The Indian story of economic growth and structural transformation has been one of significant achievements as well as continuing challenges. On the one hand, the economy has grown rapidly since the 1980s, drawing millions of workers out of agriculture. And the proportion of salaried or regular wage workers has risen while that of casual workers has fallen. On the other hand, manufacturing has failed to expand its share of GDP or employment significantly. Instead, construction and informal services have been the main job creators. Further, the connection between growth and good jobs continues to be weak.

When we speak of new opportunities, another important set of questions arises. Who is able to take advantage of them, and who is not? Has growth created faster improvements for marginalised groups, enabling them to catch up with more advantaged groups? This year’s report takes a detailed look at the impact that growth and structural change have had on some long-running social disparities. We show that significant progress has been made on all fronts since the 1980s, but also that there is a long road ahead. 

The report makes use of official datasets such as the NSO’s Employment-Unemployment Surveys, the Periodic Labour Force Surveys, the National Family Health Surveys, the Annual Survey of Industries, and the Economic and Population Censuses. The researchers also make use of a unique primary survey carried out in rural Karnataka and Rajasthan, the India Working Survey. This year’s report goes further than our earlier three editions and makes extensive use of regression analysis to offer more precise estimates of the impacts of structural change on employment conditions and outcome gaps.

In India, as in many countries around the world, most government jobs are allocated through a system of merit-based exams. Over the past few decades, these exams have become incredibly competitive, at times receiving over 1,000 applications for each vacancy.

Against a backdrop of rising educational attainment, high aspirations, disappointment with private sector opportunities, and a deep unmet need for income security, it is understandable why the demand for public sector employment opportunities is so high.

Yet despite the large footprint that public sector recruitments have in our social, economic and political life, many basic questions about them remain shrouded in mystery. Who applies? Why do they apply? Are these intense levels of competition socially productive, or do they make people worse off? Why are people willing to invest so much in exam preparation? Why are people willing to gamble on such low odds of getting selected?

Our lack of understanding limits our ability to formulate sound labour market policy. As we will see, a large share of college graduates participate in public sector recruitment exams, and candidates for these exams make up a disproportionate share of the overall unemployed population. How can we improve employment outcomes if we do not understand who the unemployed are and how they invest their time?

The main reason for the holes in our understanding is a lack of data. To date, neither private nor public household surveys include questions on whether individuals are preparing for competitive exams; and recruitment agencies have historically been cloistered institutions, understandably concerned about protecting the integrity of the recruitment process. As a result, the crores of candidates preparing for competitive ex- ams around the country remain largely invisible in data, and by extension in policy.

This report attempts to shine a light on this dark corner of the labour market. To do so, the researcher uses several new sources of data. First, he draws on administrative data from a recruitment agency. This data allows us to observe the whole recruitment process for the entire universe of applicants — the first time such data has been made available in the Indian context. 

Second, the researcher uses data from a large-scale survey of over 3,000 candidates, which provides information about their investments in exam preparation, their access to resources, their constraints, and their beliefs. 

Third, the research collaborators and the researcher conducted interviews and focus groups with candidates to better understand them in their own words. These rich data sources provide new insights into the economic and social life of candidates preparing for competitive exams.

The goal of this report is to demonstrate how both labour market and recruitment policy can be informed by a better understanding of candidate application behaviour. This un- derstanding can, in turn, help us tackle some of the key challenges in the modern Indian labour market — high levels of educated unemployment, a lack of skill development, low levels of female labour force participation, and more.

When the pandemic hit, the Indian economy was already in the most prolonged slowdown in recent decades. On top of this, there were legacy problems such as a slow rate of job creation and lack of political commitment to improving working conditions which trapped a large section of the workforce without access to any employment security or social protection.

The pandemic has further increased informality and led to a severe decline in earnings for the majority of workers resulting in a sudden increase in poverty. Women and younger workers have been disproportionately affected. Government relief has helped avoid the most severe forms of distress, but the reach of support measures is incomplete, leaving out some of the most vulnerable workers and households. 

On the 25^th of March 2020, the Prime Minister, Mr. Narendra Modi, announced a nationwide lockdown to stem the spread of the novel Coronavirus, COVID-19. The decision, while imminent, was unplanned and unilaterally made without any consultation with the state governments. This has consequently caught millions of migrant workers and the bureaucracy off-guard, leaving them no time to plan for such an emergency. While millions of migrants successfully reached their home states, only to be quarantined in camps, many remain stranded far from home, with no money or food. We are therefore confronting a lethal combination of crises: health, hunger, sanitation, and trauma, both physical and psychological.

1. State of Working India 2019 is being published close on the heels of the 2018 report. The principal reason is that this year’s report aims to intervene in the debate over employment generation in time for the general elections to be conducted in April and May 2019. In this report we present an update on the jobs situation for the period between 2016 and 2018, and also present some ideas for employment generation.

2. The recent controversy over employment statistics should be seen in the context of the fact there is now a fully established politics of unemployment in India. This is a new development that needs to be understood. The politics of unemployment is typically a feature of middle-to-high income countries, not low-to-middle income countries. Traditionally, the principal economic issue of broad spectrum political significance in India has been poverty, not unemployment.

3. There have been some new developments, which when juxtaposed with older structural and cultural factors, can account for why this is happening in India, a lower middle income country with a per capita GDP one third that of China and half that of Indonesia. The ​‘precocious’ part of the Indian labour market that resembles higher income countries, that has always been there to a limited extent, is now substantial and rapidly rising, and more to the point, it has spread throughout the country, including the rural areas. This has laid the material basis for a widespread politics of unemployment.

4. Without any claim to being a complete list, we discuss seven key factors on the supply side of the labour market and two crucial demand side factors that together contribute to the crisis. On the supply side we have high growth rates and aspirations, the youth bulge, the education wave, the dominance of ​‘general’ degrees, sub-standard degrees, and continued relevance of caste and gender based rigidities. On the demand side we have the collapse of public sector employment and inability of the private sector to create adequate good jobs due to contractualisation and automation.

5. The foregoing factors are clear to all observers of the Indian economy. The question is, of course, what can be done? Several long-term and short-term measures which face these structural conditions as they exist currently, are needed. Public action and spending should be strong elements of all these measures.

6. The report details four policy measures for addressing the crisis. In Chapter Three, Strengthening Towns through Sustainable Employment: A Job Guarantee Programme for Urban India, we propose a programme that calls for providing 100 days of guaranteed work at D500 a day for a variety of works in small towns. It also provides for 150 contiguous days of training-and-apprenticeship at a stipend of D13,000 per month for educated youth. In Chapter Four, Creating Good Jobs through a Universal Basic Services Programme, we argue that a well-executed UBS would go a long way in restoring public goods to their rightful place in society, creating decent work in the process. Chapter Five, How to Revive Indian Manufacturing: On the Need for Industrial Policy, by Jayan Jose Thomas discusses the renewed interest in, and continued relevance of industrial policy. Srinivas Thiruvadanthai in Chapter Six, Using Fiscal Policy to Alleviate the Job Crisis, argues that there is ample fiscal space to address the criss via public spending.

7. India is at a crucial juncture in its economic development where timely public investment and public policy can reap huge rewards. At the same time, being in denial about the current realities and missing this window of opportunity can have large negative consequences in social and economic terms. Let us act together to ensure that it is the first eventuality that comes to pass.

Microenterprises have been the engines of job growth in the majority of dynamic economies. India is home to thousands of microenterprise clusters as well as millions of distributed entrepreneurs who can become job creators. Fostering of such mass-entrepreneurship is key to addressing India’s employment challenge.

Case studies of clusters in general, and of women entrepreneurs in particular, show that if key factors such as collective action, infrastructure, credit, and market linkages are in place, returns to entrepreneurship are vastly improved. Inspirational stories are also emerging in the use of fourth industrial revolution technologies to improve access to markets and enter global value chains in a way that awards greater agency to women entrepreneurs.

Our aim in this report is to provide information and analysis that can assist policy-makers and the microentrepreneurial ecosystem at large to develop tools required to help this sector flourish. The study looks at non-farm microenterprises that employ less than 20 workers. We analyse various dimensions such as geographical distribution, demographics, gender (employment and enterprise ownership), industrial distribution, labour productivity, and wages. The analysis is based on Economic Census and National Sample Survey data.