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Number theory: Shrinking public sector employment and its costs

As the public sector has contracted, there has been no other good employer that has emerged to take its place despite the economic expansion of manufacturing and services sectors.

Updated on: Sep 1, 2022, 10:48:32 IST
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Despite several decades of rapid growth of the private sector in India, the allure of a public sector job, historically associated with security, steady pay, and multiple benefits, continues to remain strong for most Indians. The protests following the announcement of the Agnipath scheme for the armed forces, and the uproar around the Bihar railways recruitment issue prior to that have to be seen in this larger context of the aspirations and hopes that have been traditionally placed on public

PREMIUMNumber theory: Shrinking public sector employment and its costs (Sanchit Khanna/HT PHOTO)
Number theory: Shrinking public sector employment and its costs (Sanchit Khanna/HT PHOTO)

Public sector continues to be the main source of “good jobs”

In 2020, three out of four salaried workers in the public sector were eligible for at least one kind of social security benefit including provident fund contributions, gratuity and health insurance. In fact, around 66% and 42% of railways and public sector employees received all three benefits. Contrast this with the access to benefits for salaried workers in the private sector. In manufacturing and services, only 14-18% of salaried workers received all three benefits and only 40% received at least one of them. It is no wonder, then, that such jobs continue to remain aspirational endpoints for most workers in the country.

Public sector is a major employer of marginalised communities

Another less appreciated role of public employment is its role in furthering social equality. Affirmative action policies in the form of reservation for historically marginalised communities has been a continuing feature of public employment in post-Independence India. While reservation for Scheduled Castes (SC) and Scheduled Tribes (ST) were in provision right after independence, after recommendations from the Mandal Commission, other backwards classes (OBCs) were also extended reservation in the public sector.

The impact of this affirmative action policy is evident when we contrast the representation of SC/ST groups in these public sectors against their representation in the overall workforce. So, for instance, in 1999, SCs comprised about 11% of the workforce. In the same year, they constituted only 6% of salaried workers in public administration. This implies a “representation index“of 0.56 (6/11) for SCs -- an under-representation of SCs in the public administration salaried workforce by nearly half. In contrast, the representation index for the general category is 1.5, indicating that their share in this sector is more than their share in the overall workforce, an over-representation. However, over time, there has been a steady increase in the representation of workers from marginalised communities in the public sector. As of 2020-21, STs were represented in public services in proportion to their share in the workforce. In fact, SCs have come to be over-represented in public services with their share in the sector being 1.2 times their share in the workforce, a testimony to the role of affirmative action policies.

Contrast this with the representation of these communities in the private manufacturing and services sectors. The share of SCs and STs in these sectors is below their share in the workforce. While it has marginally increased over the years, these groups are still very much underrepresented in these sectors. On the other hand, general category individuals are over-represented in these sectors, with their shares remaining relatively unchanged over time.

The public sector, therefore continues to be a provider of “good jobs”, and importantly, a crucial employer of marginalised communities. Given that the private sector has not created enough or good jobs, this has led to both increasing informalisation of the labour market as well as marginalisation of underprivileged communities from the labour market. In this context, further attempts to erode job creation in the public sector are likely to have both economic and social consequences for the Indian economy.

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Follow the latest breaking news, major developments and agenda-setting stories from India and around the world with the newsdesk at Hindustan Times. Operating round the clock, the desk brings together experienced editors, reporters and correspondents to deliver fast, accurate and contextual reporting across subjects that influence public policy, governance, business, society and international affairs. The HT News Desk covers politics, elections, government policies, the economy, business and markets, science and technology, the environment, law and order, infrastructure, education, climate issues and geopolitics, while closely tracking developments across states, institutions and global capitals. The team also leads coverage of major breaking news events, policy announcements, court proceedings, natural disasters, public emergencies and significant international developments. Reports published by the newsdesk are based on information gathered from reporters on the ground, official statements, government agencies, court records, regulatory filings, recognised institutions and other authoritative sources. Stories undergo editorial scrutiny and verification processes to ensure accuracy, fairness and relevance, and are updated as events evolve and additional information becomes available. Whether covering a key political decision in New Delhi, an economic policy shift affecting millions, a landmark court ruling or a major global event, the HT News Desk aims to provide readers with reliable, fact-based journalism that delivers not only the latest developments but also the context and analysis needed to understand their wider implications.

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