Government Rebuttal To Citigroup Research Ignores Changes In Employment Structure

Job generation is among the foremost challenges facing the Indian economy and the government has failed to address changes in employment, Citigroup Research said, adding Asia's third-largest economy needs greater job creation to accommodate new entrants to the labour market each year.

India needs to create about 1.2 crore jobs every year over the next decade to absorb the number of new entrants to the labour market, according to an estimate by Citi. However, based on the 7% growth rate, the country is able to generate only around 80–90 lakh jobs a year, according to the report.

That's a deficit of around 30–40 lakh jobs a year.

The government rebutted this claim on Monday, stating that Citi's research failed to account for the comprehensive and positive employment data available from official sources such as the Periodic Labour Force Survey and the Reserve Bank of India's KLEMS data.

KLEMS is an acronym for K (capital), L (labour), E (energy), M (material), and S (services), all key inputs and sources of economic activities and growth.

According to these data, India has generated more than 8 crore employment opportunities from 2017–18 to 2021–22, the government said. This translates to an average of over 2 crore in employment per year, despite the global economy being hit by the Covid-19 pandemic during 2020–21, it said.

Here's what the government says:

Rise In Self-Employment

Self employed made up 57.3% of those employed in rural and urban areas in 2022-23, compared to 55.8% between 2021-22 and 55.6% in 2020-21. This compared to self-employed workers making up 52% of the workers prior to the pandemic in 2018-19.

Within the share of self-employed, the share of own account workers and helpers rose. While the share of own account workers rose to 39% in 2022-23 from 38.3% a year ago, helpers in household enterprises rose to 18.3% of the workers from 17.5% in 2021-22.

The share of salaried employees fell to 20.9% during 2022-23 from 21.5% during the same period. The share of salaried employees was 23.8% in 2018-19, or prior to the pandemic.

Rise In Agricultural Employment 

By broad industry division, 58.4% of the people in rural areas were engaged in agriculture in 2022-23, compared to 57.8% prior to the pandemic in 2018-19. Nearly 49.1% of all rural males and 76.2% of all rural females were occupied in agriculture, the government data showed.

The pandemic has brought a change in the structure of employment, according to Amit Basole, professor of economics and head, Centre for Sustainable Employment, Azim Premji University. 

Along with a rise in self employment and unpaid work, there has also been a stagnation in wages when compared to pre-pandemic, he said.

The debate isn't on the stock of employment, but on its nature, according to Basole. People have no choice but to find any work for their sustenance, often having to resort to self employment or agricultural employment, he said.

As such, despite a rise in labour force participation and a decline in unemployment, the nature of employment does not indicate healthy growth, he said.