The number of self-employed has increased in India, a trend usually seen in poor and developing countries with low per capita income
Photo: iStock The National Sample Survey Office recently released the Periodic Labour Force Survey (PLFS) for 2022-23. The annual survey is the widest one to gauge the state of employment in the country. The latest survey covered 101,655 households with 419,512 people. After the pandemic years, this is the first survey that can be considered representative of a normal situation. Its findings, thus, carry more weight.
According to the survey, unemployment has decreased in the country: From 5.3 per cent in rural areas in 2017-18 to 2.4 per cent in 2022-23, and from 7.7 per cent in urban areas in 2017-18 to 5.4 per cent in 2022-23. This is impressive, though there are non-government data that point at an unemployment or livelihood crisis. The popular perception is also that the employment situation in the country is not rosy. Does the massive survey indicate any such crisis, hidden behind its headline findings?
To begin with, the survey findings reiterate one fact very starkly: That the overall employment character of the country remains unchanged; that it is dominated by the informal sector; and that agriculture still is the prime employer. Employment in agriculture has, in fact, increased: From 41 per cent in 2018-19 to 43 per cent in 2022-23.
Also, casual employment is still the dominant source of livelihood in the country and formalisation of the employment sector remains a distant objective. To sum up, the majority of the workforce is scrambling to the agricultural sector for employment. The immediate concern here is: Does the agriculture sector have the capacity to absorb more people? If not, we definitely have a crisis of livelihood on our hands. However, the decrease in unemployment rate points to more and more people being able to get employment. Is that so? The PLFS data reveals the real crisis that India’s job situation is going through.
One striking feature of India’s employment character is that it is majorly made of self-employed workforce. One is considered self-employed if he or she works with his or her own set up, or employs people for own ventures. The definition of self-employment is wide: It ranges from a tea stall to working in a farm to practising doctors. Under this category, there are two types: Those who are account workers or employers and those who are helpers in household enterprises. The latter type is basically unpaid work undertaken in one's own economic activities.
Share of self-employed persons in the total employed population of the country is increasing, from 52 per cent in 2018-2019 to 57 per cent in 2022-2023, according to the latest survey. Interestingly, the shares of both casual and regular wage earners in the total employed population have decreased. Within total self-employed persons in the country, the share of women has gone unusually up: From 53 per cent in 2018-2019 to 65 per cent in 2022-2023. Among the self-employed women, the share of both their own workers or employers and those in household enterprise have gone up in comparison to 2018-2019 level, but the growth is higher in the latter type.
Going by global data on employment, self-employment is high in poor and developing countries. Usually countries with low per capita income have higher self-employed populations. One can say that most of the world’s poor are self-employed. These are the people without a job contract and include a significant number of people who do unpaid household enterprise work.
So, a high level of self-employment is an indicator that there are no other alternatives; the people, therefore, stick to these non-rewarding jobs. As the survey points out, in India a daily wage job fetches more than a self-employment option. In India, like in other countries, this option attracts most of the small and marginal farmers as well as the landless. This indicates the deep employment crisis the country is facing, but the high rate of self-employment gets reflected as a decrease in unemployment rate.
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