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Beyond GDP: A State-Level Just Jobs Index for India, by Sabina Dewan

Created Jun 16 2020, 2:41 PM by Teuta Gashi

Beyond GDP: A State-Level Just Jobs Index for India

By Sabina Dewan

 

Even before the COVID-19 pandemic, India's labour market indicators were showing signs of distress. Among the factors that helped propel these worrisome trends was the pursuit of economic growth underpinned by the assumption that it will inevitably lead to more, and eventually better jobs without due attention to the composition and geography of growth. 

Capital intensification fuelled economic growth for several consecutive years but did not generate enough employment to absorb the country’s surplus labour. Surplus labour spilled into informal employment with low-productivity, depressed wages, and working conditions; especially for women that have seen labour force participation rates decline. A lack of productive jobs and low wages manifested in lacklustre private consumption and low aggregate demand, which in-turn adversely affects investment and production creating a vicious cycle.


Source: http://mospi.nic.in/sites/default/files/press_releases_statements/Statement_12_3june2020.xls

Still, jobs do not enjoy the same treatment as other indicators of economic health. Metrics such as Gross Domestic Product boil several economic parameters down to one number. No such equivalent exists for the labour market.  Politicians, policymakers, the private sector and other stakeholders lack a simple tool for communicating performance on the indicator that matters most to ordinary people: good jobs.

The State-level JustJobs Index for India is a comprehensive, data-driven tool that examines how states perform in providing more and better jobs to their inhabitants. It delivers one score that captures several dimensions of the quantity and quality of employment. The S-JJI covers 20 Indian States and one Union Territory over a sample period of 2010 to 2018 analysing fifteen labour market indicators along five dimensions (Table 1) [Also see the  associated website that allows the user to alter the weights and see how the state-level rankings change].

Table 1: State-Level Just Jobs Index: Dimensions and Indicators

Dimensions

Indicators

 

Employment

Labor force participation rate, ages 15+

Unemployment rate, ages 15+ (low is better)

Youth unemployment rate, ages 15-29 (low is better)

 

Formality

Share of own-account and contributing family workers in total employment (low is better)

Share of workers with a written job contract, excluding the self-employed

Share of regular workers in total employment

 

Benefits

Share of workers with a union association, excluding the self-employed

State expenditure on pensions as percentage of Gross State Domestic Product (GSDP)

Share of workers with Provident Fund (PF)/pension, excluding the self-employed

 

Income equality

Ratio of minimum wages to average wages

Gini coefficient of consumption inequality (low is better)

Ratio of informal wages to formal wages

 

Gender equality

Ratio of female to male employment rates (equal is better)

Ratio of female to male labor force participation rate (equal is better)

Ratio of female to male real average wages (equal is better)

 

Examining these dimensions at the state-level sheds light on India's heterogenous labour market in a way that GDP does not. The best performers on State Gross Domestic Product growth rates, such as Gujarat, are not the best performers on the S-JJI. 

Table 2 reflects state scores with Andhra Pradesh, Maharashtra and Chhattisgarh performing well on employment, gender and income equality.  While Odisha, Bihar and Uttar Pradesh received the lowest ranks driven largely by poor performance on gender equality. Improving the performance of these states on the S-JJI calls for taking measures to improve female labour force participation to achieve greater parity with men. Scores on the gender equality dimension have a direct correlation with the overall State-level JustJobs Index highlighting the significance of equal participation of women in the economy.

The notion that formal jobs are good jobs is pervasive, but reducing informality does not mean a concomitant increase in formal/good jobs. In states like Tamil Nadu, the degree of formality is high, but access to benefits is relatively low.

Table 2: State-wise and Dimension-wise Index Score

State/ UTs

Employment

Formality

Benefits

Income

Gender

JJ Index

Andhra Pradesh

88.35

45.59

38.98

51.90

62.08

57.38

Maharashtra

76.50

38.44

29.43

76.84

64.78

57.20

Chhattisgarh

95.29

22.37

14.14

83.03

67.12

56.39

Uttarakhand

44.14

49.75

50.64

73.39

45.78

52.74

Tamil Nadu

68.96

66.80

29.25

41.40

56.86

52.65

Delhi

53.34

67.26

52.47

60.71

29.26

52.61

Himachal Pradesh

69.40

38.77

40.92

40.91

72.90

52.58

Karnataka

81.63

42.77

21.49

64.15

50.56

52.12

Jharkhand

65.64

20.87

22.76

67.59

46.02

44.58

Jammu & Kashmir

37.07

53.56

55.47

36.24

39.27

44.32

Goa

15.88

87.59

27.96

47.03

40.94

43.88

West Bengal

58.45

46.39

23.38

68.95

21.01

43.63

Haryana

51.53

41.53

18.16

60.80

41.17

42.64

Punjab

41.05

46.32

31.67

61.70

29.51

42.05

Rajasthan

68.77

25.21

17.19

52.98

46.08

42.05

Madhya Pradesh

77.83

26.32

17.78

43.43

42.60

41.59

Kerala

17.55

71.57

51.99

28.85

37.93

41.58

Gujarat

75.86

35.27

12.67

46.31

31.17

40.26

Odisha

57.80

36.15

22.11

44.83

27.64

37.70

Bihar

39.68

41.84

37.58

53.78

13.50

37.28

Uttar Pradesh

51.73

16.92

30.70

39.45

21.38

32.04

All India

63.68

37.70

25.54

50.96

44.10

44.39

These examples underscore the fact that policy must look beyond GDP to examine the myriad of factors that drive employment outcomes in smaller administrative units in India's complex and segmented labour market. Harnessing the productive potential of India's large and growing population, and delivering on the nation's aspirations, depend on it.

(Sabina Dewan is the President and Executive Director of the JustJobs Network and a Senior Visiting Fellow at the Centre for Policy Research)