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Labour and employment (April 2014)

Since 2004-05, for the first time in the history of India, more workers have left agriculture for productive work in industry and services. Between 2009-10 and 2011-12, non-agricultural employment grew rapidly.

Between 1999-2000 and 2004-05, National Sample Survey (NSS) data reveal that nearly 12 million joined the labour force. However, the number of non-agricultural jobs created per annum was much lower — 7.5 million. Non-agricultural employment increased between 1999-2000 and 2004-05 (which coincides with the time the National Democratic Alliance was in power) by 37.5 million over the five-year period, i.e., 7.5 million new jobs in industry (manufacturing and construction) and services per annum.

Growth of non-agricultural jobs
The number of non-agricultural jobs between 2004-05 and 2011-12 increased by 52 million over seven years, i.e., by 7.5 million per annum again. However, since 2004-05 fewer people joined the labour force. 37 million persons left agriculture during the periods 2004-05 and 2011-12, they found work in non-agricultural activities, both rural and urban. In comparison, 20 million new workers joined agriculture between 1999-2004.

Since 2004-05, this transformation has been happening for the first time in the history of India. Of the 60 million additions to the workforce between 1999-2000 and 2004-05, a third (20 million) joining agriculture indicated growing rural distress, on account of the slow growth in agriculture between 1996 and 2005.

Agriculture has grown much faster since 2005. During the 11th Plan, agricultural output grew at 3.2 per cent per annum (2007-12) on average, despite crippling drought in 2009-10. The share of agriculture in the workforce has been in decline for decades (falling to 49 per cent in 2001-12).

Unskilled workers who left agriculture flocked to construction employment. Such employment increased by only eight million (17 to 25.6 million) during 1999-2000 to 2004-05. But it grew sharply to 50 million by 2011-12. This was an increase from under two million a year to seven million a year. While a part of this increase in construction employment was in housing real estate, it was infrastructure (roads, bridges, airports, ports, energy projects) investment which drove most of the employment growth.

Increasing employment was accompanied by rising wages. Wages were stagnant between 1999-2000 and 2004-05, especially rural wages. MGNREGA created a floor wage in the rural areas. This led to a knock-on effect on urban unskilled wages as well.

Growth in service jobs
Most importantly, services jobs grew by 11 million, and manufacturing employment increased by a remarkable nine million in two years alone (2009-10 and 2011-12), although manufacturing employment fell in absolute terms by three million between 2004-05 and 2009-10.

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