Changing Employment Sector in India

Syllabus: GS3/Economy

Context

The trend of organised employment has been shifting from the public to private sector — especially post the economic reforms of 1991.

India’s middle class after Independence was largely created by the public sector.
Employment in the public sector stood at 194.7 lakh and that in the organised private sector only at 80.6 lakh in 1995.
- The employees in the central and state governments plus quasi-governments (public sector undertakings) and local bodies — fell to 176.1 lakh and the latter rose to 119.7 lakh by 2012.

Regular employees with the Indian Railways: Between 1990-91 and 2022-23, these plunged from 16.5 lakh to 11.9 lakh.
Employees in the IT Sector: Tata Consultancy Services (TCS) and Infosys already had 45,714 and 36,750 employees respectively at the end of 2004-05, which rose to 4,48,464 and 2,42,371 fifteen years later.
Banking sector transformation: In 1991-92, of the total employee strength of the scheduled commercial banks in India the Public sector banks had a share of 87%.
- At the end of 2023-24, the private employee strength was 8.74 lakh, as against the less than 7.5 lakh of public sector banks.

Economic Liberalization: Post-1991 reforms opened up the economy, leading to the growth of the private sector and more job opportunities.
Higher Salaries and Benefits: The private sector often offers better pay, career growth, and benefits compared to public sector jobs, attracting the middle class.
Improved Work Culture: It provides a more dynamic and performance-driven environment, which appeals to the ambitious working middle class.
Limited Public Sector Jobs: The growth of public sector jobs has stagnated, and competition for these positions is high, making private sector jobs more attractive.
Entrepreneurial Opportunities: The rise in entrepreneurial ventures and startups has encouraged the middle class to shift towards private businesses and self-employment.

Employment in the Agriculture Sector: India has not experienced structural transformation of surplus labour from agriculture to other sectors.
- As per the Periodic Labour Force Surveys (PLFS) farm sector’s share in India’s workforce decreased from 64% in 1993-94 to 42.5% in 2018-19, but is subsequently going up to 46.2% in 2023-24.
Most services sector jobs are informal and low-paying:
- India with almost 85% informal labour is generating more than half of the country’s GDP.
- A high proportion of socially and economically underprivileged sections of society are concentrated in informal economic activities.

Unskilled Labour: The education system emphasises theoretical knowledge over practical proficiency. This approach renders new graduates ill-prepared to meet industry demands.
Rural-Urban Divide: Inaccessible areas are hardly getting quality programmes for their training and industry exposure.
Technological Changes: The rise of gig economy platforms and casual labor opportunities has expanded the informal sector.
Flexibility: Many workers prefer the flexibility of informal work, even though it lacks benefits like healthcare and pensions.

Low Wages and Exploitation: Informal employment, by definition, lacks a written contract, paid leave, and hence does not pay minimum wages or pay attention to working conditions.
Lack of Social Security: Workers in the informal sector often lack access to social security benefits such as healthcare, pensions, and unemployment insurance.
Limited Access to Finance: Informal sector workers and businesses often struggle to access formal financial services such as bank loans and credit.
Poor Quality of Life: Unorganized sector workers were far more likely to be poor than their organised sector counterparts.

Bridging the Gap in Education: Aligning Education with Industry Demand Changes will prepare students for real-world challenges.
Government Initiatives: The programmes can focus on areas like installation of solar energy, waste management, and precision agriculture.
- Public-private partnerships in the green sector can ensure that such training is relevant and impactful.
Strengthening Rural Skilling Initiatives: Leveraging technology to scale online platforms can ensure equitable access to quality education.
Incentivising for Retention of Employees: Offering tailored upskilling programmes, encouraging inclusive work cultures, and having mental health support can enhance employee satisfaction and retention.

Source: IE

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