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According to the Economic Survey 2014-15 Vol. 1 & 2 (Please click Vol1 and Vol2  to access):

• Estimates of employment growth and its elasticity relative to economic growth vary widely. However, tentatively, one might say that employment growth and elasticity have declined in the 2000s compared to the 1990s. Since labour force growth is in excess of employment growth, labour absorption will be a challenge. Reforms and faster economic growth will be central to meeting it.

• A few very tentative conclusions can be drawn from what are fairly noisy estimates. Aggregate employment growth has been above 2 percent in the 1990s. The Census and Economic Census are airly close to each other in this regard, although the NSS data paints a different picture. Employment growth declined to between 1.4 and 1.8 percent in the 2000s according to both the Census and NSS.

• In contrast, employment growth in organized industry exhibits the opposite temporal pattern, with substantially higher employment growth in the 2000s compared with the 1990s.

• A similar pattern is suggested for the employment elasticity of growth: higher elasticity of about 0.35-0.44 in the 1990s and a drop to close to 0.2 in the 2000s. The most recent data from the Labour Bureau indicates that since 2011-12 too, the employment elasticity has remained low. Employment absorption was evidently less successful in the last decade.

• Regardless of which data source is used, it seems clear that employment growth is lagging behind growth in the labour force. For example, according to the Census, between 2001 and 2011, labor force growth was 2.23 percent (male and female combined). This is lower than most estimates of employment growth in this decade of closer to 1.4 percent. Creating more rapid employment opportunities is clearly a major policy challenge.


• A cause for concern is deceleration in the CAGR of employment during 2004-05 to 2011-12 to 0.5 per cent from 2.8 per cent during 1999-2000 to 2004-05 as against compound annual growth rates (CAGRs) of 2.9 per cent and 0.4 per cent in the labour force respectively for the same two periods.

• During 1999-2000 to 2004-05, employment on usual status (US) basis increased by 59.9 million persons from 398.0 million to 457.9 million as against the increase in labour force by 62.0 million persons from 407.0 million to 469.0 million.

• After a period of slow progress during 2004-05 to 2009-10, employment generation picked up during 2009-10 to 2011-12, adding 13.9 million persons to the workforce, but not keeping pace with the increase in labour force (14.9 million persons).

• A major impediment to the pace of quality employment generation in India is the small share of manufacturing in total employment. However data from the sixty-eighth National Sample Survey (NSS) round indicates a revival in employment growth in manufacturing from 11 per cent in 2009-10 to 12.6 per cent in 2011-12. Promoting growth of micro, small, and medium enterprises (MSME) is critical from this perspective.


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