Why govt job growth data isn't good news

Most of 17 crore new jobs in 6 year in agriculture, which has low GDP share.

New Delhi: Union Minister of State for Labour and Employment Shobha Karandlaje on Thursday informed Parliament that 16.83 crore new jobs were created in the country during 2017-18 to 2023-24. However, a deeper look at data shows that a bulk of these jobs were created in the agriculture sector, which contributes just 15% to India’s economy.

Referring to KLEMS (K: Capital, L: Labour, E: Energy, M: Materials and S: Services) data compiled by the Reserve Bank of India (RBI), the minister claimed that the number of employed in the country increased from 47.5 crore in 2017-18 to 64.33 crore in 2023-24, an increase of over 35% in six years.

Sectoral breakup of the data indicates that the majority of these employment are either in the category of self-employed or in the agriculture sector. 

As per data shared by Karandlaje in a written reply to a question in Rajya Sabha, 45.8 per cent of the country’s workforce was involved in the agriculture sector during the year 2022-23. In the rural areas this proportion stood at 58.4 per cent. This is despite the fact that the share of agriculture in India’s GDP declined to around 15 per cent in 2023-24 from around 35 per cent in 1990-91.

Moreover, there are issues with the definition of employment used in the KLEMS report. If you work for one hour in a week you are counted as employed for the week. Similarly if you work for 30 days in a year you are counted as employed for a year.

Paras Jasrai, senior analyst at India Ratings, said the government’s claim on increase in labour force participation and employment indicate rural distress.

As per the Periodic Labour Force Survey conducted by the Ministry of Statistics and Programme Implementation, the labour force participation rate on usual status for persons of age 15 years and above increased to 57.9 per cent in 2022-23 from 54.9 per cent in 2020-21. In the case of women, the increase was sharper. It increased marginally from 32.5% in 2020-21 to 32.8 per cent in 2021-22 and jumped to 37 per cent in 2022-23.

“A lot of these increases, especially in the case of women, are because of temporary work. This is an indication of rural distress,” said Jasrai.

Despite a consistent decline in share of the agriculture sector in the country’s gross domestic product (GDP), around half of the nation’s workforce is still employed in the farm sector. 

After agriculture the second largest number of people is involved in the construction sector accounting for 13 per cent. Trade, hotel and restaurant account for 12.1 per cent of the total workforce, 5.4 per cent of the workforce is involved in transport, storage and communication and 11.4 per cent in other services.

Only 11.4 per cent of the total workforce in the country is involved in manufacturing. According to the official data, jobs in the manufacturing sector, formal and informal put together, increased by 85 lakh during 2017-18 to 2022-23 period.

“Employment generation coupled with improving employability is the priority of the government,” said Karandlaje.  

In the Union Budget presented on July 23, Finance Minister Nirmala Sitharaman unveiled a slew of initiatives to support skilling and jobs with a financial outlay of Rs 2 lakh crore over the next five years, which is estimated to benefit 4.1 crore youth.

There is an increasing realisation of the problem and it is reflected in the budget also, Jasrai said.