are important changes taking place in labour markets
in India. The results of the latest large round of
the National Sample Survey Organisation, which took
place in 2004-05, have just been released. They reveal
some significant changes in the employment patterns
and conditions of work in India over the first half
of this decade.
aggregate employment has been growing again. The first
important change from the previous period relates
to aggregate employment growth itself. The late 1990s
was a period of sharp deceleration of aggregate employment
generation, which fell to the lowest rate recorded
since such data began being collected in the 1950s.
However, the most recent period indicates a recovery,
as shown in Chart 1.
1 >> Click
While aggregate employment growth
(calculated at compound annual rates) in both rural
and urban India was still slightly below the rates
recorded in the period 1987-88 to 1993-94, it clearly
recovered sharply from the deceleration of the earlier
period. The recovery was most marked in rural areas,
where the earlier slowdown had been sharper.
the same time, however, unemployment rates have also
been increasing, and are now the highest ever recorded.
Unemployment measured by current daily status, which
describes the pattern on a typical day of the previous
week, accounted for 8 per cent of the male labour
force in both urban and rural India, and between 9
and 12 per cent of the female labour force, which
is truly remarkable, and very worrying in a country
that provides nothing in the form of unemployment
benefit or insurance.
But perhaps the most significant change of has been
in the pattern of employment. There has been a significant
decline in wage employment in general, which includes
both regular contracts and casual work. While regular
employment had been declining as a share of total
usual status employment for some time now (except
for urban women workers), wage employment had continued
to grow in share because employment on casual contracts
had been on the increase.
But the latest survey round suggests that even casual
employment has fallen in proportion to total employment.
In fact, the share of casual labour has fallen for
all categories of workers - men and women, in rural
and urban India. The sharpest decline has been in
agriculture, where wage employment in general has
fallen by a rate of more than 3 per cent per year
between 1999-2000 and 2004-05.
But even for urban male workers, total wage employment
is now the lowest that it has been in at least two
decades, driven by declines in both regular and casual
paid work. For women, in both rural and urban areas,
the share of regular work has increased but that of
casual employment has fallen so sharply that the aggregate
share of wage employment has fallen. So there is clearly
a real and increasing difficulty among the working
population, of finding paid jobs in any form.
This is probably the real reason why there has been
a very significant increase in self-employment among
all categories of workers in India. The increase has
been sharpest among rural women, where self-employment
now accounts for nearly two-thirds of all jobs. But
it is also remarkable for urban workers, both men
and women, among whom the self-employed constitute
45 and 48 per cent respectively, of all usual status
All told, therefore, around half of the work force
in India currently does not work for a direct employer.
This is true not only in agriculture, but increasingly
in a wide range of non-agricultural activities, and
in both rural and urban areas.
Self-employment is often eulogised as representing
an advance from the drudgery of paid work and the
possibly tyranny of employers. And of course there
are cases where self-employment is of this preferable
and more liberated variety, where the joys of being
one’s own boss more than compensate for the increased
insecurity of income and greater difficulties of arranging
the sale of one’s produced goods or services.
But the particular context in which self-employment
has arisen in India in recent years suggests that
these more positive experiences may account for only
a minority of increase in self-employment. Instead,
more and more working people are forced to work for
themselves because they simply cannot find paid jobs.
In the case of less educated workers without access
to capital or bank credit, this in turn means that
they are forced into petty low productivity activities
with low and uncertain incomes.
The latest NSS report confirms this, with some very
interesting information about whether those in self-employment
actually perceive their activities to be remunerative.
It turns out that just under half of all self-employed
workers do not find their work to be remunerative.
This is despite very low expectations of reasonable
returns - more than 40 per cent of rural workers declared
they would have been satisfied with earning less than
Rs. 1500 per month, while one-third of urban workers
would have found Rs. 2000 to be remunerative.
This new trend requires a significant rethinking of
the way analysts, policy makers and activists deal
with the notion of ''workers''. The older categories,
methods of analysis and policies become largely irrelevant
in this context.
For example, how does one ensure decent conditions
of work when the absence of a direct employer means
that self-exploitation by workers in a competitive
market is the greater danger? How do we assess and
ensure ''living wages'' when wages are not received
at all by such workers, who instead depend upon uncertain
returns from various activities that are typically
petty in nature? What are the possible forms of policy
intervention to improve work conditions and strategies
of worker mobilisation in this context?
This significance of self-employment also brings home
the urgent need to consider basic social security
that covers not just hired workers in the unorganised
sector, but also those who typically work for themselves.
This makes the pending legislation on social security
for workers in the unorganised sector especially important.
It is time we revised our labour policies to deal
more effectively with the changing circumstances.