According to Reserve Bank of India (RBI) data, the country’s employment growth has risen by nearly 6 per cent in the 2023-24 financial year, compared to the 3.2 per cent increase recorded in the 2023 financial year.
The workforce in the country increased by around 4.67 crore to 64.33 crore in FY2024, compared to 59.67 crore in FY2023, data measuring productivity at the industry level showed.
The RBI data comes days after a Citigroup India survey report said the country would struggle to create enough jobs even with a 7 percent growth rate. This was denied by the Ministry of Labor and Employment.
Reserve Bank of India data
India KLEMS (Capital (K), Labor (L), Energy (E), Material (M) and Services (S)) database released on Monday (July 9) to measure productivity at the industry level by the Reserve Bank of India has projected growth in employment in the country by 2024. (temporarily) doubled as a percentage
Compared to the 3.2 percent rise seen in fiscal 2023. On an absolute basis, the number of jobs increased by approximately 4.67 crore to 64.33 crore in FY 2024. In FY 2023, the total workforce was 59.67 crore.
From FY2021 onwards, the country has added 7.8 crore, data shows. The employment growth rate is 5.1 percent in FY 2021 and 3.3 percent in FY 2022. The RBI said the KLEMS database covers 27 industries covering the entire Indian economy. The database provides these estimates at broad sectoral levels (agriculture, manufacturing and services) and at the all-India level.
It includes gross value added (GVA), gross value of output (GVO), labor employment (L), labor quality (LQ), capital stock (K), capital mix (KQ), energy consumption (E), material (M) and Services (S) are inputs, labor productivity (LP) and total factor productivity (TFP).
City Committee Report
As for India’s demographic dividend, even 7 percent GDP growth cannot meet job demand over the next decade under reasonable assumptions, Citigroup said in a recent report.
While the official unemployment rate is just 3.2 percent (16 percent of youth), the data reflect serious problems with the quality of jobs and potentially low unemployment, the research report said.
Agriculture accounts for 46 percent of total employment but less than 20 percent of GDP, while the manufacturing and service sectors absorb less of their share of labor than their share of GDP.
The share of the formal sector in non-agricultural employment is still only 25 percent. Only 21 percent of the labor force has a low-paying job, down from 24 percent pre-Covid.
The share of employment in rural areas between 2018 and 2023 is about 67 percent, indicating that the process of rural-urban migration has practically stalled.
Ministry of Labor’s response to City Committee report
The Citigroup report was met with a firm denial by the Ministry of Labor and Employment on Monday.
The ministry said Citigroup’s report failed to account for comprehensive and positive employment data available from official sources such as the Periodic Labor Force Survey (PLFS) and Reserve Bank of India’s KLEMS data.
Citing data from the RBI’s KLEMS data, the ministry has projected over 8 crore job creation from 2017-18 to 2021-22, which means an average of over 2 crore jobs per year. It also said that more than 6.2 crore net subscribers have joined EPFO between September 2017 and March 2024.
The ministry said private data sources have several shortcomings. These studies use their own definition of unemployment, which is not aligned to national or international standards.
The sampling distribution and methodology are often criticized for not being as robust or representative as official data sources such as the PLFS. So reliance on such personal data sources over official statistics can lead to misleading conclusions and should therefore be used with caution.
Latest PLFS report
According to the Quarterly Bulletin of the Quarterly Labor Force Survey (PLFS) published by the Ministry of Statistics and Planning Implementation (MoSPI) in May 2024, the unemployment rate (UR) in urban areas has decreased from 6.8 percent in March 2023 to 6.7 percent.
Female unemployment rate has decreased from 9.2 percent in January-March 2023 to 8.5 percent in January-March 2024. Labor force participation rate (LFPR) in urban areas is increasing from 48.5 percent to 50.2 in January-March 2023. Percentage in January – March 2024 for persons aged 15 years and above, PLFS data shows.
The Working Population Ratio (WPR) for 15 years and above is increasing from 45.2 percent in January-March 2023 to 46.9 percent in January-March 2024.
The proportion of female labor population in urban areas increased from 20.6 percent to 23.4 percent in January 2023.
In January – March 2024, reflecting an overall increasing trend in WPR, PLFS showed.
