In a recent discussion at the Reserve Bank of India, Niti Aayog vice-chairman Arvind Panagariya dismissed as bogus claims that India’s economy has expanded without creating jobs. Yet, job creation continues to be one of the major challenges for the Narendra Modi government-not necessarily the number of jobs being created but rather their composition.
The lack of good data on the Indian labour market means that the debate on job creation is shrouded in a fog of confusion.
Take the issue of how many jobs India needs to create to absorb the annual increase in its labour force. The headlines are misleading. The working- age population, i.e. those in the age group of 15 to 59 years, is rising by around 12 million every year. However, not everybody entering this age group is looking for a job. Some are getting educated. And many women in rural India are withdrawing from the labour force as family incomes rise.
So, the annual increase in the Indian labour force-or those seeking work-is likely to be around six million.
The estimate of six million additional workers assumed that the female labour force participation has stayed constant at 24.7% since 2011-12, the latest year for which credible employment data is available from the National Sample Survey Office (NSSO). In other words, only around a quarter of Indian women in the working age group is employed. Even if we assume women’s participation to have further reduced in recent years, as suggested by a 2016 survey conducted by People Research on India’s Consumer Economy (PRICE), the annual addition to the workforce is likely to reach six million by around 2020.
India needs to create 6 million new jobs every year-and not 12 million as is commonly assumed.
