KEY TRENDS 

• Employment elasticity of agricultural growth (see the note below) declined from 0.52 during 1983-1993/94 to 0.28 during 1993/94-2004/05#
• The growth of total employment declined from 2.03 per cent during 1983/1993-94 to 1.85 per cent during 1993-94/2004-05#
• The share of unorganized sector agricultural workers in the total agricultural workers was 98 per cent during 2004-05#
• Nearly two-thirds of the agricultural workers (64 per cent) are self-employed, or farmers as we call them, and the remaining, a little over one-third (36 per cent), wage workers#
• Growth rate of agricultural employment decelerated from 1.4 per cent during the period 1983/1993-94 to 0.8 per cent during the period 1993-94/2004-05*
• Between 1993-94 and 2004-05, the unemployment rate increased by 1 percent**
• Among rural males, the proportion of self-employed had fallen from 61 per cent in 1983 to 57 percent in 2005-06**
• There exists gender differential in wage rates for regular/ salaried work in both rural and urban areas**
• Goa and Kerala have the highest unemployment rates of 11.39% and 9.13% respectively. Lowest unemployment rates of 0.48% and 0.77% are found in less developed states such as Uttaranchal and Chattisgarh***

Note: Employment elasticity indicates an increase in employment in response to economic growth. A reduction in employment elasticity suggests that the rate of increase in jobs is on the decline 

# The Challenge of Employment in India: An Informal Economy Perspective, Volume-I, Main Report, National Commission for Enterprises in the Unorganised Sector (NCEUS), April, 2009, http://nceus.gov.in/
* NCEUS (2007), Report on Conditions of Work and Promotion of Livelihoods in the Unorganised Sector
** Employment and Unemployment Situation in India 2005-06, National Sample Survey 62nd Round
*** India Labour Market Report 2008, prepared by Tata Institute of Social Sciences (TISS) and Adecco Institute, London

OVERVIEW

Despite a consistently high GDP growth rate, India is not able to generate even a fraction of new job its rural folks require. The new job creation is restricted to higher end service sector areas like finance, insurance, IT and IT Enable Services (ITES) rather than in manufacturing and infrastructure where the low-skill rural migrants hope to find work. A combination of sluggish village economy, stagnation in rural crafts and cottage industry, falling farm incomes and poor human development indicators (HDI) is a perfect recipe for more rural unemployment and more distress migration to cities. 

Even before the recession started, creation of new jobs had hit negative growth. Nine out of ten people in the trillion-dollar economy work in the unorganized sector and three fourths of all Indians live on Rs 20 a day, according to the National Commission for Enterprises in the Unorganized Sector (NCEUS). Many economists argue that migration from villages to cities is a necessary condition for growth. However, India's 'low cost advantage' in the global market ensures low earnings which fail to kick off the growth cycle of reasonable purchasing power creating more domestic demand and finally leading to more job creation.

Numbers show that instead of ‘getting there’ we could be moving in the opposite direction. For instance the rate of unemployment rose by 1 percentage point in the decade between 1994 and 2005. Among rural males the proportion of self-employed has also fallen by four percentage points between early eighties and 2005. This spells doom for work participation of rural poor in the face of falling employment.

Figures also show that the situation is unchanged or worsened for rural females since the early eighties. Over 45 per cent of the farmers’ meager incomes come from rural non-farm employment (RNFE), which, in effect, is another name for casual labour. The wages are typically low because the farmer has to take whatever work he can get in the vicinity of his village. Right now only 57 per cent of the farmers are self employed and above 36 pr cent are wage workers, of which 98 per cent are engaged as casual labour.