Some caveats to job creation claims

In recent times, the Centre has claimed that India generated 7.8 crore jobs between 2021-24, averaging 2 crore annually. This was supported by the KLEMS database, EPFO net enrolment, and PLFS data.

Employment growth rates for the past four years were 5.1 per cent in FY21, 3.3 per cent in FY22, 3.2 per cent in FY23, and 6.0 per cent in FY24. However, a closer look shows that the quality of jobs generated leaves much to be desired.

PLFS data reveals that most employment growth occurred in agriculture and self-employment within the informal sector. Despite agriculture contributing less than 15 per cent of GDP, it employs around 45 per cent of the workforce.

From 2009 to 2012, India experienced a decline in its agricultural labour force. However, post-Covid, livelihoods shifted back to agriculture, causing underemployment in the sector. This reflects economic distress, as people return to farming for survival. Migrants to urban areas now rely on petty economic activities, highlighting the poor quality of employment generated.

The majority of India’s labour force (57 per cent) is self-employed, a figure that has risen since 2020-21. Male self-employed workers earn an average of ₹15,763 monthly, while females earn significantly less at ₹5,637, with 37 per cent of self-employed women engaged in unpaid family labour.

Between July 2022 and June 2023, average earnings for the self-employed dropped by 3 per cent in real terms, reflecting increased distress, largely due to the rising share of lower-paid female workers.

Casual workers make up 23 per cent of the labour force and are employed on a daily basis without job contracts. As of June 2023, male casual workers earn ₹432 daily, while females earn ₹291. From July 2022 to June 2023, their earnings fell by 3 per cent in real terms. Casual workers lack job security, are not covered by most labour laws, and have no access to institutional social security.

Regular workers make up just 21 per cent of the labour force, with 62 per cent lacking a written job contract (they are covered under EPF and ESI), 51 per cent without paid leave, and 60 per cent without social security. ASI data of 2021-22 shows that the share of contract workers in organised manufacturing increased from 23 per cent in 2002-03 to 40 per cent in 2021-22.

Low ‘regular’ share

Even so, India’s share of regular workers, at 23 per cent, is exceptionally low compared to other developing countries. Though women participation rose from 25 per cent in 2018-19 to 37 per cent in 2022-23, much of this growth occurred in agriculture and unpaid self-employment.

Only 15 per cent of female workers hold regular salaried jobs, and a significant gender pay gap persists, especially among the self-employed.

Also, India witnessed a significant rise in platform workers in last one decade and this is set to rise further in coming years. Platform workers are perceived as informal workers in Social Security Code 2020. They have been encouraged to self-register in e-shram portal introduced in August 2021. However, employment relations remain ambiguous in the ‘gig economy’ and platform workers don’t get protection under existing labour laws.

Meanwhile, attributing the net increase in EPFO enrolment solely to new job creation is challenging, as the data is influenced by reorganising existing beneficiaries and including contract workers, which inflates the figures. Net payroll data reflects shifts within EPFO — new members, exits, and re-entries — rather than direct job creation.

Since its monthly release began in April 2018 (covering data from September 2017), EPFO enrolment has included previously employed workers not covered by the scheme. While formalising these workers is a positive step, it shouldn’t be seen as clear evidence of new job creation.

India’s labour market faces structural deficiencies. Occupational distribution hasn’t kept pace with the sectoral distribution of national income. Surplus labour from agriculture hasn’t been absorbed into organised manufacturing or the formal service sector.

This failure to absorb labour has affected both the quantity and quality of employment generation.

Post-Covid, many workers have returned to agriculture, reversing earlier trends. Given these conditions, there is little basis for celebrating the employment growth claimed over the past four years.

The writer is a faculty member at the Goa Institute of Management and former labour administrator with West Bengal Govt