SOME of the worrying features of recent employment trends raise doubts about the discourse of post pandemic robust recovery advocated by the government and the political establishment. It is not at all surprising that the economy faced severe contraction during the pandemic and as situations ease off, the economy once again records positive growth in different sectors. In most of the sectors however as the first quarterly estimates suggest, the economy is still short of recovering the pre-pandemic levels of output or value addition.

One of the interesting facts revealed by the Periodic Labour Force Surveys (PLFS) of the past three years suggest that there has been a reverse migration of people from non-agriculture to agricultural activities during the recent past which is reflected by an increase in the share of agriculture from 42.5 per cent in 2018-2019 to 45.6 per cent in 2019-2020. Roughly for the past three decades in India there had been a massive  shift of employment share from agriculture to non-agriculture and the absorption was primarily recorded in sectors such as construction, trade, hotel and restaurants and some marginal rise in manufacturing employment although most of these are recorded in the informal sector of the economy. Recently the reverse movement towards agriculture raises concern as the growth of non-farm segment in rural India that was creating some jobs seems to have dried up. The decline in the growth of employment in the construction sector which was primarily driven by government investment in infrastructure and also by the construction boom fomented by speculative capital lost its steam by 2011-12. Manufacturing growth didn’t take off depending on foreign investment and relying on exports as expected by liberalizers. Hence low-end services particularly retail trade continues to be the major absorber in non-farm employment.

During the recent past there had been a sharp decline in employment due to the pandemic and in the post-pandemic situation we are still not back to pre-pandemic employment in sectors such as manufacturing, construction, transport, storage and communication and the only sector which shows a rise in employment is retail trade. According to CMIE data roughly 40 million people were employed in manufacturing in pre-Covid scenario. With the onset of the pandemic, the count almost halved to 21 million in April 2020 that recovered to 30 million in February 2021 although again fell to 28 million in August 2021. Close observers of industry suggest that employers have already resorted to technologies that reduce employment and it is not so easy going back to pre-Covid employment figures in manufacturing. So the rising share of agricultural employment actually reflects the low absorption capacity in non-agriculture and with the rising proportion of farm labourers in agricultural sector it is clear that workers who worked in construction or employed earlier in other non-farm activities are not fully back to their previous occupations.

DISCONCERTING TRENDS

One of the other major trends visible in recent employment figures is the rise in the share of self-employment in total employment. According to PLFS 2019-20 the latest so far released by National Statistical Office, 53.5 per cent of India’s working population are self-employed. In rural India the share is 59.8 per cent and in urban segment it is 37.8 per cent. The share of self-employment within total employment increased in rural India compared to 2011-12 NSSO figures. And what is even more significant as a long term trend that the share of non-wage employment in India remained above 50 per cent consistently for past decades. In official statistics self-employment is captured both in labour force survey as well as in periodic enterprise survey conducted by the government. Self-employment is indicated by Own Account Enterprises (OAE) those that do not hire any labour. These are primarily household enterprises involving mostly family members as unpaid helpers. The share of OAEs within unincorporated non-agricultural enterprises in manufacturing, utility, trade and services, excluding construction accounts for 91.4 per cent of rural enterprises and 76.6 per cent of urban enterprises in 2015–16 and they account for 76.4 per cent and 50.4 per cent of employment respectively. Therefore, a large proportion of small enterprises both in rural and urban India are own account enterprises employing no hired labour. Within manufacturing sector on an average in rural India, 91.4 per cent of enterprises in unorganised manufacturing have been OAEs that do not hire any labour and account for 76.3 per cent share of employment of unorganised manufacturing. The corresponding shares for the urban unorganised manufacturing have been 71.6 and 44.8 respectively. What is evident from the facts is that self-employment has been and continues to be the mainstay of rural and urban unorganised employment in India despite high and low growth episodes experienced in the past decades.

MYTH OF AUTONOMY

The rise in the proportion of self-employment in the current scenario is primarily distress driven as this has been the only opportunity left to eke out a living. Some may say that it is a reflection of increasing entrepreneurship and also of expanding autonomy of work force enjoying more freedom than waged labour, which might be the case for a very thin upper layer consisting of owners and professionals but the bulging of self-employment in countries such as India indicates rising proportion of more vulnerable and precarious workforce. Wage labourers mostly enter into a contract and their earnings, at least in the short run do not immediately depend on the sale of the produce. They are to be paid due wages and salaries even if the employer may not be able to sell all of his produce immediately. In case of self-employment owner-worker can realize the return of labour only when the produced goods or services are sold. More importantly their autonomy is a myth since they are at the weaker side in the bargain while buying inputs from big suppliers and also while depending on big buyers in selling products. They also have to compete with products produced by bigger capitals including MNCs particularly in consumer goods segment. It is evident from PLFS figures that average monthly earnings of an average self-employed person in India have been roughly 54 per cent of the monthly earnings of a regular/salaried worker.

What is significant to note is that non-wage employment continues to be more than half of Indian workforce and a significant majority of unorganised workers despite some intermittent fluctuations in abnormal times. It had been generally held that proportion of self-employment is very sensitive to cyclical fluctuations in the economy. Self-employment increases during economic downturn and a portion of the self-employed or a part of the reserve army of labour are called back with rising productive activities, hence, the proportion of self-employment in the workforce falls. But this cyclical fluctuation of self-employment has not been found to be robust in India as well as in other countries in recent times. In fact, even in advanced economies the share of self-employment has increased which is of course a process largely driven by technological changes and different from distress driven self-employment prevalent in low-medium income economies. Increasing disconnects between economic growth and self-employment is more pronounced in the neoliberal regime when growth does not necessarily accompany new employment. Hence even if growth rebounds after a downturn more people may not be absorbed in the organised process of production. In other words, hardly any portion of the reserve army returns back to the active army of labour.

On the other hand, during the downturn there is a possibility of more people slipping to self-employment who are exorcised from the formal sector, but at the same time the same crisis may destroy many existing petty producers, so the net effect depends on the initial proportion of self-employed within the economy before the crisis sets in. If the proportion had been higher, the destructive effect is likely to overwhelm the new entries of self-employment during the crisis. However, in case of developing counties this may not always be reflected in declining numbers of employed people, as people cannot afford to remain unemployed in the absence of any welfare benefits, hence the dispossession may be reflected in terms of lower earnings. It is imperative therefore for the working class movement to raise the concerns of this vast majority of petty producers and working poor drawing them to collective action for their rights, entitlements and their fight against policies that favour the big corporates.