What job data says about the economy

GDP is growing for sure, but the fact that jobs are still being created mostly in the low-value sectors of the economy is a reason for concern

The decade beginning in 2000 was one of the best as far as the Indian economy’s growth prospects were concerned. However, this was also the period which was known as the era of jobless growth because the number of jobs did not see a commensurate increase with GDP. How has the situation changed today?

New Delhi, India - Feb. 16, 2018: Candidates apply for jobs at 'Job Fair' organized by Directorate of Employment, Delhi Government at Tyagraj Sports Complex in New Delhi, India, on Friday, February 16, 2018. (Photo by Sanchit Khanna/ Hindustan Times) (Sanchit Khanna/HT PHOTO)

Because of the contraction inflicted by the pandemic, it is not possible to make a flawless comparison of economic growth under the Narendra Modi government. However, headline employment numbers from the annual Periodic Labour Force Surveys (PLFS) — they are available for the July-June period from 2017-18 to 2022-23 — show that India’s labour market has done well in the last five years. Not only has the share of people who are either working or looking for work — economists call this the labour force participation rate (LFPR) — increased, we have actually seen a fall in the unemployment rate which means that the number of jobs has grown at a faster pace than the number of job seekers. The numbers, on their own, are nothing but impressive. LFPR has increased from 36.9% in 2017-18 to 42.4% in 2022-23. The unemployment rate has fallen from 6.1% to 3.2% during this period. Should these numbers be seen as unambiguous proof of dynamism in India’s labour markets?

A data journalism series published in these pages shows that such conclusions could be misleading as far as the real picture is concerned. Here are some key facts. Unpaid work in family-owned enterprises accounts for more than one-third of the total jobs that have been created between 2017-18 and 2022-23. The bulk of these jobs have been added in rural areas and have gone to women. Half of the new jobs are in agriculture. What this essentially highlights is an asymmetry between value and job creation in the Indian economy. While tailwinds to GDP growth are increasingly coming from the high-skill quarters in the new economy, and there is good reason to believe that this sector will continue to create value at a healthy pace, jobs, at least in the technical sense of the term, are still being created in the low-value sectors of the economy.

While the government has done well to cushion the not-so-gainfully employed with targeted welfare schemes of various kinds, this asymmetry may get worse with growing inequality and aspirations in the economy. Our policymakers will do well to look beyond the headline indicators from the PLFS data and focus on this issue.