Opinion Labour Minister’s employment numbers do not tell the whole story

Last week Union Labour Minister Mansukh Mandaviya sought to highlight the NDA government’s job creation, drawing a comparison with the record on employment of the Congress-led UPA government. The total number of employed people in India increased from 47 crore in 2014-15 to 64 crore by the end of 2023-24, the minister said. That’s an increase of 17 crore (or 36 per cent) — far in excess of the 2.9 crore new jobs (signifying an increase of just 7 per cent) during the preceding decade, 2004 to 2014, under UPA rule. He underlined that since 2017-18, the unemployment rate has fallen while the employment rate (or worker population ratio or WPR) as well as labour force participation rate have risen steadily. Minister Mandaviya has flagged overall improvements, and yet there are persisting reasons for disquiet.

It is true that India had more people with jobs in the decade 2014-2024 than between 2004-2014. But since absolute numbers must be read against total population size, it is best to look at the employment rate or WPR; the WPR for 15 years and above in this case is the percentage of people employed as a proportion of the total population. Here’s how India’s WPR moved over the past two decades: It was 62.2 per cent in 2004-05, which was the first full year under UPA rule. Since then, despite unprecedented rates of GDP growth, it fell to 55.9 per cent in 2009-10 and 54.7 per cent in 2011-12. The WPR continued to fall well into the first four years of the decade under the NDA to hit a low of 46.8 per cent in 2017-18. It is from this low level that the WPR started its steady upward climb and by the end of 2023-24 (July to June year), rose to 58.2 per cent. In other words, the dip and recovery in employment rate does not follow the neat political divide. Similarly, data on the labour force participation rate also shows a secular decline from 63.7 per cent in 2004-05 to 49.8 per cent in 2017-18, reversing the trend thereafter. Data on the unemployment rate (defined as the percentage of persons unemployed among persons in the labour force) shows that it actually fell between 2004-05 and 2011-12 before rising to a 45-year high in 2017-18.

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Most notably, perhaps, the recent improvement in India’s labour statistics hides the poor quality of the new jobs being created in the economy. For instance, the minister highlighted the fact that employment in India’s agriculture sector had declined by 16 per cent between 2004 to 2014 under the UPA whereas it had grown by 19 per cent between 2014-2023 in Prime Minister Narendra Modi’s first two terms. The increase in farm employment should be seen as a backward step — a move away from the structural transformation India has been trying to achieve since Independence. Similarly, the fact that most of the new jobs are in the low-paying “self-employment” category — especially as “unpaid helpers in household enterprises” — actually suggests deepening economic distress.