This study is part of the HEP research project on 'Higher education and employment ', directed by Bikas C. Sanyal

H E P Research Report N o . 67

Education and the labour market in India

N . V . Varghese

Paris 1989 International Institute for Educational Planning (Established by Unesco)

Education and the labour market in bndia

T h e views and opinions expressed in this volume are those of the authors and do not necessarily represent the views of Unesco or of the H E P . T h e designations employed and the presentation of material throughout this report d o not imply the expression of anv opinion whatsoever o n the part of Unesco or H E P concerning the legal status of any country, territory, city or area or its authorities, or concerning its frontiers or boundaries.

This volume has been typeset using Unesco's computer facilities and the Waterloo 'Script' documentation-composition program. Copies have been printed and bound in IIEP's printshop. International Institute for Educational Planning, 7 - 9 rue Eugène-Delacroix, 75116 Paris © Unesco 1 9 8 9

The H E P research project on higher education and employment

T h e rapid expansion of education in the countries of the Third World has in some respects created as m a n y problems as it has solved. A t the higher levels of education, w e often find a considerable discrepancy between the output of graduates in different specializations and the absorptive capacity of the labour market leading, in turn, to unemployment and under-employment of certain types of graduates. In qualitative terms, questions are being raised as to whether the content and performance of systems of higher education are able to meet the changing needs of society, including the n e w and changing methods of production in the labour market. These discrepancies are in need of exploration, understanding and remedy. T h e high unit cost and opportunity cost in higher education, the particular social and political significance of universities and university students, and the responsibility of the higher education system in guiding and developing other levels of education m a k e it imperative that a special effort be directed towards the analysis of both the qualitative and quantitative discrepancies that have developed in the higher education system and towards the exploration of possible means to correct them. It is in this context that the International Institute for Educational Planning, during its past two M e d i u m - T e r m Plans, carried out a research project to relate the development of higher education within a selection of countries to the changing needs of the employment market, in both quantitative and qualitative terms, so as to improve the basis for planning the development of higher education and to reduce the

Education and the labour market in India

mismatch between the type of training offered by the institutions and the types of skills needed by the labour market. T h e project had the aim of providing a knowledge-base for formulating educational policy oriented towards the employment needs of the country. T h e immediate objectives of the project were: (1) to identify the role played by the education system in general, and the higher education system in particular, in the overall socioeconomic development of the country and, conversely, the influence that the social, cultural and economic factors have exerted in the development of the education system; (2) to identify the inconsistencies, both quantitative and qualitative, that have developed in the past in the education system and suggest measures to rectify them; (3) to throw light on the main variables to be considered in formulating policies of intake to different disciplines and institutions; (4) to identify the factors which intervene in the implementation of such policies and suggest s o m e ways of minimizing the effect of these factors; (5) to develop a system of indicators to be used by the national policymakers, the university administrators, potential employers, and the students, for decision-making; (6) to create a data base for researchers in educational planning, particularly in the area of employment. Research was launched in twenty-one countries around the world to meet the above objectives in each case. This involved desk studies and surveys of the different target groups. T h e present study is on the Indian evidence on the theme of education and employment. T h e empirical evidence on education and employment in India comes mainly from two different types of sources: (1) the national agencies like the Census of India, the National Sample Surveys Organization, the Directorate General of E m p l o y m e n t and

VI

The HEP research project on higher education and employment

Training etc.. which periodically collect information on the theme. These sources provide information at the macro-level; and (2)

the studies on the theme undertaken by individuals and organizations focussing specifically on certain aspects of the problem of education and employment relations. At times, some of these studies are based on the macro-level evidence collected by the national agencies. However, m a n y studies are based on the microlevel empirical evidence collected by the individual researchers.

This study is a survey of evidence on education and employment as reflected through and provided by the above-mentioned sources and studies. Based on these sources of evidence, the study attempts to provide a synthesis of the education and employment process in India.

Acknowledgements

Employment, especially of the educated, has become an area of major concern in recent decades. This was partly in direct response to the problem of growing unemployment at the global level. The problem of unemployment of the educated has attracted attention in India for over half a century. However, serious efforts to study this problem were m a d e only from the fifties when unemployment figures in the Live Registers showed a sharp increase. There are several studies conducted in India addressing themselves to the problem of general unemployment. T h e issue of unemployment of the educated figured at times only as a part of these studies. Apart from this, there are studies specifically focussing on the problem of employment or unemployment of the educated. M a n y of them are based on traditional sources of information. Studies based on specific surveys and new sources of information are rather limited in number. In this study an attempt is made to survey and synthesize the evidence from all these types of studies and sources. The present study was undertaken at the instance of the International Institute for Educational Planning ( H E P ) , Paris. I a m grateful to H E P for this valuable opportunity given to m e . I a m indebted to Professor Satya Bhushan, Director, National Institute of Educational Planning and Administration ( N I E P A ) , N e w Delhi, for his guidance and encouragement at all stages of this study. D r . Bikas Sanyal, H E P , Paris, showed a keen interest in the study. Several rounds of discussions that I had with him during his visits to India helped m e to mould its framework. 1 a m indebted to Professor Tapas Majumdar, Jawaharlal Nehru University. N e w Delhi, for his valuable advice and guidance.

IX

Acknowledgements

The discussions that 1 had with Professor P . R . Panchamukhi, Director, Indian Institute of Education, Pune, Professor J. Krishnamurthy, Delhi School of Economics and Dr. K . V . Eswara Prasad, National Labour Institute, N e w Delhi, helped m e in clarifying m a n y of the issues in this area. Discussions with D r . Brahm Prakash and D r . Y . P . Aggarwal of the Planning Unit at N I E P A provided m e with an added opportunity to improve m y understanding of the theme. D r . J . B . G . Tilak went through the earlier versions of this study; but for his critical and extensive comments, it could not have been finished in this form. D r . A . Mathew helped m e at various stages of the work. M a n y other colleagues at N I E P A were always helpful. D r . K . Karunakar extended help, especially during the final stages of the study. I visited various libraries and m a d e use of their facilities. I remember with gratitude the assistance from librarians of N I E P A , the National Council for Educational Research and Training, Jawaharlal Nehru University, the Planning Commission, Ministry of Labour, the Institute for Applied M a n p o w e r Research, and the Documentation Centre of the Indian Council of Social Science Research, all in N e w Delhi, and the Gokhale Institute of Economics and Politics, Pune. M r . Baldev Raj Pahwa provided excellent and timely typing assistance, with the preliminary version of the study. I a m obliged to all of them and remain grateful.

N . V . Varghese

x

Bibliography

Contents

The H E P research project on higher education and employment

v

Acknowledgements

ix

Chapter 1:

Introduction

1

Chapter 2:

Labour markets in India

7

Chapter 3:

Data sources on employment and unemployment . . . . 14

Chapter 4:

Employment and unemployment: evidence at the macro-level

22

xi

Education and the labour market in India

Chapter 5:

Chapter 6:

References

Xll

Employment and unemployment of the educated:

a survey of Indian studies

54

S u m m a r y and conclusions

79

89

Chapter 1 Introduction

1.1

Educational expansion

India at the time of independence was at a low level of educational achievement. It was facing two major problems in its educational endeavour—(a) mass illiteracy; and (b) shortage of critical m a n p o w e r . Hence emphasis was laid and efforts were m a d e to overcome these two problems. Expansion took place at all levels of education in the postindependence period in India. T h e pattern of expansion of education in India was in conformity with the worldwide p h e n o m e n o n of high rates of growth in the fifties and sixties followed by declining rates of growth in the seventies and eighties. Though expansion was witnessed at all levels of education, the rates of growth varied between levels. In general, growth rates were higher at higher levels of education. This is shown in Table 1. F r o m the table it is clear that the rates of growth were positively associated with the levels of education. Primary education experienced the lowest rates of growth and higher education witnessed the highest except during 1971-81. In fact the fifties was a period of faster expansion of school education; growth rates at this level declined in the sixties. O n the other hand, higher education expanded at the highest rate in the sixties. However, by the seventies, rates of growth declined substantially at all levels of education. Perhaps the decline was sharper

1

Education and the labour market in India

Table Г. Growth oí education in India (growth rates) Year 1951-61

Primary

Middle

Secondary

Higher

6.21

7.65

9.15

12.35

8.11

13.18

1961-71

5.0

7.10

1971-81

2.45

3.84

4.0

3.48

1951-81

4.62

6.26

7.17

9.65

Sources: (i) Education in India. Ministry of Education, N e w Delhi (various years). (ii) UGC Reports. U G C . N e w Delhi (various years).

in the case of higher education, and could partly be attributed to the policy of consolidation rather than expansion followed by the government. In general, one can say that the pattern of educational expansion in India surpassed the targets at the higher education level and it fell short of the targets at lower levels of education. It is interesting to note that the lower rates of growth were experienced in those sectors like primary education where the government seemingly placed high emphasis on its policy pronouncements. T h e Indian situation shows that there is a lack of demand for education at the primary and middle levels and an unsatisfied demand at all other levels of education. Expansion at the higher education level was mainly at the undergraduate level. Nearly 90 per cent of the enrolments in higher education are at this level. Enrolments in post-graduate levels form nearly 10 per cent and at research level only 1 per cent. This trend has not undergone any substantial change over a period of time. Another significant feature of expansion of higher education in India is that a substantial proportion of enrolments are in faculties like arts, science and commerce (see Table 2). In fact more than 80 per

i

Introduction

cent of enrolments are in these faculties. Over the period this trench has not undergone any marked change. However, it m a y be noted that their relative share has marginally declined in the recent decades. Within these three faculties, arts occupies a dominant position, followed by science and commerce. This was the trend till the mid-seventies. F r o m the mid-seventies the relative share of science has declined and correspondingly the share of commerce has gone up. A t present the relative shares of the science and commerce faculties are almost equal. Table 2 shows that corresponding to the decline in the share of the arts and science faculties, there is a substantial increase in enrolments in the commerce faculty and a marginal increase in professional and technical courses. Shares of the faculties of medicine, engineering and law in total enrolments have been increasing whereas in other professional and technical courses one can observe a decline in their share. Despite these changes, enrolments in higher education in India continue to be predominantly in the faculties of arts, science and commerce. Another feature of higher education in India is its urban bias in terms of location of institutions and enrolments. A s per the 1977 survey, more than 70 per cent of the colleges are in urban areas and, again, urban areas account for nearly 80 per cent of the total enrolment. T h e urban bias in enrolment varies between faculties. Professional and technical courses like medicine, engineering and management attract a high proportion of students from highly urbanized areas (Dhar, et al.: 1976). In the recent past there has been a positive trend towards opening more colleges in the rural areas and it is expected that the extent of urban bias will be reduced in the coming years. Growth of employment in India did not correspond to the expansion that was experienced by the educational sector. Rates of growth of higher education were faster than the rate of growth of employment in India. Moreover, educational expansion was linear and hence did not respond favourably to the changing skill requirements of the economy. These factors led to mismatches of various types manifested in the form of unemployment of the educated. T h e interesting situation in India is that of growing unemployment of the educated on the one hand and expanding enrolments in higher education on the other.

3

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-S р о с - о "О ^Г 1) г-

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cu о 10

educational levels (19S1 rural total) (percentages) illiterate

_.;erate

Primary

Middle

Matric Hi. Sec.

D iploma

Desree and ahove

1. Cultivators

63.6

'.0-2

14.3

7.2

-1"?

O.O-i

0.3

2. Agricultural labourers

81.6

6.8

8.0

2.6

0.9

nesl.

0.3

3. Livestock, forestry, etc.

0.8

4. Mining and quarrying

64.5

11.9

6.9

6.0

0.04

1.2

5a. Household industry

58.3

12.3

19.0

6.8

2.6

0.01

0.1

0.54

1.3

b. Other than household industry

9.0

38.1

13.2

23.4

û. Construction

50.3

12.6

17.5

7. Trade, commerce

27.0

-.3.6

24.9

8. Transport, storage & c o m m .

2S.4

11.1

9. Other services

23.6

7.2

Total workers

64.5

9.3

13.2

Source: Census of India 19S1

30

13.1

9.0

10.2

S.l

O.S

16.1

1-1.9

0.1

20.1

17.2

20.6

0.34

2.3

12.2

12.7

2S.6

4.0

11.6

5.2

0.3

0.9

6.6

;.6

.

35

Employment and unemployment: evidence at the macro-level

was the lowest in trade and commerce, but in 1981 the share of illiterates was the lowest in the other services sector. In the case of literates there was no specific pattern in 1981. Graduates of primary and middle levels are employed m o r e in the manufacturing and service sectors (with the exception of other services). The service sector in general deploys a higher proportion of matriculates and university graduates, followed by non-household industry and construction sectors. Comparison of urban workers m a y be more reliable. M a n y of the observations m a d e in the previous paragraphs hold good in the case of urban areas also. In the urban areas (Tables 9 and 10) the relative share of illiterates has c o m e d o w n in all sectors and correspondingly the share of the educated has gone up. It can be seen that the proportion of the educated is m o r e in the urban labour force. A n d , again, the service sectors employ a higher proportion of educated. So far as university graduates are concerned, livestock, forestry, etc. of the primary sector, non-household industry of the secondary sector, other services and trade and commerce of the service sectors employ a relatively higher proportion of them. A s noted earlier, comparisons between 1971 and 1981 cenruc figures are not strictly correct because of non-inclusion of marginal workers in the 1981 census. O f the marginal workers 94.5 per cent are in rural areas and of the total marginal workers nearly 8 4 per cent are female. In other words, a comparison between male workers in the two census figures will be more revealing. Distribution of male workers in rural areas by educational levels is given in Tables 11 and 12. These tables show that the relative share of educated persons in all sectors has improved during the period. Agricultural labourers are the least educated category. Nearly 75 per cent of the workers in this category are illiterate whereas in the case of trade and commerce the corresponding figure is only 22 per cent and in other services 20 per cent. Similarly in the case of workers with qualification levels of university graduation and above, the proportion is highest in the case of the other services sector. In general the proportion of matriculation and above category is also higher in the service sectors. This becomes more pronounced in the 1981 figures than in the 1971 figures. Distribution of urban male workers by educational levels is given in Tables 13 and 14. Perhaps this is the most comparable category in the censuses between 1971 and 1981. These tables show that in all the

31

Education and the labour markei in India

Tabic 9: Distribution of workers en educational levels (1Q"1 urban total) (percentages) Illiterate 1. Cultivators

Literate

Primarv

Middle

Diploma 0.07

51.9

Degree and above 0.90

2. Agricultural labourers 3. Livestock, forestry, etc. 4. Mining and quarrying

57.2

10.6

9.0

9.S

10.0

0.12

3.4

5a. Household industry

47.9

17.8

21.6

8.9

3.6

0.05

0.3

b. Other than household industry

31.3

12.9

21.1

16.7

14.7

0.13

3.9

b. Construction

49.0

12.0

15.9

9.4

9.7

1.45

3.9

7. Trade, c o m m e r c e

28.5

14."

25.0

2!..r

3.2

0.26

7.0

5. Transport, storage & c o m m .

35.7

9.7

15.8

15.4

19.9

0.33

3.5

~. Other services

26.6

S.2

12.0

13.3

25.4

1.8

16.1

Total workers

31.6

11.2

18.0

15.1

16.8

0.7

6.6

Source; Calculated based on Census of India !9~1.

32

Employmeni

and unemployment: evidence at the macro-level

Table 10: Distribuí. vr; of workers by educational levels (1981 urban total) (percentages)

Illiterate

Literate

Primary

Middle

Matric

Diploma

Degree and above

1. Cultivators

4S.7

10.2

16.5

11.2

11.2

0.10

2.0

2. Agricutural labourers

73.7

7.7

11.3

4.7

-•3

0.02

0.3

3. Livestock, forestry, etc.

46.1

10.5

15.8

9.1

12.9

0.38

4.8

4. M i n i n g and quarrying

50.0

7.5

10.8

11.0

16.3

0.96

3.4

5a. Household industry

44.5

12.1

21.9

11.6

8.3

0.19

1.4

26.3

9.4

20.6

15.8

20.6

1.35

6.0

6. Construction

45.0

S.9

15.9

10.1

13.2

1.85

5.0

7. Trade, c o m m e r c e

20.S

8.2

15.5

16.2

2J.4

0.34

11.1

8. Transport, storage and c o m m .

2S.5

7.6

16.4

15.3

25.5

0.63

6.1

9. Other services

21.0

5.6

10.5

11.0

29.0

2.4

20.0

Total workers

30.4

8.2

16.5

13.2

21.2

1.1

0.4

b. Other than household industry

Source: Calculated based on Census sof India. /967.

33

Education and the labour markt; in India

Table 11: Distribution of workers "•> educational ievels (1971 rural males) (percentages) Illiterate

iterate

Primary Middle

Matric H r . Sec.

Diploma

Degree and above

1. Cultivators

64.0

11.5

15.7

6.4

2.1

0.08

0.1

2. Agricultural labourers

78.0

S.O

9.9

2.7

0.4

negl.

negl.

3. Livestock, forestry, etc.

7.09

9.2

12.4

4.4

2.7

0.13

0.3

4. Mining and quarrying

64.6

10.7

12.2

7.1

4.3

0.4

0.7

5a. Household industry

53.0

15.8

22.7

6.6

1.7

0.07

0.06

b. Other than household industry

38.3

15.2

263

12.3

6.7

0.4

0.7

6. Construction

52.4

13.3

19.9

8.1

5.0

0.8

0.5

7. Trade, c o m m e r c e

25.4

17.8

32.0

16.1

8.5

0.27

0.9

8. Transport, storage & c o m m .

33.S

13.0

2° ~*

16.6

12.8

0.4

1.1

9. Other services

28.7

14.2

14.4

14.4

20.5

3.0

4.7

Total workers

63.5

11.2

15.1

6.4

3.1

0.26

0.4

Source: Based on census of India, 1971

34

Employment and unemployment: evidence at the macro-level

Tabic

12:

Distribution of w o r k e r s b y educational levels (1981 rural m a l e s ) (percentages)

Illiterate

Literate

Primary

Middle

Macric H r . Sec.

Diploma

Degree a n d above

5.2

1. Cultivators 2. Agricultural labourers

10.8

3.6

3. Livestock, forestry, etc. 4. M i n i n g and quarrying 5a. H o u s e h o l d industry b. O t h e r than household industry

58.4

10.5

13.9

8.2

7.1

0.05

1.4

5.3

14.8

22.5

8.2

3.9

0.04

0.2 1.5

33.1

13.9

25.1

14.3

11.5

1.00

6. Construction

44."

13.8

19.4

1 LI. 1

9.1

0.O4

l.S

7. Trade, commerce

21."

14.3

2b.fi

Г.4

16.1

C.15

3.5

8. Transport, storage & c o r a m .

27.7

11.1

20.3

17.5

20.8

0.44

-) -1

9. Other services

20.0

7.8

13.2

13.4

29.9

3.14

12.2

Total workers

57.7

10.9

15.6

8.0

6.4

0Л5

1.1

Source: Bascii o n Census c'India

19S1

35

Education and the labour markci in India

sectors the relative shares of the educated workers have gone u p . O n e distinguishing feature during this period is that the relative shares of both illiterates and literates have declined in all sectors. In all other cases, which w e have discussed earlier, only the share of illiterates had declined. This shows that overall educational levels of urban male workers have gone u p at a faster rate. In the tertiary sector, m o r e than one-fourth of the male employees are matriculates. In fact in the other services sector, m o r e than half of the workers possess qualifications equivalent to or higher than matriculation. Interestingly this is the only sector where the relative share of degree-holders is higher than that of illiterates. T o s u m u p , the following tentative observations can be m a d e . Between the two census periods, educational levels of the work force in all sectors have improved. A relatively higher proportion of the lower level educated or uneducated persons are in the primary sector, followed by secondary and tertiary sectors. Within the primary sector, livestock, forestry, etc. shows a relatively higher portion of educated persons. Within the secondary sector, it is the non-household industry which has a Iii^her proportion of the educated labour force. In -the tertiary sector, it is the other services sector which employs a relatively larger a m o u n t of educated persons. This is m o r e true in the case of university graduates. T h e pattern a m o n g the sectors in the tertiary level is m o r e similar at lower levels of education. Relative shares of the educated in each sector show that the primary sector is associated m o r e with lower levels of education, including illiterates, and the tertiary sector is associated with higher levels of education. F r o m the educational point of view, livestock, forestry, etc. of the primary sector, nonhousehold industry of the secondary sector, and trade and c o m m e r c e and other services of the tertiary sector are significant.

36

Employment

and unemployment: evidence at the macro-level

Table 13: Distribution of workers by educational levels (1471 urban males) (percentages)

Illiterate

Literate

Primary

Middle

Mairie H r . Sec.

Diploma

Degree and above

1. Cultivators

4S.9

13.7

17.6

11.S

7.0

0.07

0.9

2. Agricultural labourers

71.5

3. Livestock, forestry, etc. 4. Mining and quarrying

52.9

11.6

9.8

10.9

11.0

0.14

3.8

5a. Household industry

40.7

19.8

24.4

10.4

4.3

0.05

0.4

b. Other than household industry

29.1

13.2

21.8

17.3

15.1

0.13

4.0

6. Construction

45.0

12.8

17.1

10.3

10.4

1.55

4.3

". Trade, commerce

26.3

15.2

26.0

22.3

2.9

0.26

7.0

8. Transport, storage &. c o m m .

34.7

10.0

18.2

15.8

19.9

0.32

3.4

9. Other services

23.5

9.0

13.3

14.4

26.0

1.03

15.7

Total workers

31.5

11.8

18.2

15.1

17.1

0.07

6.6

Source: Based on Census of India / 9 7 / .

37

Education and the labour market in India

Table N: Distribution of worker? r> educational levels (19S1 urban males) (percentages) Illiterate

"-iterate

Primary

Middle

Matric

Diploma

Desree and above

1. Cultivators

45.1

¡0.4

17.6

12.2

12.4

0.13

2.2

2. Agricultural labourers

66.6

9.3

14.4

6.2

3.1

0.02

0.3

3. Livestock, forestry, etc.

42.4

i 0.4

16.6

9.8

14.1

0.94

5.2

4. Mining and quarrying

45.2

7.9

11.3

11.6

17.2

1.06

5.6

5a. Household industry

37.0

13.2

24.3

13.5

10.2

0.2

1.7

b. Other than household industry

6.0

24.2

9.5

21.1

16.3

21.3

1.45

6. Construction

41.1

9.4

17.0

10.9

14.2

1.95

5.4

7. Trade, commerce

18.5

S.4

19.1

16.8

25.7

0.34

1Ü.9

8. Transport, storage &. c o m m .

28.2

7.8

16.7

15.7

25.4

063

5.6

9. Other services

18.0

6.0

11.7

12.3

29.8

2.0

20.0

Total workrs

26.0

8.5

17.5

14.3

22.3

1.1

9.4

Source: Based on Census of India 1981.

38

Employment and unemployment: evidence at the macro-level

4.4

Employment in the organized sector

E m p l o y m e n t in the organized sector accounts for nearly 10.3 per cent of the total employment. 6 Over the last two decades ending in 1981, employment in this sector has increased from 12.09 to 22.88 million, i.e. at an annual c o m p o u n d growth rate of 3.24 per cent. Over the two decades, the relative share of employment in all sectors except services has declined. T h e service sector continued to be the single largest sector in terms of employment (Table 15). In 1961, it constituted nearly one-third of the employees in the organized sector and its share has increased to 41.61 per cent in 1981. Other important sectors in terms of employment are manufacturing and transport and communications. These three sectors together accounted for nearly 76 per cent of the total employment in 1961. T h e same share in 1981 was more than 82 per cent. However, it m a y be noted that this increase in the relative share is mainly due to the increase in the share of service sectors. Between the sectors (public and private), the public sector witnessed a higher growth rate in employment and it improved its share in the total employment. In 1961, the public sector accounted for 58 per cent of the total employment in the organized sector. B y 1981, this share had increased to 68 per cent. E m p l o y m e n t in the public sector is service sector-centred while employment in the private sector is m a n u facturing sector-centred. In 1981, 51 per cent of total public sector employment was in the service sector and 60 per cent of total private sector employment was in the manufacturing sector. In the seventies both the public and private sectors witnessed declining rates of growth. However, the growth rate in the private sector was very low, at less than 1 per cent.

6

Data on employment in the organized sector in India cover all establishments in the public sector and all non-agricultural establishments in the private sector employing 25 or more persons. The private establishments employing 10 to 24 workers are covered on a voluntary basis.

39

Education and the labour market in India

Table 15: E m p l o y m e n t by industrial division (percentages) Agriculture, hunting, etc.

7.03

5.77

Mining and quarrying

5.62

4.14

28.03

27.43

Electricity, gas and water

2.18

3.14

Construction

6.97

5.07

Wholesale and retail trade

2.01

1.72

Transport and communications

14.92

12.10

Services

33.12

41.61

100.00

100.00

12.09

22.86

Manufacturing

Total N u m b e r (millions)

Source: Statistical outline of India, 1984, Tata Services Ltd., Department of Economics and Statistics, Bombay, 1984.

4.5

Educational profile of the employees in the organized sector

A s noted earlier, the D G E & T collects information on the educational profile of the employees in the private and public sectors. This information is available from 1966 onwards for selected categories. D G E & T collects information on employees in the occupational categories of professional, technical and related workers (0 & 1), administrative, executive and managerial (2), and craftsmen and production process workers (7,8 & 9). However, educational information on

40

Employment and unemployment: evidence at the macro-level

craftsmen and production process workers did not follow a uniform pattern of classification of educational qualifications. Therefore, the comparable figures are available for divisions 0 & 1 and 2. 7 T h e educational pattern of employees in the public sector is given in Table 16. In the category of professional, technical and related workers, more than two-thirds of the employees are professionally qualified (either degree- or diploma-holders), and another 10 per cent are university degree-holders in arts and science, and the remainder are matriculates and below. Surprisingly, the relative share of university degree-holders has declined by 1978. This is true for professional as well as general degree-holders. Correspondingly the share of diplomaholders has gone u p . T h e situation is different in the case of employees in the administrative, executive and managerial categories (division 2). In 1966, this division was dominated by employees with qualification levels up to matriculation. They constituted m o r e than 60 per cent of the employees. In 1978, nearly 69 per cent of the employees were university graduates and above. H o w e v e r a m o n g them, the university graduates in arts dominated the employment scene (44.19 per cent). A close reading of the table shows thai between the period 1966 and 1978 the proportion of university graduates of all types doubled and correspondingly the proportion of matriculates halved. Therefore, one can argue that this division (division 2) shows a clear preference towards higher educated, especially university graduates. T h e educational profile of the employees in the private sector is given in Table 17. This gives a different pattern. In the occupational category of 0 & 1, nearly 69 per cent held professional qualifications in 1973. Surprisingly, the university graduates constitute nearly threefifths of the total workers. Persons with qualifications less than matriculation level are negligible. In 1977, the preference was towards university graduates in professional and general education and matriculates. Shares of all other categories have declined. This is in contrast to the pattern in the public sector where the share of professional graduates has c o m e d o w n .

The occupational classifications underwent change and the new classifications were applied for data collection from 1974 onwards. This made marginal changes in the relative position of each occupation.

41

Education and the labour market in India

Table 16: Educational-occupational distribution: public sector Professional, technical and related workers Occupation division 0 & 1

Administrative, executive and managerial Occupation division 2

1966

1978

1966

1978

Graduates and above (professional)

25.56

16.18

8.83

15.84

Diploma/certificates

42.98

57.39

.32

4.98

8.05

6.87

17.03

1.23

13.03

13.82

46.55

24.85

BA/MA

6.70

3.34

22.52

44.19

B.Sc/M.Sc.

3.66

2.41

4.10

8.89

100.00

100.00

100.00

100.00

Non-matriculates Matriculates

Total

Source: Based on D G E & T : Occupational-educational pattern in India, Ministry of Labour. N e w Delhi (various vears).

Occupational division 2 in the private sector shows a preference towards higher educated people. T h e relative share of graduates increased from nearly 3 0 per cent in 1973 to 44 per cent in 1977. T h e arts graduates dominate this occupational division (28 per cent). T h e share of persons with qualification less than matriculation has sharply declined. Similarly the share of diploma-holders has also c o m e d o w n . In other words, this sector follows the pattern similar to that in the public sector.

42

Employment and unemployment: evidence at the macro-level

Tabic 17: Educational-occupational distribution: private sector Professional, technical Administrative, executive and related workers and managerial Occupation division 0 & 1 1973

1977

Occupation division 2 1973

1977

Graduates and above 32.79

35.93

6.93

9.52

36.18

31.61

13.30

8.91

Non-matriculates

1.39

negl.

17.88

4.38

Matiiculates

3.56

7.47

34.20

35.16

BA/MA

14.11

16.16

22.30

28.25

B.Sc/M.Sc.

11.96

7.85

5.38

6.77

100.00

100.00

100.00

100.00

(professional) Diploma/certificates

Total

4.6

Unemployment of the educated

T h e Second Five-Year Plan (1956-61), for the first time, attempted a fairly detailed estimate of unemployment in India. It also provided a methodology of estimating unemployment in the subsequent plan periods. Accordingly, the backlog of unemployment at the beginning of any plan was estimated by taking into account (i) the extent of backlog of unemployment at the start of the previous plan period; (ii) net additions to the labour force during the preceding plan period; (iii) additional employment generated during the preceding plan period. A n d subtracting (iii) from the s u m of (i) and (ii) gives a backlog of u n e m ployment at the beginning of any plan. 43

Education and the labour market in India

As per the estimates of the Second Five-Year Plan, the backlog of unemployment at the beginning of the plan period was 5.3 million (2.8 million in rural areas and 2.5 million in the urban areas). The net addition to the labour force during the plan period was estimated to be 10 million (6.2 million in the rural areas and 3.8 million in the urban areas). A s noted earlier, the census of India, the N S S and the D G E & T collect data on unemployment in India at the macro-level. N o w let us take a glance at the figures provided by these sources. The incidence of unemployment by levels of education as per the 1971 census is given in Table 18; the table shows unemployment as a percentage of the respective category in the work force. T h e rate of unemployment increases with level of education; it reaches a peak at the diploma level and then comes down at the degree level. It shows that the curve depicting unemployment and levels of education takes an inverted ' U ' curve. T h e peak point of this curve in 1971 is the diploma level of education. However, it m a y be noted that diploma- holders form a small share of the total work force, both in absolute and relative terms. Rates of unemployment show that the incidence becomes substantial from the post-primary levels of education only. This m a y be because a substantial proportion of the work force with educational level up to primary are absorbed in the primary sectors, mainly in the agricultural sectors. Unemployment to them m a y be seasonal and disguised. O n the other hand, most of the educated people (matric and above) are employed in the organized sectors and in wage employment. Therefore, unemployment at this level becomes more open and pronounced.

4.7

The NSS evidence

T h e N S S collects data on unemployment on a regular basis. Because of the differences in the concepts used in subsequent rounds of the survey, one cannot derive a comparable time series on unemployment from the N S S data. Though not comparable, the percentages of unemployed in different N S S rounds are given in Table 19. As per the 27th round (1972-73) worker participation rates based on main activity were 54.59 per cent for rural males, 31.91 per cent for rural females, 50.12 per cent for urban males and 13.41 per cent for urban females. 44

Employment and unemployment: evidence at ike macro-level

Table 18: U n e m p l o y m e n t by levels of education 1971 (thousands)

Unemployment

Percentage of unemployed work force in the respective category

Illiterates

820

.72

Literates

238

1.32

Primary

469

1.9

Middle

695

5.3

Matric

560

5.7

82

11.8

178

7.3

12 894

6.36

Educational levels

Diploma Higher educated Total educated (Matric and above)

Source: Census of India, 1971

W o r k e r participation rates in the 32nd round (1977-78) were 55.21 per cent for rural males, 32.97 per cent rural females, 50.66 per cent urban males and 15.65 per cent for urban females. This corresponds well with the 27th round estimates. A s per the 32nd round (1977-78), 52 per cent of the population belonged to the working age-group (15-59) and 34.4 per cent of the population constitute the labour force. O f the total working age p o p u ­ lation, 63 per cent were in the labour force. Л Л per cent were students, 19.2 per cent were in domestic duties. O n the basis of weekly activity status. 4.8 per cent of the total labour force are unemployed. O f the employed. 81 per cent are in the

45

Education and the labour market in India

Table 19: Unemployment in N S S rounds

Year

Round

% of unemployed in total population

1956-57

11 & 12

2.34

1958-59

14

2.4

1959-60

15

1.73

1961-62

17

1.73

1964-65

19

1.63

1966-67

21

0.98

1972-73

27

1.77

1977-78

32

1.58

Source: Brahmananda (1983)

rural areas and 19 per cent in urban areas. Agriculture accounts for 63 per cent of the labour force, wage employment for 15.2 per cent and self-employed in non-farm activities represent 15.2 per cent. A picture of the educated unemployment as depicted in the recent N S S rounds is given below. It m a y be noted that figures from these two tables are not strictly comparable. Therefore the inferences drawn from Table 20 should be seen in the light of this limitation. Table 20 shows that the rate of unemployment in the rural areas is higher than in the urban areas. Secondly, incidence of unemployment is more a m o n g females in the rural areas. In other words, rural w o m e n are worst hit in terms of unemployment in India. Between the 27th and 32nd rounds, unemployment a m o n g females has increased at a faster

46

Employment and unemployment: evidence at the macro-level

rate. Increase in u n e m p l o y m e n t in the case of males w a s m u c h - less. This is m o r e so in the case of rural males. B u t in the case of females, both in the rural and urban areas, there is a sharp increase in u n e m ployment.

Table 20: Educated u n e m p l o y m e n t (percentages) 1972-73 Male

1978

Female

Male

Female

Rural Matriculates

8.9

12.1

9.8

15.4

Graduates and above 17.3

19.1

17.6

24.9

Urban Matriculates

5.9

6.1

7.3

9.4

Graduates and above

6.8

9.5

8.2

15.7

Source: National Sample Survey Reports (27th and 32nd Rounds)

T h e Seventh Five-Year Plan (1985-90) m a k e s use of the results of the 38th N S S round, accordingly, u n e m p l o y m e n t (usual status) in the age-group 1 5 + is 8.77 million (3.54 million rural males, 1.13 million rural females, 3.14 million urban males and .96 million urban females). U n e m p l o y m e n t a m o n g matriculates and university graduates and above w a s 3.7 million by the beginning of 1985.

47

Education and the labour market in India

4.8

The D G E & T evidence

Based on the Live Registers of Employment Exchanges, the D G E & T gives data on educated unemployment. A s per the data (Table 21) unemployment has increased manyfold during the period between 1953 and 1981. T h e rate of growth of educated unemployment during this period was 15.4 per cent. In terms of relative shares, matriculates enjoy an enviable position. In the fifties, matriculates constituted more than three-quarters of the educated unemployment in India. However, from the sixties onwards, this share started showing a declining trend. In 1981, matriculates constituted nearly 55.5 per cent of the total educated unemployment in India. Correspondingly the relative share of other categories in the educated unemployed has steadily gone up. Only at the post-graduate levels of education, is this increase not substantial. In fact there is a marginal decline at this level. M a x i m u m increase is at the undergraduate followed by graduate levels of education. This shows that over the years unemployment is spreading slowly but steadily to higher levels of education. T h e pattern of educated unemployment over the years shows that the share of unemployment is negatively associated with levels of education. However, the share of the unemployed with higher levels of education has gone up. This m a y be partly due to the fast expansion of the higher education system, whereby the absolute number of graduates turned out by the universities has gone u p . Because of this change in base (expanding base) even when m o r e graduates are employed, their share in unemployment of the educated increases. Studies (Blaug et. al: 1969; Panchamukhi: 1978: Kothari: 1978, Varghese: 1982, 1988) show that there is an upgradation of 'devaluation' of educational qualifications in the labour market whereby jobs previously occupied by the lower level educated are n o w shared by persons with higher levels of education. Despite this factor, the share of graduates and undergraduates in total educated unemployed has gone up. O n the other hand, if w e compare the incidence of unemployment (in relation to the respective categories) as recorded by the census and the N S S evidence, it shows that incidence is quite high at higher levels of education. A n analysis of faculty-wise graduate unemployment (Table 22) shows that the share of arts graduates is the highest, followed by the science and commerce graduates. However, over the years, the relative

48

Employment and unemployment:

evidence at the macro-level

Tabic 21: Educated unemployment in India (thousands)

Year 1953 1954

Matriculate No. % 125 145 164

1955 1957

237

1958 1959

283 344

1960 1961 1962

400 463 553 560 585 580 619 714

1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1974 1975 1976 1977 1978 1979

Undergraduate No. % 17 22 26 31 45 49

76.68 76.72

810 910 1 101 1 296 1 485 2 278 2 641 2 820

75.75 76.09 72.53 79.45 78.75 78.48 78.10 75.78 72.67 68.88 67.50 65.58 61.88 59.59 60.46 56.50 56.83 54.58 56.14 55.24

3 082 3 262

53.75 53.94

3 516 54.52 3 784 1980 53.12 5 008 1981 55.52 : Note: * included in graduates

61 71 91 111 148 Ï76 204 252 324 401 443 605 664 1 1 1 1

086 228 255 474

1 553 1 614 1 797 2 326

Graduate No. Tc

10.42 11.64

21 22

12.03 12.70

26 27

12.33 11.32 12.00 12.03 12.85 15.02 18.39 20.90

37 40 47 56 64

-in ->5

23.18 24.75 26.26 24.33 26.37 25.41 26.01 26.10 24.58 25.68 25.68 25.02 25.24 25.78

68 72 86 94 121 157 190 245 354 421

Post-graduate No. %

* * * * * * * * * * * * * *

12.SS 11.6-1 12.03 11.0"

io.:9.23 9.25 9.-10 9.05 Q.20 S.Q4 10.22 10.25 11.14 11.Q o lZ.-i13.-5 15.-5 16.::

746 772

r.s-

926 1 074 1 124

:s.:-

1 209 1 423 1 543

18. '-i 20.00

i".:o

216 244 365 433 508 590 708 739 805 842

63 94 105 108 110 113 142

1.83 1.70 1.70 1.58 1.57

43 64

iö.-: iS."3 18.5°

163 189

1.38 1.70 1.76 1.70 1.65 1.53 1.33 1.84

18 26 32 39

Total

917 1 087 1 309 1 527 1 821 2 294 2 613 4 174 4 704 5 5 6 6 7 9

105 733 047 449 117 019

Source: (i) Fact book on manpower. I A M R . New Delhi. 1963 (ii) Employment Review (various years) D G E & T . Ne«. Delhi.

49

Education and the labour market in India

share of the arts graduates has c o m e d o w n and that in almost ah" other categories has gone up. It m a y be noted that the relative share of arts, science and engineering graduates to the total graduate unemployment has c o m e d o w n over the years. At the same time, the share of all other faculties has gone up. T o sum up, educated unemployment in India has assumed alarming proportions in recent years. It was mainly a problem of unemployment of the matriculates in the fifties; graduates and undergraduates joined the pool of unemployed in large numbers in the sixties and seventies, making the problem of educated unemployment more complex and hence more difficult to seek solutions. However, at graduate levels, unemployment is basically a problem faced by the arts graduates, followed by science and commerce graduates. A state-wise picture of educated unemployed (Table 23) shows that West Bengal contributes the highest proportion, followed by Uttar Pradesh, Kerala and Bihar, to the total educated unemployment in India. Since that share depends to a great extent on the stock of educated in each state, no further observations can be m a d e on this count. HvjW3ver, the question of unemployment of the educated is more severe in the states mentioned above. The latest position regarding unemployment is available from the Seventh Five-Year Plan document. According to the seventh plan perspectives, there was a backlog of unemployment to the extent of 9.2 million in 1985. T h e plan envisages that there will be a net addition of 39.38 million to the labour force during the plan period. Employment during the plan period is expected to grow at a rate of 3.99 per cent, which is faster than the rate of growth of the population and labour force. Total estimated employment generation will be 40.36 million. Thus the plan envisages to provide employment not only to all n e w entrants, but also to reduce the backlog of unemployment. Even if these plan targets are attained, the backlog of unemployment towards the end of the plan will be substantial. Before w e conclude this chapter, a look at the figures on u n e m ployment of the educated as given by different sources is essential. A s per the seventh plan document, the total stock of educated manpower in India in 1985 was 47.72 million, of w h o m 30.40 million (64.6 per cent) were economically active. It is expected that the stock of educated manpower will increase to 64.39 million by 1990 (if w e apply the same percentage as for 1985. economically active educated m a n p o w e r by the

50

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