Rural Non-Farm Sector Employment in India:Distress Driven or Growth Driven?

Vinoj AbrahamCentre for Development Studies

Trivandrum, kerala

INTERNATIONAL CONFERENCE ON EMPLOYMENT OPPORTUNIES AND PUBLIC EMPLOYMENT POLICY IN GLOBALISING INDIA ,TRIVANDRUM:

3RD- 5TH APRIL, 2008

• Background• Trends in rural employment• Patterns of rural non-farm employment• Distress in agriculture and RNFE• Determinants of employment in RNFS

Background

• Structural transformation in india’s output but not in employment

• Transformation in employment and income from agro based rural economy to industry based urban economy is associated with a vibrant RNFS.

• Performance of RNFS is strongly related to agriculture sector

Background

• A highly productive agriculture sector generates a vibrant RNFS , which is growth driven.

• A stagnant agriculture sector coexists with a low value adding RNFS that is residual of farm sector.

• What about INDIA?

Trends in rural employment

• Some positive trends in 61st round NSS Report

– Both LFPR and WPR had increased after nearly a decade of jobless growth

– Rise of self employment and decline of casualisation

– intersectoral mobility of male workers increased

• Can distress lead to employment increase?– Yes , under certain conditions– When income from the main bread winner of

the household does not meet even basic needs then the usually dependent members of household may join Labour force.

1. female LFPR, after declining continuously since the peak in 1987-88, rose for the first time in 2004-05 to 24.9

percent. 2. Moreover, this rise is the largest between any two NSS

thick rounds, from 23.5 to 24.9 percent

Female LFPR

0

50

100

150

200

250

300

1983 87-88 93-94 99-00 2004-05

Female Female above 60

increment in LFPR -99-00 to 04-05

-40 -20 0 20 40 60

5-9

15-19

25-29

35-39

45-49

55-59

personsfemalemale

Change in WPR 99-00 to 04-05

-40 -20 0 20 40 60

5-9

15-19

25-29

35-39

45-49

55-59

personsfemalemale

under employment in rural india

0123456789

10

1983 87-88 93-94 99-00 04-05

RM_PS+SSRM_CDSRF_PS+SSRF_CDS

growth of real wages in rural india

0 1 2 3 4 5 6 7

male

female

Persons

male

female

Persons

Reg

ular

Cas

ual

1999-20041993-19991983-1993

Share of RNFS in Rural India

22.826.1 26.3 28.8

33.8

13.817.5 15.3 15.9 18.6

0

10

20

30

40

1983 87-88 93-94 99-00 04-.05

Male RNFS Female RNFS

status of rural male employment (%)

0100200300400500600700

Self-Employ Regular Casual

Rural Male

1993-941999-002004-05

status of employment - male- secondary sector (%)

0102030405060

Self-Employed Regular Casual

Secondary sector 1993-94 Secondary sector 1999-00Secondary sector 2004-05

RNFS-concepts• Rural non- farm sector employment is defined as any form of

employment other than farm employment in the type of wage, self,or unpaid family labour.

• Farm employment is taken to be those agricultural activities such as• growing of crops ;• market gardening; horticulture ( NIC 011)• farming of animals (NIC 012)• mixed farming ,i.e., both crops and animal farming combined (013); • agricultural and animal husbandry service activities (NIC 014);• hunting and related services (NIC 015)

Data used

• Household level data of 61st NSSO round on employment-unemployment

• number of observations -145443 individuals in 62056 households.

• After cleaning -145359 observations in 62016 households.

• All tables generated below and the analysis done is based on this dataset.

RNFE and GenderSector of Employment by Gender - Share

10077.8722.13Non-farm employment10062.3937.61Farm employment

TotalMaleFemale

Gender by Sector of Employment - Share

100100100

39.5744.9827.82Non-farm employment

60.4355.0272.18Farm employment

TotalMaleFemale

Level of Education and Sector of Employment (%)

05

101520253035404550

Not literat

eLe

ss th

an Prim

ary

Primary

Middle

Second

aryHighe

r edu

catio

n

Farm Non-farm

Distress in Farm Sector and Employment Patterns

• we divide the regions into agriculturally distressed and non-distressed regions

• GoI (2007) ‘Report of the Expert Group on Agricultural Indebtedness’, Department of Economic Affairs, Ministry of Finance, Government of India, July

• 100 distressed districts identified by the expert group is the distressed region. Non-distressed is the rest of the region

Feminization of work in distressed region

6455.5

78.31 75.7769.74

63.06

3644.5

21.69 24.2330.26

36.94

0102030405060708090

ND D ND D ND D

Farm Non-farm Total

Male

Female

Underemployment among UPS main workers

0

5

10

15

20

25

farm non-farm

total farm non-farm

total

Non-distressed region Distressed region

< than 1month 1 to 2 months3 to 6 months

100100100100100100Total

28.1320.1532.8824.3920.3127.11casual labour on other works

0.380.840.10.260.590.04casual labour: in public works

9.4524.020.7912.0927.791.59regular salaried/ wage employee,

27.4714.8834.9622.9411.0330.9unpaid family worker1.390.831.721.520.941.91employer

33.1839.2929.5538.8139.3538.45self-employed

TotalNon-farmFarmTotalNon-farm

FarmDistressed RegionNon-Distress region

Share of workers by status

Belonging to other scheduled castes and scheduled tribes

Soc_SC/ST

Belonging to other backward classesGeneral category = 0

Soc_OBC

Size of the householdHH_size

Average Land cultivated by a household/no. of persons in the household

Percap_landcult

Average Land owned by a household/no. of persons in the household

Percap_landown

Higher educationEdu_high

Secondary educationEdu_sec

Middle educationEdu_mid

Priamry educationEdu_prim

Not illiterate , but has not attended a formal school

Illiterate = 0Edu_lit

Square of ageage2

Age of the workersAge

Male =1 ,female =0sex

Variables used in the logit model

DETERMINANTS OF RNFE

• LOGIT MODEL• Dependent variable

– Employed in farm sector = 0– Employed in non-farm sector =1The exercise is done for distressed and non-

distressed region separately for four category of workers

Casual, regular, self employed, unpaid family workers

Effect of Gender on Prob. of RNFE(Male =1,Female =0)

0.533540.74261

0.91079

1.54736

-0.12242

-1.53367

0.420080.22733 0.25795 0.23465

-2-1.5

-1-0.5

00.5

11.5

2

NON-D Distress NON-D distress NON-D distress NON-D distress NON-D distress

Total Casual w ageemployment

Regular w ageemployment

Self employed Unpaid familylabour

Effect of AGE on Prob. Of RNFE

-0.0027

0.03762

0.01120.02166

-0.05494

0.07408

-0.0084

-0.03786

-0.01728

-0.00405

-0.08-0.06-0.04-0.02

00.020.040.060.08

0.1N

ON

-D

Dis

tress

NO

N-D

dist

ress

NO

N-D

dist

ress

NO

N-D

dist

ress

NO

N-D

dist

ress

Total Casual Regular Self employed Unpaid family

Age

age2

Education and RNFE -Total(illiterate=0)

0

0.5

1

1.5

2

Edu_lit

Edu_prim

Edu_mid

Edu_se

cEdu_

highNON-D

Distress

Education and RNFS - Casual

-0.2

0

0.2

0.4

0.6

0.8

1

Edu_lit Edu_prim Edu_mid Edu_sec Edu_high

Casual NON-D Casual distress

Education and RNFE - Regular

0

1

2

3

4

5

Edu_lit Edu_prim Edu_mid Edu_sec Edu_high

Regular NON-D Regular distress

education and RNFE -Self employment

00.20.40.60.8

11.21.4

Edu_lit Edu_prim Edu_mid Edu_sec Edu_high

Self employed NON-D Self employed distress

education and RNFE - unpaid family

00.10.20.30.40.50.60.7

Edu_lit

Edu_prim

Edu_mid

Edu_se

c

Edu_high

Unpaid family NON-D

Unpaid family distress

Percap_landown and RNFE

-0.001

-0.0005

0

0.0005

0.001

0.0015

0.002N

ON

-D

Dis

tress

NO

N-D

dist

ress

NO

N-D

dist

ress

NO

N-D

dist

ress

NO

N-D

dist

ress

Total Casual Regular Self employed Unpaid family

Percap_landcultivated and RNFE-0.008-0.007-0.006-0.005-0.004-0.003-0.002-0.001

0

NO

N-D

Dis

tress

NO

N-D

dist

ress

NO

N-D

dist

ress

NO

N-D

dist

ress

NO

N-D

dist

ress

Total Casual RegularSelf

employedUnpaidfamily

HH_size and RNFE

-0.2

-0.15

-0.1

-0.05

0

0.05N

ON

-D

Dis

tress

NO

N-D

dist

ress

NO

N-D

dist

ress

NO

N-D

dist

ress

NO

N-D

dist

ress

Total Casual Regular Self employed Unpaid family

social groups and RNFE(Gen cat = 0)

-0.6 -0.4 -0.2 0 0.2 0.4 0.6

NON-D

Distress NON-D

distress

NON-D

distress

NON-D

distress

NON-D

distress

Tota

lC

asua

l R

egul

arS

elf

empl

oyed

Unp

aid

fam

ily

Soc_SC/STSoc_OBC

Conclusion

• Signs of distress related employment growth

• Employment in non-farm sector picking up probably as a residual sector

• RNFS Employment in agriculturally distressed regions is related to factors that support residual sector argument, especially in casual wage workers