RBI's Latest Announcement Brings Good News on Employment
Amid escalating concerns over insufficient employment opportunities in India despite the economy's rapid expansion, new estimates from the Reserve Bank of India (RBI) indicate an uptick in job growth.
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The apex bank’s KLEM database shows a jump in employment. According to the RBI, the employment rate in the country increased by 4.67 crore in 2023-24.
This number is much higher than what was estimated by some private surveys. However, these are provisional numbers and do not offer a sector-wise breakdown for the current year.
With available disaggregated data (2017-18 to 2022-23), the RBI latest estimates reveal that the agriculture sector experienced significant growth in job opportunities, followed by the construction and trade sectors.
Labour Productivity
As per the database, value added per worker, a measure of labour productivity, is lowest in agriculture and substantially lower in construction and trade compared to the most productive sectors. This low productivity affects workers’ wages.
Increasing Labour Force Participation
Recent data from periodic labour force surveys shows a sharp rise in labour force participation, particularly due to more women joining the labour market. But many of these new entrants are engaged in self-employment as helpers in household enterprises, which clearly shows a lack of more productive and remunerative jobs.
Informal Sector Employment
Data from the recent survey of unincorporated sector enterprises shows a significant portion of the labour force is still engaged in low-productivity informal sector jobs.
In 2022-23, there were 6.5 crore unincorporated companies, employing around 11 crore workers, with value added per worker being a fraction of that in larger formal firms.
Challenges in Job Creation
Non availability of more productive non-farm employment has been a main issue in India’s development. The State of Working India 2023 report highlighted the weak link between long-term GDP growth and non-farm employment growth.
The government has always tried to help create jobs, but the results haven't always been constant. The primary challenge for the government is to make sure that economic growth translates into more productive job opportunities.
