India has struggled to convert high economic growth into jobs, a report by the Azim Premji University said on Tuesday. Currently, a 10% increase in the Gross Domestic Product results in less than 1% increase in employment, the State of Working India 2018 report said.
For instance, the average GDP growth rate of 6.8% from 2011 to 2015 led to only a 0.6% increase in employment, the report said. “Between 2013 and 2015, total employment reduced by 70 lakh,” it added. “As a result, the rate of unemployment among the youth and higher educated has reached 16%.”
Wages, adjusted for inflation, have risen steadily over the last 15 years, the report said. Most sectors, except agriculture, have reported an increase in real wages by 3% or more annually. However, 82% of male workers and 92% of female workers earn less than Rs 10,000 per month. This is far below the minimum salary of Rs 18,000 per month recommended by the Seventh Central Pay Commission, the survey added.
“Even in the organised manufacturing sector, 90% of the industries pay wages below the minimum,” it said. “The situation is worse in the unorganised sector.”
The report also highlighted the gender and caste disparities among the Indian workforce. “For example, women are 16% of all service sector workers, but 60% of domestic workers,” the survey said. “Similarly, Scheduled Castes formed 18.5% of all workers, but 46% of total leather workers. On a positive note, the gender earnings gap is reducing over time.”
The report said that the organised manufacturing sector, especially the knitwear, plastics, and footwear industries, has grown over the last 10 years, as “workers are no longer being replaced by machines”. However, it added that firms have substituted contract and trainee workers for permanent employees at a fraction of the wage.
It also highlighted that while labour productivity has grown by over six times from 1982 to 2016, wages have increased only by 1.5 times in the period.
The report recommended that a “national employment policy” be immediately formulated. It backed the Mahatma Gandhi National Rural Employment Guarantee Act, saying that India “should build on its experience” of such schemes. The survey encouraged the government to look at new policies “such as wage subsidies and incentives for skilling workers” and “examine successful state-level employment policies and learn from the diversity of state experiences”. It also said there is a need for creating a Universal Basic Services programme that invests in education, health, housing, public transport and safety.