The trend from official data shows that most of the new jobs created in India’s formal sector are low-paid and temporary work, hence offering little job security or upward mobility.
The recent findings are raising questions over its long-term socio-economic implications.
Maximum Jobs In Expert Services
The data shows that in the 18-25 age group, almost 59% of net payroll additions in May came from expert services.
This category contributed over 200,000 out of the net addition of 345,000 new hires across 10 top industry segments, with the rest spread across the other nine sectors.
Further, the Employees’ Provident Fund Organisation (EPFO) data for May showed that maximum jobs were created in the ‘expert services’ category.
It included manpower agencies, private security firms, and small contractors.
On the other hand, the established sectors such as engineering, financial establishments, and construction sectors lagged behind.
In the expert services category, they have added 83,903 people in the 29-35 age group.
The ‘trading and commercial establishments’ category added 8,500 employees in the same age cohort.
At the same time, textiles sector 5,800 employees and building and construction firms added 7,478 workers.
The contribution of expert services was slightly more than 60% of the total payroll additions of 139,532 in this age bracket.
The trend seems like a continuation from April when expert services contributed 101,349 out of the total of 173,797 people joining formal work in the 29-35 age group.
Decent And Well Paid Jobs Are Missing
Interestingly, the trend seems to be similar across several age groups.,
Analyzing the results, labor economists say that decent, well-paid jobs are missing from the market, and the formal sector additions may be happening in low-paid and contractual works.
The sectoral details indicate a changing labor market. The government and its statisticians need to note the changing nature of work and its long-term impact on the economy, poverty alleviation, and consumption, said K.R. Shyam Sundar, a labor economist and professor at XLRI Jamshedpur.
Further, he said, “the data shows two key aspects of the labor market as well as the broader economy —stunting of the conventional employers in core sectors and, two, the growth of new-age services and allied service sector jobs managed and supplied by manpower agencies,”
Decent Salary Missing From The Job
The manpower agencies, small contractors, and private security guards are largely hiring young people because of the nature of the job. It helps principal employers lessen human resource headaches and eases the process of firing, compared with those who they hire directly, Arup Mitra, professor of economics at the Delhi University’s Institute of Economic Growth, said.
“But it has three long-term implications—the new recruits at the lower end of the value chain don’t have bargaining power; decent salary is missing for a majority of them, and the idea of upward mobility for the poor and the lower middle class get stymied,” He said.