JOIN USCommonsense suggests that economic growth or general GDP increase entails growth in employment opportunities and incomes, absolute and per capita. But this has not happened and is famously described as jobless growth.
Technically this is termed as low employment elasticity of growth: for every unit increase in production, there is very low increase in employment or number of employees added. This has reached a very low level of 0.15 in recent times as against 0.3 during 1991-2007.
This means that for every percentage point increase in production/GDP, there is hardly 0.15% increase in employment; or, 6% increase in GDP entails hardly 0.9% increase in employment; and this is too little to make a dent on the nearly 5% long-term persisting unemployment and constant additions, nearly 10-12 million, to the labour force.
Labour force increased from 337 million in 1991 to 488 million in 2013. In the same period, employment increased from 323 million to 470 million. Of course, entry into employment depends on factors like prolonging education at the post-school, college, polytechnic, ITI levels and migration and marriage particularly of women; decline in population growth rate and fertility rates also are factors, affecting both the growth of labour force and the employment rate.
General absorption of labour concomitant to GDP growth is too rough a measure. And the broad sector specificities have to be noted. Clearly, agriculture has been witnessing surplus labour with low and overall unattractive incomes. Absorption rate of labour in agriculture is becoming more dismal with time. In addition, youth are eager to leave agriculture and villages in search of more lucrative employment, though they may lack in skills.
Therefore, the hope lies with the service and manufacturing sectors for providing employment and incomes. The service sector elasticity was 0.57 during 1983-'94 and declined to 0.10 during 2009-'12. In contrast, the manufacturing sector had elasticity of 0.68 during 2009-'12. This means, for 100% increase in service sector output, there was hardly absorption of 10% labour. And in the manufacturing sector, this absorption was 68%. Clearly, manufacturing holds the key to increasing employment opportunities, and this has to be done all well-populated areas.
Though there is an increasing drift of rural youth towards cities and nearby towns, we have to note that this is causing a lot of social distress and anxiety.
Urban anonymity
Urban misery and want are increasing, and migration into cities is ipso facto, a fall into poverty and the prospect of crime. Facilities for living, energy, drinking water, sanitation and transport are increasingly seldom; compounded by non-belonging.
This social distress can be contained only if there is retention of youth in rural areas, in nearby larger villages and towns, preventing villages from becoming old age asylums. Fortunately, on the other hand, there is growing non-farm employment in villages; and villagers' non-farm earnings are on the rise.
Obviously, construction, trade, transport, warehousing, medical practice, work in local government offices are all widening sources of employment in rural areas. And adding to this is the role of self-employment and family trade. Transporting produce, villagers, students and women to nearby schools, markets and hospitals, is a growing need and taxi and minibus operators have good business prospects.
Servicing equipment, electrical, transport and such others have provided employment to many. However, there is a need for improving village-level technical and post-school education, so that the village youth are in situ trained to undertake emerging modern day jobs. These jobs have been the backbone of the manifest process of recent reduction in poverty in the villages. But caste-based social hierarchy is a hindrance to local agricultural labour. Non-farm employment in villages is not only income-yielding but also socially liberating.
These factors have a welcome impact on the political economy of agriculture. Traditional agriculture will have to deal with the low availability of local labour.
Naturally, land consolidation, the opposite of ever smaller parcels of bequest land, will have to be thought of - ceding of usufruct rights over land to entrepreneurially more active farmers. That can liberate one from reducing him or herself to the status of a watchman of one's inherited small parcel of land.
(The author is former professor, Maharaja's College, University of Mysore, Mysuru)