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

persons

female

male

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

persons

female

male

under employment in rural india

0

1

2

3

4

5

6

7

8

9

10

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

RM_PS+SS

RM_CDS

RF_PS+SS

RF_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

1999-2004

1993-1999

1983-1993

Share of RNFS in Rural India

22.826.1 26.3

28.833.8

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 (%)

0

100

200

300

400

500

600

700

Self-Employ Regular Casual

Rural Male

1993-94

1999-00

2004-05

status of employment - male- secondary sector (%)

0102030405060

Self-Employed Regular Casual

Secondary sector 1993-94 Secondary sector 1999-00

Secondary 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 Gender

Sector of Employment by Gender - Share

  Female Male Total

Farm employment 37.61 62.39 100

Non-farm employment 22.13 77.87 100

Gender by Sector of Employment - Share

 Female Male Total

Farm employment 72.18 55.02 60.43

Non-farm employment 27.82 44.98 39.57

 100 100 100

Level of Education and Sector of Employment (%)

05

101520253035404550

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

0

10

20

30

40

50

60

70

80

90

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 months

3 to 6 months

Share of workers by status

  Non-Distress region Distressed Region

  Farm Non-farm

Total Farm Non-farm Total

self-employed 38.45 39.35 38.81 29.55 39.29 33.18

employer 1.91 0.94 1.52 1.72 0.83 1.39

unpaid family worker 30.9 11.03 22.94 34.96 14.88 27.47

regular salaried/ wage employee,

1.59 27.79 12.09 0.79 24.02 9.45

casual labour: in public works

0.04 0.59 0.26 0.1 0.84 0.38

casual labour on other works

27.11 20.31 24.39 32.88 20.15 28.13

Total 100 100 100 100 100 100

Variables used in the logit model

sex female =0 Male =1 ,

Age   Age of the workers

age2   Square of age

Edu_lit Illiterate = 0 Not illiterate , but has not attended a formal school

Edu_prim   Priamry education

Edu_mid   Middle education

Edu_sec   Secondary education

Edu_high   Higher education

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

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

HH_size   Size of the household

Soc_OBC General category = 0

Belonging to other backward classes

Soc_SC/ST   Belonging to other scheduled castes and scheduled tribes

DETERMINANTS OF RNFE

• LOGIT MODEL

• Dependent variable – Employed in farm sector = 0– Employed in non-farm sector =1

The 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

0

0.5

1

1.5

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

0.0112

0.02166

-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

tres

s

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

NON-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

0

0.2

0.4

0.6

0.8

1

1.2

1.4

Edu_lit Edu_prim Edu_mid Edu_sec Edu_high

Self employed NON-D Self employed distress

education and RNFE - unpaid family

0

0.10.2

0.3

0.4

0.50.6

0.7

Unpaid family NON-D

Unpaid family distress

Percap_landown and RNFE

-0.001

-0.0005

0

0.0005

0.001

0.0015

0.002NO

N-D

Distr

ess

NON-

D

distr

ess

NON-

D

distr

ess

NON-

D

distr

ess

NON-

D

distr

ess

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

0.05NO

N-D

Dist

ress

NON-

D

distre

ss

NON-

D

distre

ss

NON-

D

distre

ss

NON-

D

distre

ss

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

asual

Regula

r

Self

em

plo

yed

Unpaid

fam

ily

Soc_SC/ST

Soc_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