Employment in the manufacturing sector has sharply declined and has become nearly half of what it was, according to a bulletin by the Centre for Economic Data and Analysis at Ashoka University and the Centre for Monitoring Indian Economy. The bulletin focussed on seven sectors which make up 99% of employment in the country. Employment in manufacturing, mining and real estate and construction accounted for 30% of all employment in 2016-17, according to the CEDA-CMIE bulletin. By 2020-21, this was down to 21%.
The government’s 'Make in India' initiative envisioned achieving 25% GDP from the sector by 2025, as well as creating 100 million additional jobs by 2022. However, going by the numbers even preceding the pandemic, this seems unlikely.
The bulletin states that the manufacturing sector accounts for almost 17% of the country’s GDP, but employment in the sector has fallen from 5.1 crore Indians in 2016-17 to 2.73 crore in 2020-21 — down by 46%. “This indicates the severity of the employment crisis in India predating the pandemic,” the bulletin states.
On a year-on-year basis alone, 2020-21 saw 32% fewer people being employed in the sector from 2019-20. In 2019-20, the growth had been just 1% year-on-year.
“Instead of increasing employment in the sector, we have seen a sharp decline over the last 5 years. When we look closely at industries that make the manufacturing sector, we find that this is a secular decline in employment across all sub-sectors, except chemical industries,” the bulletin states. Sub-sectors within manufacturing registered a longer-term decline, it added.
This is sectors such as the real estate and construction sector. Employment in the sector was down by 25% in the same five year period, and was down from 6.9 crore to 5.37 crore. “The sector saw employment dip by 12% in 2020-21 (YoY) and 2.1% in 2019-20 (YoY). In recent years, the sector has been beset by issues of inventory pile up, delivery delays and developer failures. This is reflected in the employment numbers,” the bulletin states. The pandemic has only made this worse.
Another sub-sector, mining, saw employment plunge by 38% over the five-year period. It declined from 14 lakh to 8.8 lakh. “India’s economic slowdown may be the reason to blame for the decline in employment in the sector. With demand falling in the steel, power and construction industries, mining has suffered a hit,” the bulletin stated.
This comes as India’s economy is expected to contract by 8% in 2020-21. While robust growth was estimated for 2021-22, this too will be impacted due to the second wave.
The agriculture sector, as opposed to manufacturing, saw an increase in the number of people who were employed between 2016-17 and 2020-21, an increase of 4%. The number of people working in the sector grew from 14.56 crore to 15.18 crore
“While it constituted 36% of all employment in 2016-17, the figure rose to 40% in 2020-21, underlining the sector’s importance for the Indian economy. Employment in agriculture has been on the rise over the last two years with year-on-year (YoY) growth rates of 1.7% in 2019-20 and 4.1% in 2020-21,” the bulletin states.
Other sectors that saw an increase in employment include the public administrative services, non-financial services and financial services sector. There has been a 7% decline in overall employment in the country from 40.7 crore in 2016-17 to 37.8 crore in 2020-21, the report says.
“These numbers show that the employment crisis in India predates the pandemic; the COVID-19 pandemic has made the jobs plight even more severe,” it said.
According to CMIE, the second wave of the lockdown alone in April 2020 impacted 75 lakh jobs and saw unemployment rise to nearly 8%. The national unemployment rate touched 7.97% as per the Centre's proprietary data. The national unemployment rate had stood at 6.50% in March.