value addition, and average incomes. Instead, the surplus labour from farms is being absorbed largely in construction and services. This indicates a weak and deficient structural transformation process in India.
Services Sector: Not Just High-Paying Jobs
While the services sector includes well-paying industries like information technology, finance, healthcare, education, and others, a significant part of the jobs in this sector are in small retailing, eateries, domestic help, sanitation, security staffing, transport and similar other informal economic activities. This highlights the low share of organised enterprises engaging 10 or more workers.
The Rise of Information Technology as a Job Provider
The IT sector has seen a significant increase in employment opportunities in the post-pandemic period. Between 2020-22, the combined employee headcount at India’s top five IT companies increased by nearly 36%, demonstrating the sector’s success in providing employment amid the pandemic.
Government Initiatives to Reduce Unemployment
Several government schemes have been introduced to boost employment rates and skill development in India. These include Support for Marginalized Individuals for Livelihood and Enterprise (SMILE), Pradhan Mantri Dakshta Aur Kushalta Sampann Hitgrahi (PM-DAKSH), Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), Pradhan Mantri Kaushal Vikas Yojana (PMKVY), and Start Up India Scheme.
Types of Unemployment in India
Unemployment in India presents itself in various forms. These include disguised unemployment, where more people are employed than necessary; seasonal unemployment, which occurs during certain seasons of the year; structural unemployment, resulting from the mismatch between available jobs and skills of available workers; cyclical unemployment, correlated with the business cycle; technological unemployment due to changes in technology; and frictional unemployment, which occurs when individuals are searching for a new job or switching jobs. Another category of unemployment is vulnerable employment, where people work informally without legal protection.
Solution Strategies for Unemployment
To curb unemployment, several strategies can be adopted. Upskilling of agricultural labourers, promoting labour-intensive industries, decentralising industries to ensure regional employment, and developing rural areas to decrease migration to urban areas can help in reducing unemployment rates in India.
Last Modified: February 18, 2024