Fast-Growing States May Not Offer Best, Most Jobs: New Index

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High economic growth does not necessarily lead to better jobs, and states that do better on gender equality performed better on a new employment index.

Andhra Pradesh (including Telangana), Maharashtra and Chhattisgarh lead Indian states on the quality and quantity of jobs they provide to their people, while Bihar, Odisha and Uttar Pradesh (UP) are last, the index reveals.

“Good quality productive jobs that offer good wages are an impetus for sustainable economic growth,” Sabina Dewan, president and executive director at research organisation JustJobs Network, said at the launch of A Just Jobs Index for India, on 21 June 2019.

Supported by Azim Premji University in partnership with the Centre for Policy Research, a think tank, the Index tracks the performance of states by employment, formality, benefits, income equality, and gender equality, based on a set of equally weighted indicators.

Despite economic growth, the pace of job creation has been slow, the report said. The country faces rising unemployment with 71% of workers employed in the informal sector, and inconsistent job creation across states.

India’s unemployment rate was 6.1%--rural (5.3%) and urban (7.8%)--in 2017-18, according to the government’s Periodic Labour Force Survey (PLFS), released on 31 May 2019.

Gujarat, which has “consistently maintained” net state value-added (NSVA) growth rates of 10% or higher during the period 2012-13 to 2016-17, did not do as well in creating quality jobs, ranking 18 on the index.

Andhra Pradesh and Telangana lead the pack, as we said, with 57.3 points, followed by Maharashtra (57.2) and Chhattisgarh (56.39), while UP (32.04) is below Bihar (37.28) and Odisha (37.70) at the bottom of the list.

For each indicator, the index uses a mean of the available values for the period 2010-2018, using data from various government sources, such as surveys conducted by the National Sample Survey Office, the Labour Bureau, the Annual Survey of Industries, the Reserve Bank of India and the PLFS.

The Index does not take into consideration the seven northeastern states due to small sample sizes in the available data.

“Demand-side” dimensions--such as employment, formality, benefits, income equality and gender equality--were selected, since they evaluate the quality and quantity of jobs, and “supply-side” indicators, such as education and skill levels, were not, authors Dewan and Divya Prakash, a research associate at JustJobs Network, wrote in the report.

Gender Equality Delivers a Better Overall Score

While India’s female labour force participation rate is 24%, ranked 120 among 131 countries in 2018 by the World Bank, the jobs index found that states that did better on gender equality are associated with a better overall score.

Himachal Pradesh (72.9) topped on gender equality, while Bihar (13.5) ranked at the bottom.

To address the issue of gender disparity in employment, states with low female workforce participation should make public spaces, housing and workplaces safer for women, and women should migrate to cities if they needed to, Dilip Chenoy, secretary general, Federation of Indian Chambers of Commerce & Industry, said at the launch of the report.

Chhattisgarh (95.29) performed the best on the employment dimension owing to its high labour force participation rate. Goa scored (15.88) the least due to high youth unemployment (28.7% in 2018).

A state with a larger share of workers with a written contract was ranked higher on the part of the index that measured the proportion of formal jobs. Goa (87.59) topped the index on this score; Uttar Pradesh (16.92) brought up the bottom.

States with higher benefits and safeguards to workers, such as union association, higher expenditure on pension as part of gross state domestic product and a higher share of workers with pension/provident funds, also ranked higher.

Jammu and Kashmir (55.47), Delhi (52.47) and Kerala (51.99) topped on the benefits dimension, which the authors attributed to relatively high state expenditures on pensions and union participation. Rajasthan (17.19), Chhattisgarh (14.14) and Gujarat (12.67) were at the bottom due to low union participation.

For income inequality, the index considers a higher ratio of minimum wages to average wages, a low Gini coefficient--an indicator of inequality--of consumption, and a high ratio of informal wages to formal wages. Chhattisgarh (83.03), Maharashtra (76.84) and Uttarakhand (73.39) were at the top here, while Uttar Pradesh (39.45), Jammu & Kashmir (36.24) and Kerala (36.24) stood at the bottom.

Lack of Real-Time Data and Indicators: Authors

The authors of the report note the lack of real-time data about India’s labour markets, and the lack of better indicators, which led to gross domestic product and Ease of Doing Business rankings--in which India stood at 77 among 190 countries--to be substituted as indicators for job creation.

“The Index, which is being put in the public domain, would hold state governments accountable and push them to provide more productive jobs and enhance opportunities for the youth,” said Amitabh Kant, CEO of NITI Aayog, the government’s think tank.

Kant suggested the revitalisation of education for skill development, with a focus on “skills for the future”--digital literacy with a focus on hands-on training and mobile-based training for people in remote areas. This will help youth in rural areas become job creators rather than job seekers, he said.

(This article was first published in IndiaSpend and has been republished here with due permission.)