India’s employment paradox of the 21st century: A crackable puzzle

livemint.com:

The covid pandemic is the great divide of the early 21st century. We compare conditions before and after 2020. This also applies to employment trends.

The International Labour Organization-Institute for Human Development (ILO-IHD) India Employment Report released last month highlighted some curious paradoxical trends of the pre-pandemic period that were sharply reversed following the pandemic. Drawing on Periodic Labour Force Survey (PLFS) data and the earlier NSS Employment-Unemployment surveys, the report points out that there were some very slow but positive employment trends during 2000-2019 which were reversed after 2020. Three developments in particular are worth noting.

First, there was a pre-pandemic shift in workforce distribution from agriculture to the non-agricultural sector, a key structural transformation of the development process. Unfortunately, most of the additional employment was primarily in low-skill, poorly paid jobs in construction and services. The workforce transformation also lagged far behind the corresponding transformation of the structure of production.

Nevertheless, the shift was a positive development. The second was a shift from informal to regular employment in the organized sector, the best category of employment in India’s complex labour market. Informal jobs remained predominant, but the share of regular employment in total employment rose from 15% in 2000 to 24% in 2019.

The third positive development was a rise in labour productivity across all sectors, albeit with large variations. During 2000-2019, productivity increased the most in manufacturing (annually 6%), followed by services (5%), agriculture (4%) and construction (1%). Of course, rising labour productivity also meant that