Agri sector may not create more jobs

At a time when job markets are shrinking due to the global economic crisis, the Planning Commission said that the agriculture sector
may fail to create additional employment, causing subsequent shift of the surplus labour to the manufacturing and services sectors. In order to meet the challenge, the Planning Commission has emphasised on the need to encourage labour intensive activities and development of skilled labour.

As agriculture sector is not expected to create additional employment, reduce underemployment and increase income and wages of those employed in agriculture, the shift of the surplus labour to the non-agriculture sector is expected, a Plan Panel report said.

National Sample Survey Organisation’s (NSSO) figures show that unemployment rate increased from 7.3% in 1999-2000 to 8.3% in 2004-05. The labour ministry confirmed that growth in labour supply is faster than the employment growth post-2000 period leading to increase in unemployment rates.

Subsequently, a slowdown in the manufacturing sector is likely to aggravate the unemployment problem. One of the indicators of industrial slowdown is the declining growth of indirect tax collection (-5%) last month. That manufacturing sector showed a slow rise of 0.6% in excise collection during the seven months till October. The trend is likely to continue as companies plan to cut production to prevent inventory pile up on falling demand.

The Planning Commission's suggestion on encouraging skilled labour has found endorsement in the draft National Employment Policy(NEP) prepared by the labour ministry as well. The draft NEP focuses on skilled employment in construction, retail trade, tourism and information and communication technologies (ICT).

The NEP has also suggested to continue the National Rural Employment Guarantee scheme (NREGS) to absorb labour flight and under-employment in the agricultural sector. It says that improving capabilities of local bodies and suitable changes in administrative and financial procedures will be necessary for effective implementation of the scheme.

The Planning Commission’s concern on job front stems from its apprehension about growth in the current fiscal. It has cautioned that the gross domestic product (GDP) growth rate in 2008-09 is likely to be lower than the targets, signalling further dip in employment opportunities.