The document discusses employment growth in India after independence. It is divided into four phases: 1) Independence to mid-1960s, characterized by high growth in agriculture and manufacturing. 2) Mid-1960s to 1980s, saw slower growth due to various factors. 3) 1980s to early 1990s, marked by sharp GDP growth and a major shift to the services sector. 4) Early 1990s onwards, began privatization and liberalization, accelerating structural shift away from agriculture towards services. Key problems discussed include slow agriculture growth, underutilization of manufacturing capacity, and inadequate infrastructure across sectors.
1. Employment in India
Growth after Independence
Presented by:
Gaurav Dakliya (2011CH10082)
Nikhil Aggarwal (2011CH10099)
Paras Garg (2011CE10377)
2. Key Terms
• Labour force participation rate
• Percentage of “Working Age Persons”
• Employed
• Unemployed but looking for a job
• Work force participation rate
• Percentage of the total working age population
• employed
• Unemployment rate
• Percentage of total working age population which is unemployed
3. Key Terms (Contd.)
• Usual status (Principal)
• Usual principal activity status
• ‘Labour Force’.
• Employed/Unemployed status
• Unemployment rate
• Usual status (Subsidiary)
• subsidiary status workers.
• Usual Status (PS+SS)
4. Key Terms (Contd.)
• Current Daily Status (CDS) Unemployment
• Activity status of an individual for each day of the reference week
• Time disposition of an individual on each day of the reference week
• Assigning Time Intensities and Activity status
• Intensity 1.0 – full day, 0.5 – Half day
• Employed for full day – 4 Hours
• 0.5 Intensity for two economic activities
• Working for half day
• Unemployed for full day/Half Day
• Outside the labor force for the entire day
• Current Weekly Status (CWS) Unemployment
• one or more of the gainful activities for at least one-hour on any day of the reference
week
• Seasonality in Labour Market
8. Dividing in different phases
Based on this trend Independent India can be divided in different
phases:
• Phase 1: Independence to mid-1960s
• Phase 2: Mid-1960s to 1980
• Phase 3: 1980 to early 1990s
• Phase 4: Early 1990’s onwards
9. Phase 1. Independence to mid 1960s
• First (1951-1956) and Second (1956-1961) Five Year Plan.
• High growth rate in Agriculture with 59% in GDP share with more
than 80% people employed in this sector.
• High growth rate in Manufacturing & Industry sector.
10. Phase 2. Mid – 1960s to 1980s
• Third (1961-66), fourth (1969-1974) and fifth
(1974-79) five year plan.
• Wars drought and inflation.
• Growth rate of GDP was 3.5%.
• Deceleration in growth of industries.
• Slower pace of structural shift.
11. Phase 3. 1980 to early 1990s
• Sixth (1980 - 85) and Seventh (1985-90) Five Year Plan.
• Sharp growth of GDP between 5.5% to 6%.
• Major shift to service sector.
• Large decline in the share of agriculture.
• Manufacturing sector more or less stagnant
• Percentage Employment Shift
• Primary Sector – 65.6% to 59.1%
• Secondary Sector – 14.4% to 16.2%
• Tertiary Sector – 20% to 24.7%
12. Phase 4. Early 1990s onwards
• Eighth to Eleventh five year plan.
• Beginning of privatization and liberalization.
• Foreign policies and trades played major part.
• Accelerated structural shift. Contribution to GDP:
• Primary Sector – 20% to 16%
• Secondary Sector – 26% to 25%
• Tertiary Sector – 54% to 59%.
• Percentage Employment shift
• Primary Sector – 59.84% to 53.2%
• Secondary Sector – 17.42% to 21.50%
• Tertiary Sector – 22.73% to 25.40%
13. Problems faced by Agriculture Sector
• Slow and uneven growth.
• Obsolete methods for irrigation and cultivation
• Flaws in land reforms
• Finance problems
• Problems related to storage, marketing, warehousing, communication and
transport
14. Problems faced by manufacturing sector
• Under-utilization of capacity
• Absence of proper infrastructure
• Increasing capital-output ratio
• High cost industrial economy
• Inadequate employment generation
• Poor performance of public sector
• Industrial sickness
• Global Competition
15. Problems faced in Service Sector
• Inadequate infrastructure facilities
• High growth but low share in providing employment
• Improper maintenance in airports, railways, highways, power plants
etc
• Service sector cannot grow in isolation
17. NREGA
• Salient features:
• Employment to all those who are willing to work.
• Free registration with a job guarantee within 15 days of
application
• At least 1/3rd of the employees must be women
• Fixed minimum wage rate and no upper limit
• Weekly disbursement of wages and delays not beyond a
fortnight.
18. Objectives
• Unemployment
• Enhancement of livelihood security of households
• Arrest rural migration
• Sustained Development
• Create rural assets
• Create livelihood
19. Implementation and Effectiveness of
NREGA
• 144 Crore person-days of employment
• 34 Mn household benefitted
• Improved – ‘employment per rural household’, share of women in
workforce, expenditure per district, share of wages in total
expenditure
• Decreased % of ST’s benefitting from NREGA
• Improved utilization of funds from 73% to 80%
21. Factories Act in India
In India, the First factories Act was passed in 1881. This
act was basically designed to protect children and to
provide few measures for health and safety of workers.
This law was applicable to only those factories, which
employed 100 or more workers.
In 1891 another Factories Act was passed which extended
to the factories employee 50 or more workers.
23. Minimum Wages Act, 1948
Objective of this act:
• To prevent workers from working at starvation wages.
• To prevent exploitation of labor and make provisions for
statutory fixation of minimum rates of wages.
24. Broad features of the Act
The act lays down the principles for fixation of:
• A minimum time rate of wages
• A minimum piece rate
• A guaranteed time rate
• An overtime rate for different occupations, localities or classes
of work and for adults, adolescents, children and apprentices.
25. Employee State Insurance Act, 1948
Objective:
To secure sickness, maternity and medical benefits to
employees of factories and establishments and dependents
benefits to the dependents of such employee.
28. Public Sector and Private Sector
distribution
• Public Sector contributed 7.5% of NDP in 1950-1951. Small
scale private industries.
• Public sector forms 25% of NDP in 2007-2008.
• Public sector contributes one-third of Exports
30. EMPLOYMENT IN PUBLIC AND ORGANISED
PRIVATE SECTORS
Years Public Sector Private Sector
end march end march
1981 154.8 74.0
1991 190.6 76.8
1995 194.7 80.6
2000 193.1 86.5
2002 187.7 84.3
2003 185.8 84.2
2004 181.9 82.5
2005 180.1 84.5
2006 181.9 87.7
31. Reasons for growth of public sector
• The Industrial Policy Resolution (1956)
• Schedule A: stated 17 industries, exclusively under right of state
• Schedule B: list of 12 industries progressively state owned
• Restrictive to new private industries
32. Benefits
• Helps in rapid economic growth
• Promote redistribution of Income
• Create employment
• Promote balanced regional development
Limitations
• Economic Inefficiency
• Ineffectiveness in provision of goods and services
• Rapid expansion of bureaucracy
• Pressure on government
Benefits and Limitations in Public Sector
33. Benefits and Limitations in Private
Sector
Benefits
• Reduce political interference
• Provide adequate competition
• Generate cash
• Reduce the concentration of economic power.
Limitations
• Emphasis on Non-Priority Industries,
• Emergence of monopoly power and concentration,
• Industrial Disputes,
• Industrial Sickness.
39. Effect of Integration with
global economies on
Employment
Employment in India and China
40. Similar Current Issues
Most important problems in both economies are currently the same:
• Agrarian crisis
• Inadequate generation of employment in terms of “decent work”
• Public neglect of social sectors
• Growing inequalities.
41. Effect of Integration with global
economies (Contd.)
• Pre Integration Period
• China - State Controlled Labour Supply
• No Unemployment but Surplus labour
• Post Integration Period
• China - Rigid labour laws dismantled
• India – Not much Reforms in Indian labour market
• Shedding of Surplus Labour
42. Sector-wise distribution of Labour Force of China
and India (% of labour force)
Agriculture Industry Services
China
1980 69 18 13
1990 60 21 19
2000 50 23 27
India
1983 86.6 14.7 16.7
1987-88 64.9 17.1 18.0
1992-93 64.0 19.9 20.1
1990-2000 60.4 17.5 22.1
43. Effect of Integration with global
economies (Contd.)
• Unemployment in India and rate of growth
• Agricultural labour force
• Labour intensive manufacturing sector in China
• Service Sector - Jobless growth in India
• IT dominated Service Sector - Educated and skilled labour
• Self Employment decreased as of the Increase in wage employment.
Absorbed by Informal sector.
44. Distribution of Employment by Type in China
(% of total employment)
1990 1997 2005
Self-employment 51.2 46.1 39.5
Informal wage employment TVEs
11.2 14.3 19.0
PEIB 03.5 09.8 14.2
Formal wage employment
State 21.5 19.5 09.3
Non-state 0.2 1.5 5.1
45. Distribution of Employment by Type in India (% of
total employment)
1983 1993-94 2004-05
Self-employment 57.3 56.4 56.6
Causal wage employment 28.9 31.8 28.4
Regular wage employment 13.8 13.6 15.2
Formal sector employment 7.9 7.3 5.8
46. Effect of Integration with global
economies (Contd.)
• Employment in formal sector
• Low skilled labour force
• Increased labour productivity
• Brain Drain
• High Skilled Migrants
47. Effect of Integration with global
economies (Contd.)
• Threat to advanced countries
• Globalized labour force doubled
• 10% of United States labour force may get affected by
manufacturing and service successes in China and India
respectively - Freeman
• Global benefits growth of these economies
• Employment needs and provide basic necessities to growing
economy
• Demand for raw materials and commodities for other countries
48. Conclusion
• Shift from primary to tertiary sector with stagnant manufacturing
sector.
• Focus on subsectors with great scope of growth.
• Work upon equal participation of both male and female.
• Government policies to uplift agriculture sector.
• IT Sector emerged as new growth sector.
• Government focus on manufacturing sector. Lesson learnt on
comparison with China.
1.The labor force participation rate is the percentage of working-age persons in an economy who:Are employedAre unemployed but looking for a jobTypically "working-age persons" is defined as people between the ages of 16-64. People in those age groups who are not counted as participating in the labor force are typically students, homemakers, and persons under the age of 64 who are retired.2. The percentage of the the total working age population that is employed is work force participation rate3. The percentage of the the total working age population that is unemployed is Unemloyment rate
The status of activity on which a person has spent relatively longer time of the preceding 365 days prior to the date of survey is considered to be the usual principal activity status of the person. if an individual was ‘working’ and/or was ‘seeking or available for work’ for major part of the year preceding the date of survey then h/she is considered as being part of the ‘Labour Force’.Employed/Unemployed status is decided on the basis of whether he ‘worked’ (employed) or was ‘seeking/available for work’ (unemployed) for longer part of the total time he was in the labour force.Unemployment rate is the proportion of persons classified as unemployed on this basis expressed as a percentage of all those classified as being in the Labour Force.SubsidiaryAll individuals who are either unemployed or outside the labour force, but have worked for a minor period of not less than 30 days during the reference year are classified as subsidiary status workers.This gives us a different measure of Usual Status called the Usual Status (PS+SS) i.e. usual status of an individual determined on the basis of his usual principal status and usual subsidiary status taken together.
The current daily status approach to measuring unemployment accounts for the activity status of an individual for each day of the reference week. It reports time disposition of an individual on each day of the reference week. an intensity of 1.0 is given if activity is done for ‘full day’ and 0.5 is given if an activity is undertaken for ‘half day’.A person is classified as employed for the ‘full day’ if he has worked for 4 hours or more during the day.If a person is engaged in two or more activities for more than 4 hours a day, then he is assigned two economic activities and intensity of 0.5 is given to each of them.If a person works for more than 1 hour but less than 4 hours he/she is classified as ‘working’(employed) for ‘half day’If a person is not engaged in any work even for 1 hour during the day but was ‘seeking/available for work’ for more than 4 hours a day, then h/she is classified as ‘unemployed’ for ‘full day’. However if the person is reported ‘seeking/available for work’ for more than 1 hour but less than 4 hours, then h/she is classified as ‘unemployed’ for ‘half day’ and not in labour force for other half of the day.If a person is neither ‘working’ nor ‘seeking/available for work’ even for half a day is classified as being outside the labour force for the entire day.Current weekly statusA person is considered to be employed if he or she pursues any one or more of the gainful activities for at least one-hour on any day of the reference week else he is unemployedWe are using CWS and CDS as usual status uses a very long reference period. To take in account the seasonality in labor market, we use CWS and CDS
Put in unitsThe share of primary sector in GDP has declined from 59% in 1950-51 around 17 per cent in 2009-10.The share of the secondary sector has almost doubled from 13 per cent in 1950-51 to 24.5 per cent in 1990-91.ts share in GDP has not shown much change in the later years. It has varied around 24 to 26 per cent since 2000-01The service sector (tertiary sector) has grown substantially since 1950-51, with its share in GDP going up from 28 per cent in 1950-51 to over 57 per cent in 2009-10.Considering last 2-4 years, we can see that there is a difference of factor of 10 between growth of agriculture and service sector
This chart shows it more explicitly the boom in service sector in indiaIn 1960s service sector surpassed agriculture as major contributor towards GDP.There was a constant increase in agriculture but since 2008 it appears to be stagnantReduction in absolute number of people in agriculture sector.
First and second five year plans were mainly focused on increasing promoting basic industries and agricultural practices (crippled during British Raj)………..........more for developing strong foundation……………………This growth in manufacturing and industry sector can be completely contributed to Public Sector.Service sector wasn’t really in picture during this time
All these were focused on removing disparities in societyIndo china war in 1962…………indo pak war in 1966 and 1971…………..drought in 1965 then again in 1966-67This phase can be attributed to deviation from convectional pattern from primary to secondary to tertiary
Sixth plan – economic liberalization………….end of nehruvian socialism…………seventh plan – improving productivity level of industries by upgrading technology……………….making India self sufficient.Basis for liberalization was set from this time itself
Punjab and Haryana saw major boom in form of green revolution……………….still largely monsoon dependent.Small patches of land distributed leads to low productivityNo big investment possible…………….farmers entering miserable debts
The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is an Indian law that aims to guarantee the 'right to work' and ensure livelihood security in rural areas by providing at least 100 days of guaranteed wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work.
From 2006-07 to 2007-08
2006-07 to 2007-08
Indian acts covers various area of legislation:Working conditionsWagesSocial security and insurance
Factory act cover working conditions as area of legislation.
This rise to 25 % was there till 1990-1991 ever since then its stagnant.
1950-1960 rise in public sector…Private sector actually reduced during 1960Ever since 1985 public sector has been gradually decreasingSudden rise in private sector during 1990.
Despite of lower contribution towards GDP………………still higher employment…………..shows lack of efficiencyNot so significant increase in employment rate in private sector
Schedule B: progressively state owned means that the state would therefore generally take the initiative in establishing new units.
The number of women had been declining. Jobs for men are increasing but the quality of jobs is not too well.
China controlled the labour supply and strict restriction on migration between rural and urban areasNo unemployment before liberalisation but accumulation of surplus labor in production unitsIntegration resulted in gradual dismantling of rigid labor lawsIndia's need to reform labour market in line with the liberalisation policies was lesserBoth countries shed the surplus labour that the state and collective enterprises in both urban and rural areas had accumulated in the pre-reform period resulting in growth of unemployment
India’s unemployment problem is not as serious as china but the rate of growth is seriousSince 1980s labour force has decreased in agriculture in both the countriesIn china it is absorbed by the manufacturing sector which is process oriented and hence labour-intensiveIndia’s economic growth is led by services with serious implication of jobless growthService sector is IT dominated which require only educated and skilled labourSelf Employment decreased in both the countries as wage employment increased. It is absorbed by informal sector in both the countries
In India while the decrease in self-employment is fairly low, the share of employment in the formal sector has fallen substantially India's labour force is still largely low-skilled technological improvements increased labour productivity significantly in both China and India A major implication of the low capacity of formal sector to absorb high-skilled labour is the increase in “brain drain” in China and India. The number of high-skilled migrants (0.4 million in China and 0.5 million in India) was much higher than the low- and medium-skilled migrants.
Globally, entry of China and India into the global economy has come to be seen as a major threat in advanced countries.The entry of China, India and the former Soviet Bloc countries into the global economy has doubled the globalized labour force. Freeman argues that the success of China in manufacturing and India in services may ultimately affect 10 per cent of the United States' labour force. Singh argues that the fast growth of these two economies is beneficial for the whole world, as it is essential to meet the employment needs and provide basic necessities to their huge population. Moreover, the growth in these two countries has spurred demand for raw materials and commodities from other countries, which is ultimately helping them also to grow faster
