Employment Structure

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EMPLOYMENT STRUCTURE

EMPLOYMENT STRUCTURE Given the paucity of dependable statistical evidence, the employment structure in India can be described only for a period beginning in 1881 to the present, from data based on the decennial population census until 1960, and the National Sample Survey (NSS) thereafter. Though the methodology used in these sources is different, the trends in employment and its pattern are broadly comparable.

The Nineteenth Century

For India, most of the nineteenth century, at least up to the 1870s, was a period of economic decline. Exploitative features of British colonial rule, including the introduction of burdensome land revenues and tariffs, first by the British East India Company Raj, then directly by the Crown, were primarily to blame. More positive features appeared in the first quarter of the century as law and order improved, and economic infrastructure and modern communications were developed. Between 1860 and 1900, land revenue collection rose by just 25 percent, while the value of agricultural output (largely due to a rise in prices) increased by about 116 percent. National income estimates for the period after 1870 suggest that output kept pace with population, which grew by about 1 percent per annum. On the basis of the population census, the share of India's primary sector (agricultural) workforce rose from approximately 60–65 percent to 70 percent in 1881; that of the secondary sector (industrial) declined from about 15–20 percent to 11 percent, and that in the services sector remained virtually unchanged. The increased relative and absolute size of the primary sector reflected not only a movement away from declining handicrafts within the manufacturing sector, but also increased acreage brought under cultivation, which may have increased agricultural output, though not necessarily output per acre. The industrial output was estimated to have declined.

The Period from 1881 to 1950

Between 1881 and 1911, the share of labor force in agriculture, including allied activities such as forestry, rose slightly, from 72.4 to 74.5 percent, and that of the labor force in manufacturing declined from 10.6 to 9.1 percent. The employment picture did not perceptibly change in the next forty years. The share of employment in the agricultural sector remained almost constant at 75 percent, rising from 74.8 percent in 1911 to 75.7 percent in 1951. On the other hand, the share of employment in the manufacturing sector and the services sector during the same period declined slightly. In the former case, the fall was from 12.2 percent to 11.9 percent, while in the latter case it was from 13 percent to 12.4 percent. Stagnation in employment in the manufacturing sector and the decline in employment in the other two sectors took place despite the rise in net domestic product. It should be noted that the data in 1951 pertain to undivided India (which included Pakistan and Bangladesh). However, the comparison is appropriate, as the figures for 1911 are also for undivided British India.

The statistics relating to employment for the country as a whole fail to reflect the regional picture of employment. While a large part of central India had the same pattern of employment as India as a whole, two groups of states showed different patterns. In the first group, consisting of Kerala, Maharashtra, Madras, and West Bengal, there was a marked shift in the workforce away from agriculture and toward manufacturing. In the second group, consisting of Rajasthan, Orissa, and Punjab, while there was a notable rise in the share of agriculture in the workforce, the share of manufacturing fell sharply. The difference in the employment pattern in these two groups of states was attributable to the varying access of these states to transportation facilities such as internal waterways (as in the case of Kerala), seaports (as in the case of Maharashtra, Madras, and West Bengal), and the railway network.

The Second Half of the Twentieth Century

Trends in employment for the latter half of the twentieth century may be more accurately described for the period from 1961 to 1999–2000, as the 1961 census adopted the concept of participation in productive work more inclusively than did the 1951 census, using income rather than work as the criterion for being in the labor force. The share of agricultural employment during the period from 1961 to 1999–2000 declined from 75.9 percent to 60.4 percent, while the corresponding shares in industrial and service employment sectors increased from 11.6 to 17.3 percent and 12.4 to 22.3 percent, respectively. In sharp contrast to the period from 1881 to 1950, there was a more decisive structural shift in the workforce away from agricultural employment to the fast growing industrial and service employment. The growth in total employment and a major change in its structure were induced by the acceleration in the aggregate and per capita national product. Thus, the gross domestic product at factor cost grew by about 3.4 percent between 1951 and 1980–1981, by 5.75 percent in the 1980s, and then by 6 percent in the 1990s.

J. Krishnamurty