For the first time in independent India, the number of people employed in agriculture has fallen by 3.7 crores between 2004 -2012 as the number of non-farm jobs grew by 5.2 crore, says a research paper published by the Institute of Applied Manpower Research. Most such new jobs were informal in nature, mainly in the ‘resurgent’ services like construction and manufacturing.
The paper also points out that the structural job shift to the non-farm sector (because of poor farm productivity and stagnant wages) had caused a decline in poverty and rise in consumption. Further, since a rising informal workforce is more prone to retrenchment and lacks social security benefits, the slightest economic shock can cause a fall in employment. In fact, even in the organised sector, informal employment rose to 67 % in 2011-12 from 54 % in 2004-05 and 32 % in 1999-2000.
Explaining the key trends, the paper mentions rigid labour laws and incentives for the firms to remain small for the rise in informal jobs. Firms tend to operate in smaller sizes or hire contract labour rather than permanent labour to stay out of the Industrial Disputes Act. The factories employing less than 99 workers are about two-thirds of all the factories surveyed. It calls for government support or tax incentives to tackle the problem of the “missing middle” and help the transition of smaller enterprises to medium ones. It also notes that after 2010, the jobs in micro enterprises (less than six workers) rose by 1.3 crore.