IV. Employment
Trends in India and Punjab
The
changing employment structure at the broader industry level in both Punjab and
the country as a whole is shown in Table 1. In Punjab, the share of the
workforce involved in the agriculture sector declined significantly from about
50 per cent in 2004-05 to 26 per cent in 2017-18, compared to 59 per cent to 44
per cent in the country during the same period. On the other hand, the share of
Punjab’s manufacturing and non-manufacturing sectors witnessed continuous
growth during the reference years. The service sector in Punjab experienced the
most significant increase, with its share rising from 28to 41 per cent in
Punjab compared to 23to 31 per cent in the country during 2004-05 and 2017-18,
respectively. These findings indicate that Punjab has experienced a more
significant shift of the workforce towards non-farm sectors, primarily driven
by a more rapid decline in the share of the agriculture sector compared to the
national level.
Sectoral Disaggregation of Rural Workforce in Punjab
This
sub-section attempts to understand the pattern of rural non-farm employment in
Punjab at aggregate and disaggregate levels. In terms of both population and
employment share, Punjab continues to be mainly a rural economy since about 62
per cent of Punjab’s population (Census, 2011) and 60 per cent of the state's
workforce belong to rural areas (PLFS, 2017-18). In Punjab, rural workers'
reliance on agriculture fell by half from around 52 lakh workers in 2004-05 to
25 lakh workers in 2017-18 (see Table 2). The departure of around 27 lakh rural
workers from the state's agricultural sector in just 14 years (2005-2018) is
worrisome. Indeed, one of the reasons for analysing Punjab's rural non-farm
sector was the massive exit of rural workers from the agriculture sector.
The sector-wise
disaggregation reveals substantial shifts in the contribution of rural folks to
Punjab's economy. Total cultivators in the agriculture sector declined by more
than half from 36 lakh in 2004-05 to 19 lakh in 2017-18 (see Table 2), and the
agricultural labourers also declined by nine percentage points in the same
period. In 2017-18, the sectoral composition of RNFE depicted that the service
sector accounted for the largest share of non-farm employment among both rural
males and females, followed by non-manufacturing (notably construction) and
manufacturing sectors.
Table 2 also
shows that employment grew in Punjab's rural manufacturing sector from 5.7 lakh
in 2004-05 to 8.1 lakh in 2011-12. However, in 2017-18, it declined by 1 lakh
to 7.1 lakh. The same is valid for non-manufacturing (mainly construction)
jobs. In the non-manufacturing sector of rural Punjab, the absolute number of
workers increased from 7.5 lakh in 2004-05 to 12.6 lakh in 2011-12 and then
declined to 10.7 lakh in 2017-18. Only the service sector among the rural
non-farm sectors continuously generated jobs in rural Punjab.
Although the
service sector showed great success in creating jobs between 2011-12 and
2017-18, declining employment in the manufacturing and construction sectors
failed to compensate for the enormous decline in agricultural employment during
this period. Therefore, rural employment in Punjab generally declined between
2011-12 and 2017-18.
Gender Aspects of Rural Non-Farm Employment in Punjab
In recent
decades, the gender aspect of rural employment has gained significant
importance, primarily due to the deteriorating status of females in society
(Jha, 2006). A growing number of rural women are seeking higher education
(education effect), the household incomes are rising, and consequently,more and
more women are attending to domestic duties due to the ‘income effect’.
However, lower female participation in rural employment can be attributed to
factors such as limited employment opportunities for women and other
socio-cultural factors (Neff et al., 2012).
After 2004-05,
a quantum change in the male and female rural workforce towards the non-farm
sector was observed in Punjab. Table 2 shows that the number of rural male
workers in non-farm sectors is more than their female counterparts. Because of
mechanisation and other technological advancements, females were forced out of
the agriculture sector as the traditional works of winnowing, threshing, etc.,
are increasingly being done by machines. The period from 2004-05 to 2017-2018
has witnessed the 'defeminisation of agriculture' with about half of the women
leaving the agricultural sector and their number declining from 24.3 lakh in
2004-05 to just 3.6 lakh in 2017-18. However, we see that the female rural
workforce that left the agriculture sector was not absorbed in non-farm, since
the number of females engaged in the non-farm sector has slightly increased
from 2.8 lakh in 2004-05 to 5.3 lakh in 2017-18.Thus, we can draw inferences
from the data that it is mainly the decline in rural employment, which is further
caused mainly by a decline in the rural female workforce and the slow growth of
rural manufacturing and construction jobs, which led to the decline in total
employment in Punjab after 2012.
V. Sub-Sectors of Non-Farm
SectorDriving Employment Growth in Rural Punjab, 2005-2018
In the
previous sections, we observed a significant reduction in the share of the
agriculture sector in Punjab’s total employment and the corresponding rise in
the share of non-farm sectors post-2005 period. However, when we examine the
employment trends in rural Punjab, it becomes evident that a substantial
proportion of the rural workforce is still employed in the agricultural sector
(25 lakh in 2017-18). Only service sector jobs have produced better results
among the rural non-farm sectors. The industrial manufacturing and
non-manufacturing industries have a long way to go to employ the rural
population of Punjab profitably. In this particular segment, an attempt is made
to find out the sub-sectors within the manufacturing, non-manufacturing, and
service sectors that have played a role in the growth and decline of rural
non-farm employment in Punjab.
Rural Manufacturing Employment
To relieve the
burden on agriculture, the growth and advancement of the industrial sector hold
significant importance. In Punjab, it is the unorganised sector that has been
instrumental in driving the growth of non-farm employment. The unorganised
segment of Punjab's manufacturing industry comprises labour-intensive
agro-based industries that require comparatively fewer skills and can employ
large numbers of rural workforce. Table 3 reveals that the manufacturing
industry of Punjab consists of both labour-intensive and capital-intensive
sub-sectors. Between 2004-05 and 2011-12, the labour-intensive subsectors of
Punjab's rural manufacturing industry contributed significantly to the growth
of jobs in this sector. Roughly 2.5 lakh jobs were created in the rural
manufacturing industry in Punjab over the eight years 2004-05 to 2011-12.
Nevertheless, these sub-sectors suffered a decrease in jobs post-2012.
Within the
manufacturing sector, the sub-sectors that generate employment include food and
beverages, textiles and wearing apparel, basic metals and non-metallic
products, furniture and sports goods industries. However, it is important to
note that most of these sectors witnessed stagnation or a decline in employment
between 2004-05 and 2017-18. In Punjab, the decline of the agro-based
industries producing wood, leather, rubber products, textiles, etc., is alarming,
as there is still constant strain on the state to raise income and jobs beyond
agriculture, where development has almost stagnated.
The need for
more expertise and skilled knowledge is the biggest challenge for rural workers
entering capital-intensive manufacturing sub-sectors (Chand et al., 2017). For
agriculture-displaced labourers to find employment in the rural manufacturing
sector, there is a need to take pragmatic policy measures to develop
labour-intensive subsectors of the manufacturing industry in Punjab, as these
sectors do not demand much skill and professionalism. Strengthening the
capital-intensive subsectors is equally essential to accommodate the vast youth
population of Punjab, who have stayed out of work for a long time to attain education
and training.
Rural Non-Manufacturing
Employment
Among the
non-manufacturing sub-sectors, the construction sector has emerged as the
primary source of employment for the rural population. Growth in the
construction sector is employment-intensive, and it generates employment mainly
for low-skilled labourers. Numerous studies have indicated that the
diversification of employment in rural areas is driven primarily by the growth
of jobs in the construction sector, which has emerged as the leading employer
of the added rural labour force, especially for those who have migrated from
the agricultural sector (Papola, 1994; Chadha and Sahu, 2002; Dev, 2003;
Chandrasekhar and Ghosh, 2007; Himanshu, 2011; Jatav and Jagoria, 2012).
In the case of
Punjab, too, the construction sector has emerged as the largest sector and has
single-handedly provided work to its vast rural workforce. The NSS data
suggests persistently high levels of construction employment in rural Punjab.
Rural construction workers rose from 6.9 lakh in 2004-2005 to 11.8 lakh in
2011-2012 (see Table 3). Rural employment in the construction sector has
declined considerably since 2011-12, but the proportion of rural workforce
engaged in this sector has remained relatively high. Utilities like
electricity, water, and gas have yet to emerge as critical employment sectors
from the perspective of rural employment generation. The share of electricity,
gas and water sectors in the total rural non-manufacturing employment in Punjab
is relatively low, just 0.3 lakhs in 2017-18.
It has been
noticed in many Punjab-related studies that migrants mainly dominate the
construction sector of Punjab. Moreover, the nature of work in the construction
sector is typically casual. A high proportion of rural workers going into the
construction industry reveals casualization of employment (Jatav, 2010; Saha
and Verick, 2016). Thus, appropriate policy measures to protect the interests
of construction workers are the need of the hour.
Rural Service Employment
The service
industry emerged as the largest source of employment for the vast rural
workforce in Punjab. In Table 4, overall service employment rose from 12.8 lakh
in 2004-05 to 18.5 lakh in 2017-18 (0.4 lakh per annum). Unlike the
manufacturing and construction sectors, it is the only service sector that has
not experienced a decline in employment during 2012-18. Punjab’s rural service
industry consists of both traditional and modern services. The traditional
service sector requires fewer skills and is primarily self-employed and casual,
whereas the modern service sector creates more regular salaried formal jobs.
The share of traditional services in rural employment has increased
continuously over the reference period. In 2017-18, traditional services such
asretail trade (5 lakhs), land transport (2.4 lakhs), public administration and
defence (1.6 lakh) and wholesale trade (1.3 lakh) collectively accounted for
around 55 per cent of the total rural service employment in Punjab. One reason
for the increase in rural employment in trade and land transport has been the
creation of basic infrastructure like roads (Jha, 2006).
Modern service
sectors like education (3.1 lakh), real estate business (0.9 lakh), finance and
insurance (0.7 lakh), health services (0.5 lakh), hotels and restaurants (0.3
lakh) and other services (2.3 lakh) have also geared up the growth of overall
service employment in rural Punjab in 2012-18. However, warehouse and storage
services and the postal and telecommunications sectors showed a total decline
of 0.1 lakh jobs in 2012-18.
From Table 4,
it is clear that in rural Punjab, the traditional service sector plays a more
significant role in employing the rural workforce compared to the modern
service sector. Implementing policies that promote modern services like
education, health, finance, public administration, defence, etc., can
potentially contribute to an increase in the proportion of regular salaried
employment opportunities in rural Punjab.
The
analysis of the sub-sectoral composition of the rural non-farm sector (RNFS) in
Punjab shows that the increase in RNFS employment is spread around food,
textiles, construction, trade, transport, real estate, finance activities,
defence, education and other services. Such a rise in RNFE is suspected for its
quality. There is a need to transition from service-led to manufacturing-led
growth, as much potential must be harnessed in Punjab’s manufacturing sector.
This transition is necessary and imperative for Punjab’s economy to grow
reasonably.
VI.
Quality of Rural Non-farm Employment in Punjab, 2005-18
Economic
growth in India has indeed increased the overall quantity of employment.
However, it is crucial to note that access to high-quality jobs is still very
limited (Sharma et al., 2014). Therefore, for overall rural development, there
is a need to increase not only the quantity of employment but also the quality
of employment. Analysing the quality of jobs created in rural areas becomes
very important when the government is only concerned with providing access to
jobs to rural people through various employment programmes like MGNREGA, etc.
Here,
in this section, we will delve into an analysis of the quality of jobs created
in the non-farm sector in rural Punjab. This analysis will consider various
factors, including the types of employment, educational qualifications, access
to social security benefits (formal and informal),occupation types, enterprise
sizes, and terms of job contracts, among other factors.
Category-Wise
Shifts in Rural Non-Farm Workforce
The
NSSO provides a category-wise disaggregation of the RNF workforce. The relative
proportion of three different categories of workers - self-employed,
regularlyemployed and casual labour explains the quality of employment. It is
generally hypothesised in many studies that the increase in the proportion of
casual labour in the total workforce results in the deteriorated quality of
employment because casual labourers are generally devoid of any social security
measures (Papola, 1994; Himanshu, 2011; Jatav and Sen, 2013).
In the rural
manufacturing sector, there was a notable rise of six percentage points in the
proportion of regular salaried workers, accompanied by a decline of three
percentage pointsin the number of casual labourers from 2005-2018. Similarly,
the rural service sector exhibited a significant increase in the share of
regular salaried workers by ten percentage points from 46 per cent in 2004-05
to 56 per cent in 2017-18. Meanwhile, casual employment in this sector declined
by three percentage points (as shown in Table 6). An increase in regular
employment is a welcome development, as regular salaried employment is
associated with creating more formal employment in the economy.
However, in the
non-manufacturing sector (notably construction), the proportion of casual
workers has consistently risen over the years, while the share of regular
salaried workers within non-manufacturing has declined by five times (from 15
per cent to 3 per cent) between 2004-05 and 2017-18.The construction sector
mostly requires fewer skills and no technical expertise. The kind of work
provided in this sector is thus casual or informal, as only less skilled
workers opt to work in construction activities at low wages.
This result is
visible in Figure 1, where the share of formal employment in the manufacturing
sector (increased from 10 to 10.9 per cent during 2011-12 and 2017-18) and
service sector (increased from 12.9 to 17.3 per cent during 2011-12 to 2017-18)
has accentuated overtime while in non-manufacturing it has reduced from 4.9 to
2.2 per cent during the same period. Although there has been an increase in the
overall share of formal employment within the rural non-farm sectors in Punjab,
the level of informality remains very high (88.8 per cent as of 2017-18).
Therefore, a structured industrial policy at a broader level aiming at reducing
informality in Punjab is required, which can trickle down to rural sectors,
too.
Figure 1. Sector-wise formal employment trends in rural Punjab, 2005-2018
Source: Author’s calculation from NSS and PLFS unit-level data
Education Levels
Technical
education and vocational training aimed at providing the necessary knowledge
and skills for employment. Attaining technical education and vocational
training, particularly at the higher education level, is imperative to enable
workers in the labour market to compete in a world where technology plays an
important role (World Development Report, 2019).
Table
7 shows that the levels of general, technical education and vocational training
could be better among the rural non-farm workforce of Punjab. High levels of
illiteracy among the rural workforce have significantly impeded the growth of
the rural non-farm sector in Punjab. The need for more skills and technological
awareness continues to be the biggest challenge for rural folks in joining the
manufacturing and service sectors. In the manufacturing sector, nearly 60 per
cent of the workforce is illiterate or educated up to the primary level only in
2017-18. This share in non-manufacturing (72 per cent) and services (43 per
cent) is equally bad.
Even
though the proportion of the rural workforce with secondary education increased
from 14.2 to 16.4 per cent in manufacturing, 5 to 9.5 per cent in
non-manufacturing and 12.5 to 15.7 per cent in the service sector and the
proportion of the workforce with graduate degrees increased from 1.6 to 6.1 per
cent in manufacturing, 0.8 to 1.5 per cent in non-manufacturing and 9.3 to 18.8
per cent in service sector during 2011-12 and 2017-18 (see Table 7) but still
the rural manufacturing and non-manufacturing employment declined during the
same period (see Table 2). Only the service sector showed increased employment,
which is also limited to a few traditional sectors like land transport and
retail trade. A large share of the rural workforce with no technical education
and no vocational training is also responsible for poor-quality jobs being
created in the rural industrial and service sector of Punjab.
Lack
of quality education in rural areas drives workers to either be trapped in the
agricultural sector or seek jobs in the casual non-farm sector, not in salaried
employment with better pay and more significant social security benefits. In
addition to a lack of technological competence, rural firms are less likely to
invest in technology, contributing to less labour efficiency in rural
manufacturing than in urban manufacturing (Chadha, 2003). The same holds for
the service sector as well. Low educational levels of the rural workforce
suggest that merely setting up industries and necessary physical infrastructure
is insufficient to increase employment in rural areas. The enhancement of
industrial infrastructure in rural areas must be complemented by effective
human resources development programmes to equip young people with the necessary
skills and training to meet the demands for easy entry in high-paying non-farm
jobs (Chand et al., 2017). Thus, higher investment in the quality and access to
education (general, technical and vocational training) must be a priority for
the policymakers.
Occupation-Wise Disaggregation of Rural Non-Farm
Workforce
Occupation
is also one of the leading indicators to examine the quality of employment.
Occupations comprising administrative, professional, and clerical workers
belong to high-quality occupations. In contrast, sales, service, skilled, and
elementary workers belong to low-quality occupations. In the rural
manufacturing sector, there has been a slight increase in the proportion of
high-quality occupations from 10.8 per cent to 12.6 per cent, while the
proportion of low-quality occupations has declined from 89.2 per cent to 87.4
per cent during 2011-12 and 2017-18, respectively. In the non-manufacturing
sector too, the proportion of the workforce engaged in high-quality occupations
is dismally low and has declined during the reference years, while the share of
those involved in low-quality occupations has remained as high as 98 per cent
during 2011-12 and 2017-18 (see Table 8).
Even
the workers engaged in the rural service sector, which has been the principal
employer of rural folks, have been reported to be working in low-quality
occupations. Around 60 per cent of the service workforce is engaged in
low-quality occupations. Although the service sector’s share in high-quality
jobs is much higher than in the manufacturing and non-manufacturing sectors,
the sector’s potential to create high-quality jobs has remained stagnant during
the reference years. This indicator clearly shows that the jobs created under
non-farm sectors are primarily of low quality, and severe intervention from the
government is crucial to reverse the situation.
Small Size of Enterprises and Increase in Workers with No Job Contract
One of the primary factors contributing to the informal
nature of work in RNF sectors is the small size of the enterprises. The growth
of RNFE in Punjab is largely driven by micro and small enterprises that hire
fewer than ten workers. In 2017-18, around 74 per cent of the enterprises in
RNFS employed less than ten workers. In the manufacturing sector, their share
is 62 per cent, while in non-manufacturing and service sectors, it is about 85
per cent and 72 per cent, respectively. This result becomes evident when
examining the prevalence of informal employment and employment in the
unorganised sector in rural Punjab. The unorganised sector is often
characterised by seasonal employment, lack of employer-employee relationship
and inadequate coverage of social security safety net (Gupta, 2009).
It is clear from Table 8 that the level of informality
(measured by taking social security benefits like maternity, gratuity, pension
benefits, etc.) and the number of rural non-farm workforce engaged in rural
unorganised sectors has increased in Punjab. Strangely, the service sector, the
primary driver of employment in rural Punjab, has continuously seen a rise in
informality and unorganised segments. In contrast, informality declined in the
other two sectors in 2012-18.
About 89 per cent of the employed persons in the rural
non-farm sector have reported working without any written job contract,
followed by 1.3 per cent of workers with a job contract between 1-3 years in
2017-18. Around 94 per cent of workers in the manufacturing sector, 98 per cent
in the non-manufacturing sector and 82 per cent of workers in the service
sectors worked without any job contract in 2017-18. Workers with a job contract
for more than three years has declined in the manufacturing and
non-manufacturing sector and increased by five percentage points in the service
sector during 2012-18. A high proportion of workers with no job contract
implies more informality among them.
Only 15 per cent of workers in the manufacturing sector
and 3 per cent in the non-manufacturing sector have received paid leave. This
share is quite impressive in the service sector (around 35 per cent), but even
in that sector, this number has declined from 40 per cent in 2004-05 to 37 per
cent in 2011-12 and further declined to 35 per cent in 2017-18.
