India’s Deepening Employment Crisis in the Time of Rapid Economic Growth

The employment conditions in India were steadily deteriorating in the 2000s. Agriculture not just stopped accommodating new workers but was increasingly rendering many of the already employed workers—mostly less educated—redundant. Meanwhile, non-agriculture was generating employment at an increasingly slower pace and was also generating it basically for the educated. So, it was failing to absorb the labour moving out of agriculture. Under these conditions, progressive exclusion of the less educated from employment and decelerating employment growth of the educated emerged as the main trends, which showed up in declining employment rate, rising unemployment rate and, ironically enough, steady improvement in the average quality of employment. All this was happening in a period of rapid economic growth. The proximate explanation is that growth was less rapid than the skill-biased technological change that was associated with it. The deeper reason is that the benefits of growth accrued to a thin top layer of the population—the rich.