Unlike in the case of manufactures, any increase in the productivity and degree of commercialisation of agriculture and/or increases in incomes from other sources in rural areas is bound to be accompanied by an increase in demand for construction services, repair services, consumer services of various kinds, transportations services and services in the communication and storage areas, which are best met with locally-based labour. Hence an increase in the share of employment and output of these sectors would be an inevitable corollary of improved rural incomes.
 
The difficulty is that the reverse need not be true. That is, an increase in employment in services need not be a reflection of an increase in rural incomes. This is because non-farm employment in services can be the result of a distress-driven spill-over into non-farm activities of a labour force that is faced with inadequate opportunities in crop production. Thus a complex of factors rather than the mere effect of a slow or fast growth in agriculture appear to explain trends in non-farm rural economic activity. Assessing any trend in rural non-agricultural employment requires therefore an examination of the structure of non-farm activity and its evolution.
 
The availability of the results of the Fourth Economic Census relating to 1998, and the comparability of figures yielded by the three censuses relating to the years 1980, 1990 and 1998 provides such an opportunity.  The Censuses provide information on the number of and employment in enterprises engaged in all activities outside crop production and plantations in both urban and rural areas. They however include figures on a number of activities allied to agriculture such as livestock production and agricultural services including hunting, trapping and game propagation, forestry, logging and fishing. These are identified as agricultural activities in the Economic Censuses. These activities have been registering an increase in importance in the rural areas. As Charts 3 and 4 indicate the share of these activities as captured by both their share in the number of rural enterprises and their share in rural employment outside of crop production and plantations has risen consistently leading to a decline in the share of non-agricultural activities between 1980 and 1998. This points to a shrinking of the relative role of “typical” non-farm activities in rural economic activity.
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This shrinkage of the relative role of what are considered typical non-agricultural activities could have been interpreted as an indication of rural dynamism in the form of the diversification of agricultural activity but for other disconcerting trends revealed by a comparison of the Economic Censuses. The first striking trend revealed by the figures reported in Charts 1 and 2 is a deceleration in activity in the non-crop producing and non-plantation segments of both urban and rural economy. To start with the urban areas, the evidence points to a decline in the growth of the number of non-farm enterprises from an annual average rate of 3.6 per cent to 2.5 per cent between 1980-90 and 1990-98, and a sharp decline in the number of workers in the non-farm sector from 3.2 to 1.4 per cent. This points to a deceleration in the expansion of employment in the urban sector. While a part of this may be because of improvements in productivity and the movement of child workers into education, the sharpness of the fall does point to inadequate employment growth in urban non-farm activity.
Chart 1 >>  Chart 2 >>