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India Creating Around Five Million New Jobs In Non-Farm Sector Annually

We are creating around five million new jobs in the non-farm sector on an annual basis. India’s current workforce is estimated at around 455 mn out of a total population of 1.3 bn. With around 7% unemployment ratio this would imply around 425 unemployed people in India. This is evenly split with around 50% employed in farm (primarily agriculture) and non-farm sector each. A job creation of around 5 mn per year in the non-farm sector would imply around 2.2% growth on a comparable base, i.e., nearly equal to population growth explaining relatively stable unemployment ratio over the years. While around 5 mn is absorbed in the farm sector, the remaining 9 mn or so new additions to workforce are perhaps absorbed either as self employed or absorbed in the default farm sector.

 

ASK Wealth Advisors, a leading Wealth Management Firm, belonging to ASK Group, has initiated their inaugural ‘The Jobs Report’, exploring newer methods of estimation of employment, as a part of assessing which sectors and business segments, would create employment and wealth in the coming years in the current economic context.

 

Using a space-mobility approach to estimate jobs growth in India, ASK WA has attempted to measure new employment created in India by looking at three broad ‘work-spaces’ of engaging the workforce – urban offices (UO), FRESHH (factories and such static workplaces) and (on-the-go) OTG.

 

The methodology adopted

ASK WA has attempted to come out with an estimate of employment using a composite methodology and sources. ASK WA has employed data on commercial real estate sector to enable them to come up with a reliable estimate of employment being created in the urban offices (UO), i.e., the best quality white collar formal sector employment. Most of the new jobs are however, created in the in the employment intensive sectors in the non-offices, i.e., the factories in the manufacturing sector, construction sites, retail spaces, hospitality, educational and medical facilities (FRESHH). For estimating this segment, ASK WA has relied on the Quarterly Estimate of Employment (QES) by Labour Bureau for estimates of new employment in the FRESHH sectors. Finally data from the industry associations has been tapped to arrive at estimates of people employed “on the go” (OTG), i.e., broadly covering the employment in Ecommerce, transport, logistics and warehouse sectors.

 

The Observation

ASK WA observes that the new additions to employment only through offices (UO) have been around 0.9 mn on an average since 2005. The most striking feature of ASK WA estimation is the strong correlation (62%) of current year’s real GDP growth with the job creation of the next year in the UO segment. Another 2-3 million jobs are being created in the non-offices (FRESHH) sectors comprising of “factories, construction sites, retail spaces, hospitality, education and health facilities”. Finally another close to a million are estimated to be employed “on the go” (OTG) i.e., in sectors such as transport, logistics, warehouses, etc. relying on estimates provided by industry sources. Thus using this ‘sit-stand-go’ model of estimation of employment in India, ASK WA conclude that around five million jobs were being created in India during 2017 in the non-farm sector – representing approximately 50% of the economy.

 

ASK WA estimate of job creation of around 5 mn per year in the non-farm sector would imply around 2.2% growth on a comparable base, i.e., nearly equal to population growth explaining relatively stable unemployment ratio over the years. While around 5 mn is absorbed in the farm sector, the remaining 9 mn or so new additions to workforce are perhaps absorbed either as self employed or absorbed in the default farm sector.

 

The ASK WA “space-mobility” approach to employment estimate reveals that actual employment creation in the country is neither as gloomy as only 2mn annual job creation in the whole economy, a conclusion based on traditional employment surveys, or as hopeful as 5-7 mn job creation only in the “formal” part of the non-farm sector as recent EPFO based estimates would seem to suggest.

 

As we have estimates of the committed absorption during 2018-2019 period, we are reasonably certain that the best quality office jobs would be created exceeding a million in each of the coming years.

Author: Baishali Mukherjee

Profile- An independent writer and journalist for last nine years; presently working with Education World, Entrepreneur India, Scrabbl.com and Stoodnt.com. Worked as the content head for four books and have articles and features published in leading print and digital media spaces.

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