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23 Jul 2017

NSSO findings: Jobs in the unorganized sector are drying up

According to findings of a 2015-2016 NSSO survey, employment in India's unorganized sector is stagnating despite rising incomes.

A quarter of India's labour force i.e. about 11 crore people work in 6.3 crore non-farm enterprises which are not covered under the Companies Act or Factories Act. Most of them aren't even registered.

The unorganized sector contributes Rs. 11.5 lakh crore to India.

In context

Unorganized sector: Employment falls while income rises

Details of unorganized sector enterprises

Over 84% of the 6.3 crore enterprises are family-run undertakings with no hired workers. 20% of these enterprises are owned by women. With regard to activities, 36% of these enterprises are engaged with small scale trade, while others are engaged in manufacturing or services.

Unorganized sector jobs have increased by 3% in 5 years

Employment data

Unorganized sector jobs have increased by 3% in 5 years

The NSSO survey covered three lakh such enterprises and found that the number of such enterprises had increased by 10% since 2010-2011.

57 lakh new enterprises had come up in five years but alarmingly, employment in the sector had only increased by 33 lakh or just 3% in five years.

This net addition of 6.5 lakh workers per year reflects the stagnating employment scenario.

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Income data

Workers' incomes up by 86%

While employment has stagnated considerably, an eye-catching finding is that workers' earnings per month has increased by a massive 86% - from about Rs. 4,000 in 2010-2011 to Rs. 7,295 in 2015-2016.

Gross value added has also increased by 83%.

Despite these positive developments, the sector's job creating potential seems to be floundering, and one can only take an educated guess as to why.

Possible reasons behind this puzzling performance


Possible reasons behind this puzzling performance

While the poor performance of the sector has been attributed to slow demand, experts believe that other factors like lack of credit facilities, skills, and technology are also influential.

Another point to note is the regional imbalance of industrialization and its impacts - nearly 50% of the 6.3 crore enterprises are situated in 5 states - UP, West Bengal, Maharashtra, Tamil Nadu, and Karnataka.

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