India's Employment Growth Defies "Jobless Growth" Notion

Strategic Insights -

India's employment growth over the past few decades has been significant, with data showing a 36% increase in jobs, adding approximately 17 million employment opportunities between 2016-17 and 2022-23. This growth is in contrast to the notion of "jobless growth," where GDP increases without corresponding employment growth. Recent reports and economic analysis challenge this concept, highlighting India's dynamic economy, robust democracy, and culture that celebrates unity in diversity.

Key Takeaways:

  • India's employment growth increased by 36% (17 million jobs) between 2016-17 and 2022-23, contrary to the claims of "jobless growth."
  • During the same period, GDP grew at an average rate of over 6.5%, indicating a strong correlation between employment and economic growth.
  • The KLEMS database, which relies on surveys like the Employment and Unemployment Survey (EUS) and Periodic Labour Force Survey (PLFS), shows a steady rise in employment since the 1980s.
  • The Worker Population Ratio (WPR) has increased by 9 percentage points or almost 26 percent from 2017 to 2023, according to PLFS data.
  • India's growth has been driven by consumption, closely tied to employment, with a rise in consumption implying employment generation.
  • Employment elasticity estimates, based on a linear econometric model, show a 1.11 percent increase in jobs for a percent increase in value added from 2017-23.
  • The labour-capital ratio in the economy as a whole is around 1.11, and for the services sector, it is 1.17, contradicting the supply-side argument that services fail to generate jobs due to low labor intensity.

Statistics:

  • 36% increase in employment, adding 17 million jobs between 2016-17 and 2022-23
  • GDP growth averaged over 6.5% during the same period
  • Worker Population Ratio (WPR) increased by 9 percentage points or almost 26 percent from 2017 to 2023
  • 1.11 percent increase in jobs for a percent increase in value added from 2017-23
  • Labour-capital ratio in the economy as a whole is around 1.11
  • Labour-capital ratio in the services sector is 1.17

Sources:

  • Press Release from the Ministry of Labour & Employment, Government of India (Reference: https://pib.gov.in/PressReleasePage.aspx?PRID=2038699)
  • Observer Research Foundation report 'Busting the myth of jobless growth: Insights from data, theory, and logic'
  • Reserve Bank of India's KLEMS database
  • Periodic Labour Force Survey (PLFS) data from 2017 to 2023
  • Economic Survey of India