19

CHAPTER II

EMPLOYMENT SCENARIO IN PUNJAB: EVIDENCE FROM SECONDARY DATA

Employment is considered to be a key link between growth and poverty

alleviation. As the low income is an important aspect of poverty, and productive

employment is a key determinant of income, one way of defining pro-poor growth is

in terms of the employment outcome of growth. It is argued that decent and

productive employment is one of the best routes as to get out of poverty (Sau, 1978;

Parthasarthy, 1978; Islam, 2001). In the heydays of green revolution in the state, it

was argued that agricultural intensification and adoption of high yielding varieties of

grains have the ability and potential to create more than enough employment in

agriculture to absorb rural labour force. During the initial years of its launch in the

state, the HYV seeds-fertilizer-irrigation technology increased the level of on-farm

employment and its stability for agricultural labour and cultivators as well and the

state economy was said to have reached a stage of almost zero unemployment. For

productive employment of rural workers, what really needed was a strategy of

agricultural development based on labour intensive and capital-saving technology

(Sharma, 1974; Laxminarayan, 1982).

However, the rising cost of labour and other farm inputs without a

corresponding increase in procurement prices of wheat made mechanization of farm

operations and other labour saving devices increased attractive to progressive and

resourceful farmers. This resulted in a drastic cut in labour absorption in agriculture as

subsequently noted by Sheila Bhalla in a series of papers (Bhalla, 1987, 1988, 1992

and 1993). The labour absorption in agriculture in the state is, in fact, an outcome of

the two contrasting processes: (i) increase in the net sown area and/or increase in

cropping intensity and a change in cropping pattern from low labour absorption crops

towards higher labour absorption crops on the one hand; and (ii) mechanization

process on the other.

Till the mid-1980s, the combined effect of increase in cropping intensity and

change in the pattern of cropping outweighed the negative impact of mechanization

resulting in a sustained rise in labour use per hectare. Thereafter, the positive factors

20

were not sufficient enough to compensate for the negative impacts resulting in

contraction in man-days employment per hectare in almost all the crops (Bhalla,

1988; Gill, 2002; Sidhu and Singh, 2004). On the other hand, the number of

agricultural workers in the state increased from 2.86 million in 1981 to 3.6 million in

2001 apart from a number of migrant labours increasing from 2.86 lakh in the lean

period to 5.72 lakh in peak period in 1983-84 and 3.86 lakh to 7.74 lakh respectively

in 1995-96 (Sidhu and Singh, 2004). It needs to be added here that had it not the

labour absorption in the dairy sector, which showed an increasing trend of labour

absorption, the fall in labour absorption in agriculture might have been much larger

than estimated by the researchers.

It is also noteworthy that over the years, the total holdings in the state have

shown a declining trend, with total holdings having reduced from 1375 thousands in

1971 to 997 thousands in 2000-01 (Rangi, 2007). It signifies that a number of

cultivators are leaving the profession due to its non profitability. The land operated

per cultivator and agricultural labourer taken together has declined gradually from

1.93 hectares of net area sown in 1960-61 to 1.25 hectares in 1990-91 to 1.13 in 2000-

01. Even if someone takes the gross cropped area, the availability of it per agricultural

worker has come down over the years (Rangi and Sidhu, 2000). It has clear

implication that the available land area is just not available sufficiently for agricultural

workers in the state. Given these trends in labour absorptive capacity of state's

agriculture, the study has to look into other sectors for productively employing rural

workforce in the state.

2.1 Dimensions of employment in Punjab

According to Usual Status, Current Weekly Status (CWS) and Current Daily

Status (CDS) criteria, labour force participation rates (LFPRs) for rural as well urban

males have declined by one percentage point during the six years from 1993-94 to

1999-2000. On the other hand, LFPR for rural females has remained almost the same

over this period (4 per cent) according to usual principal status (UPS) criteria. It has

increased from about 20 per cent to 28 per cent according to Usual Principal and

Subsidiary Status (UPSS). This indicates that a higher proportion of females in rural

areas are subsidiary workers. There has been a declining trend of Worker-Population

Ratio (WPR) based on UPSS since 1983 for rural as well as urban males. For

21

instance, WPR for rural males has steadily declined from 67 per cent in 1987 to 53

per cent in 1999-2000. However, WPR for rural females, which declined from 36.5

per cent in 1983 to 22 per cent in 1993-94, has increased to 28 per cent in 1999-2000

(NSSO, 1990, 1997, 2001).

The rate of growth of the labour force has been higher (2.57 per cent) than that

of the workforce (2.55 per cent) during 1993-94 to 1999-2000. The growth of female

workforce has been comparatively higher than that of the labour force. Growth rate of

the labour force in rural areas has been higher (2.07 per cent) than that of the

workforce (1.99 per cent), whereas the growth rate of urban labour force has been

lower (3.81 per cent) than in the workforce (3.95 per cent).

2.2 Changes in status of employment

During 1999-2000, 54 per cent males and 89 per cent females in the rural

areas of the state were self employed. The corresponding proportion in urban areas

was 47 per cent for males and 49 per cent for females. The proportion of regular

employees among women (3.7 per cent) as compared to men (17.5 per cent) was

much lower in rural and higher in urban areas with 43 per cent women and 40 per cent

men being regular employees during this period. The proportion of casual labour was

relatively much higher for males than females, both in rural and urban areas of the

state. However, male casual labour in rural areas, at 28.5 per cent, was much higher

than in urban areas at 12.2 per cent (NSSO, 1990, 1997, 2001).

The changes in the status of employment over the period indicate that the

proportion of self employed rural males has decreased from 60 per cent (UPSS) in

1987-88 to 54.7 per cent in 1993-94 and further to 54 per cent in 1999-2000. The

share of rural females in self employment, which remained constant at 85 per cent

during 1987-88 to 1993-94 increased to 89 per cent during 1999-2000. It is

noteworthy that regular male employees in rural areas have increased by 4 percentage

points during 1993-94 and 1999-2000 but it was still lower than that obtained in 1987-

88. For rural males, the share of casual workers in rural employment increased from

22 per cent in 1987-88 to 32 per cent in 1993-94. Though, it declined to 28.6 per cent

in 1999-2000, it was still higher as compared to the earlier period of 1987-88. For

rural women, it increased from 25 per cent to almost 40 per cent during 1987-88 to

22

1993-94, but then declined to 29 per cent in 1999-2000. In urban areas, too, the share

of casual employment is on the increase, for both men and women.

The casualization of workforce seems to be at the cost of self employment in

rural and urban areas. For rural workers, regular employment is showing a decreasing

trend. Though the decline in the self employment was observed mainly in the

agriculture, yet, it is the main reason for the casualization. The data do suggest the

operation of a process where regular workers are turning casual, albeit with a low

magnitude.

Casualization of workforce, as a phenomenon, is also operating at the level of

national economy as well. Over the period of time, this phenomenon is becoming

more and more prominent in agriculture too (Gill and Ghuman, 2001). Agriculture is

increasingly unable to productively absorb the growing labour force. At the same

time, there has also been a growth of non-agricultural activities in rural areas in

construction, trade and services which offer better earnings than agriculture. Most of

these employment opportunities have been temporary and casual in nature. The

increasing casualization is a cause of concern as workers in this category may not get

regular work and are more likely to be low-paid resulting in higher incidence of

poverty. Vulnerability and risks, uncertainty of work, low earnings, unfair treatment

by employers and lack of social protection measures are the normal characters of

casual workforce (Papola and Sharma, 2005).

Slow growth of employment in the organized sector has been a major factor in

the stagnancy in the proportion of regular wage and salary earners. Growth of

employment in both the public and private sectors has declined. The share of

organized sector employment in total employment was about 9 per cent in 2000. It

means that a large proportion of workforce in the state is engaged in the informal

economy. At the all-India level, organized sector's share in employment was only

about 7 per cent (Planning Commission, 2001). Data suggest that in Punjab, the

growth of employment in the organized sector has constantly declined from 2.63 per

cent in 1981-85 to 1.36 per cent in 1995-96 and further to 0.10 per cent in 1999-2000.

The decline in the growth of public sector employment has been much faster than in

the private sector (CRRID, 2002).

23

2.3 Changes in distribution of workforce

Census data from 1961 to 2001 show that there is a slow but steady change in

workforce pattern in the state of Punjab. Over the years, there is a continuous decrease

in the dependence of workers on agricultural sector and their reliance on various

secondary and tertiary sector occupations has been on the increase.

Table 2.1: Percentage distribution of workforce in Punjab by main industrialclassification (main workers only)

Sector 1961 1971 1981 1991 2001Cultivators 46.22 42.55 35.86 31.44 24.27Agricultural labourers 9.64 20.11 22.16 23.83 13.55Livestock, forestry, fishing,plantations, orchards and alliedactivities

1.10 0.94 1.00 0.80 7.31

Sub total: Primary 56.96 63.60 59.02 56.07 45.13Mining & quarrying 0.02 0.02 0.02 0.06Manufacturing, processing,servicing and repairsHousehold industry 8.89 3.17 2.58 1.33 3.10

Other than household industry 6.72 8.12 10.57 10.95 12.02Construction 2.28 1.97 2.05 2.56 5.05Sub total: Secondary 17.89 13.28 15.22 14.86 20.23Trade & commerce 6.95 8.23 9.48 10.54 11.13Transport, storage &communication

2.45 2.81 3.74 3.84 4.11

Other services 15.75 12.08 12.54 14.69 19.40Sub total: Tertiary 25.15 23.12 25.76 29.07 34.64Grand total 100.00 100.00 100.00 100.00 100.00Note: In 1961 census, Mining and quarrying and agricultural allied activities were clubbed together.Source: Director, Census Operation, Punjab (1961, 1971, 1981, 1991, 2001).

It is clear from Table 2.1 that structure of employment in the state has

undergone a change. In a period of 30 years since 1971, the share of primary sector in

employment has declined from about 63.60 per cent to 45.13 per cent. The decline in

the importance of primary sector was sharpened during the 1990s when it declined by

more than 10 percentage points. The data also show that during 1961-1971, there was

a larger increase of agricultural labour. This was due to a large absorption of workers

in agriculture caused by the introduction of green revolution technology in the state in

the mid-1960s.

NSSO data also confirms the changing pattern of employment in the state.

Table 2.2 indicates the changing structure of the workforce at the broad industry level

in Punjab as compared to the country as a whole. The share of workforce engaged in

24

agriculture in Punjab has declined from about 67.90 per cent in 1983 to 53.23 per cent

in 1999-2000 as compared to about 68.45 per cent to 59.84 per cent in the country as

a whole during the same period. On the other hand, the share of the secondary sector

has increased in Punjab from about 12.75 per cent in 1983 to 17.51 per cent in 1999-

2000 as compared to 13.76 to 16.85 per cent in the country. The workforce engaged in

the service sector in the state has increased from 19.22 per cent to 29.26 per cent over

the same period as compared to 17.21 per cent to 22.73 per cent in the country. Thus,

it is evident that Punjab has experienced a greater shift of labour force to non-farm

sectors than in the country as a whole. This can be attributed partly to the

deterioration in employment conditions in the agricultural sector in the state.

Table 2.2: Percentage share of estimated workforce at sectoral level in Punjab and IndiaPunjab IndiaSector

1983 1993-94 1999-00 1983 1993-94 1999-00Agriculture 67.90 56.50 53.23 68.45 64.75 59.84Mining & quarrying 0.03 0.24 - 0.58 0.72 0.57Sub-total: Primary 67.93 56.74 53.23 69.03 65.47 60.41Manufacturing 9.81 10.28 10.91 11.24 11.35 12.09Electricity, gas, water,etc.

0.72 1.27 0.93 0.28 0.36 0.32

Construction 2.22 4.08 5.67 2.24 3.12 4.44Sub-total: Secondary 12.75 15.63 17.51 13.76 14.83 16.85Trade, hotel &restaurants

6.17 10.45 13.54 6.35 7.42 9.40

Transport, storagecommunication, etc.

3.41 3.56 5.21 2.44 2.76 3.70

Finance, insuranceservices

0.91 1.07 1.25 0.56 0.94 1.27

Public administration,community services

7.88 12.54 9.26 7.86 9.38 8.36

Others 0.95Sub-total: Tertiary 19.22 27.62 29.26 17.21 20.50 22.73All 9 (No. in Millions) 7.30 7.98 9.29 302.76 374.45 397.00

Source: NSSO, (1987, 1997, 2001); Planning Commission, (2001).

2.4 Changes in distribution of rural workforce

As per Census data, 66 per cent of the population and 70 per cent of state's

workforce was residing in rural areas in 2001. Of all the main workers 45.12 per cent

were engaged in agriculture and allied occupations. Table 2.3 reveals that the share of

agriculture and allied activities in the total rural workforce in Punjab is on the decline.

Over a period of 30 years, the rural workers' dependence on primary sector has

declined from 79.51 per cent in 1971 to 64.11 per cent in 2001. During the 1990s, the

25

decline is rather sharp. It may be noted that there was quite a large jump in the

proportion of workers in 2001 dependent upon livestock and other related activities.

This was mainly due to change in definition all persons who were involved in

tendering of livestock meant even for domestic production were treated as workers.

This may explain the unusual increase in women's participation in livestock in 2001.

Their contribution which was 0.96 per cent in 1981, 0.67 per cent in 1991, suddenly

shot up to more than 10 per cent because of this definitional change. If we take

livestock and other related activities as a part of rural non-farm sector [as suggested

by Saith (1992), and Papola and Sharma (2005)], then the dependence of rural

workers on agriculture proper declined from 73.56 per cent in 1991 to 53.94 per cent

during 2001. This huge decline of 20 percentage points in mere 10 years in the

dependency of rural workers on state's agricultural sector is a matter of much debate

and discussion (Ghuman et al., 2002; Ghuman, 2005). In fact, one of the main

inspirations behind this study of rural non-farm sector in the state was this 20 per cent

exit of rural workers from the farm sector of the state.

Table 2.3: Percentage distribution of rural workforce in Punjab by main industrial divisionsSector 1971 1981 1991 2001Cultivators 53.64 47.72 42.81 35.09Agricultural labourers 24.79 28.52 30.75 18.85Livestock, forestry, fishing, plantations, orchardsand allied activities

1.05 0.96 0.67 10.17

Sub-total: Primary 79.51 77.2 74.23 64.11Mining & quarrying. 0.02 0.03 0.01 0.03Manufacturing, processing, servicing and repairsHousehold industry 3.42 2.28 1.17 2.74Other than household industry 3.25 5.09 5.47 7.47Construction 1.54 1.55 1.87 4.26Sub Total: Secondary 8.23 8.95 8.52 14.50Trade & commerce 3.17 3.96 4.09 5.48Transport, storage & communication 1.30 2.30 2.57 3.05Other services 7.81 7.59 10.59 12.86Sub-total: Tertiary 12.27 13.85 17.25 21.39Grand total 100.00 100.00 100.00 100.00

Source: Director, Census Operation, Punjab (1971, 1981, 1991, 2001).

NSSO data also confirms the declining reliance of rural workers on

agriculture. During 1999-2000, among all usually employed workers in rural areas of

Punjab, 63.7 per cent males and 90.6 per cent females were engaged in agricultural

activities (Table 2.4). The proportion of males in the agricultural sector has gradually

26

declined from 68.8 per cent in 1983 to 681 per cent in 1993-94 and finally to 63.7 per

cent in 1999-2000. On the other hand, the proportion of females engaged in this

sector decreased only marginally from 92.2 per cent in 1983 to 90.6 per cent in 1999-

2000. Over the years, there has been a gradual increase in the proportion of males

engaged in construction whose share more than doubled between 1983 and 1999-

2000. Similarly, trade, hotel and restaurants; transport, storage and communication,

etc.; and public administration and community services also showed considerable

expansion in employing rural male workers.

NSSO data also show the increasing dependence of rural workers on non-farm

pursuits as is evident from Table 2.4. About 27 per cent rural workers were engaged

in non-farm pursuits in Punjab in 1999-2000, whereas 36 per cent of male rural

workers were engaged in various non-farm activities. The women workers, however,

were found to be stuck in agricultural activities – a high of 90.6 per cent of them in

1999-2000 drawing their livelihood from agriculture.

Table 2.4: Percentage distribution of usually working rural persons in the UPSS bybroad industry category in Punjab

Rural males Rural femalesSector

1983 1987-88 1993-94 1999-00 1983 1987-88 1993-94 1999-00Agriculture 77.0 68.8 68.1 63.7 92.2 91.6 92.7 90.6Mining &quarrying

-- -- -- -- 0.1 0.1 -- --

Manufacturing 6.2 9.7 6.2 7.7 4.2 2.8 1.3 2.3Electricity, gas,water etc.

0.7 1.1 1.5 1.1 -- -- 0.2 0.2

Construction 2.9 4.0 4.7 7.8 0.1 -- -- 0.1Trade, hotel &restaurants

4.1 4.5 6.3 8.1 0.6 1.1 1.0 1.1

Transport, storagecommunication etc.

3.3 3.8 3.6 5.6 0.1 0.1 -- --

Finance, insuranceservices

0.3 0.6 0.5 -- -- --

Publicadministration andcommunityservices

5.1 7.2 9.0 5.5 2.1 4.2 4.8 5.7

Total 100.00 100.00 100.00 100.00 100.00 100.00Source: NSSO, (1987, 1990, 1997, 2001).

It is noteworthy that as per NSSO, the proportion of rural workers in the non-

farm sector has increased from 23.0 per cent in 1983 to 27.3 per cent in 1999-2000,

whereas the census data (2001) shows a higher share of rural workers in non-

agricultural pursuits at 36 per cent. Most agricultural households in contemporary

27

Punjab have diversified their economic activities. They are increasingly becoming

pluri-active, "standing between farming and other activities whether as seasonal

labourers or small scale entrepreneurs in the local economy…. Agriculture and

farming is no more an all-encompassing way of life and identity" (Lindberg, 2005

quoted in Jodhka, 2005).

Table 2.5: Sectoral distribution of usual status rural workers across major Indian statesby Sex: 1983/1999-00

Agriculture Manufacturing Non-AgricultureStateYear M F P M F P M F P1983 77.1 83.4 79.9 8.0 7.6 7.7 22.6 16.3 19.7

1993-94 75.6 83.7 79.3 7.1 7.4 7.3 24.4 16.3 20.7Andhra Pradesh1999-00 74.4 84.4 78.8 6.2 6.1 6.2 25.6 15.6 21.2

1983 78.6 79.8 78.8 3.3 9.2 4.4 21.2 18.0 20.01993-94 77.7 82.9 78.7 4.0 10.5 5.4 22.3 17.1 21.2Assam1999-00 64.5 79.3 67.7 4.2 10.0 5.4 35.5 20.7 32.3

1983 78.9 92.0 84.4 7.4 3.3 5.7 20.3 7.1 14.81993-94 71.0 90.6 78.6 12.9 4.2 9.5 28.8 9.4 21.3Gujarat1999-00 71.9 92.2 80.4 10.2 2.1 6.8 28.1 7.8 19.6

1983 71.2 89.5 76.8 7.6 3.8 6.1 28.5 9.9 22.31993-94 60.8 93.0 71.8 6.5 1.5 4.8 39.2 6.8 28.1Haryana1999-00 59.5 92.7 69.8 10.5 2.1 7.9 40.5 7.3 30.2

1983 57.6 70.4 62.8 12.6 17.7 14.5 42.3 29.5 36.91993-94 52.8 62.8 56.1 10.7 19.4 13.6 47.1 37.1 43.9Kerala1999-00 43.0 60.6 48.8 11.6 20.2 14.4 57.0 39.4 51.2

1983 79.5 92.7 85.6 6.9 2.7 5.0 20.2 7.0 14.21993-94 75.3 91.2 82.6 7.2 3.1 5.3 24.7 8.8 17.4Maharashtra1999-00 73.9 94.0 82.8 7.6 2.2 5.2 26.1 6.0 17.2

1983 77.0 92.1 82.0 7.3 4.2 6.3 22.3 7.2 17.41993-94 68.0 92.7 74.6 7.5 1.3 5.9 31.9 7.3 25.9Punjab1999-00 64.0 90.7 72.9 10.0 3.0 7.7 36.0 9.3 27.1

1983 80.7 94.0 86.6 5.7 2.5 4.2 19.0 6.0 13.31993-94 69.5 93.0 79.8 6.9 1.5 4.6 30.4 7.0 20.2Rajasthan1999-00 67.1 92.1 77.9 6.4 2.9 4.8 32.9 7.9 22.1

1983 68.7 81.7 74.4 12.5 9.9 10.9 31.2 18.2 25.11993-94 63.8 78.4 70.3 14.0 13.1 13.6 36.2 21.6 29.6Tamil Nadu1999-00 62.6 76.4 68.3 14.4 14.4 14.4 37.4 23.6 31.7

1983 73.0 74.8 73.4 9.3 16.6 11.1 26.8 24.8 26.31993-94 64.8 59.6 63.5 12.8 30.3 17.0 35.1 40.4 36.4West Bengal1999-00 66.0 52.6 63.0 11.9 38.0 17.7 34.0 47.4 37.0

Note: M= Rural Male, F=Rural Female, P=Rural PersonsSource: Government of India, SARVEKSANA, Vol. XIV, No.1 & 2 Oct-Dec.1990; NSSO, various

rounds.

The data on operational land holdings and its distribution in Punjab reveals

that these decreased from 13, 75,392 in 1971 to 10,19,990 in 1981 to further 9,97,370

in 2001. The decline of almost four lakh holdings between 1971 and 2001 reflects a

move away from agriculture in the employment patterns of Punjab. The decline is

most clearly visible in the category of marginal land holdings (less than one hectare).

Their share more than halved from 37.63 per cent in 1970-71 to 26.47 per cent in

1991 and further to 12.30 per cent in 2001. Small holdings also experienced a decline

28

in their share, but not as pronounced as marginal ones. There is a corresponding rise

in the medium and large holdings. The latter category of farmers is more urbanized in

their look and behaviour. Their children generally study in urban schools.

As per NSSO data (Table 2.5), the Punjab's share of 27.4 per cent in rural non-

farm employment is lower than that of Kerala (51.7 per cent), West Bengal (36.4 per

cent), Assam (32.3 per cent), Tamil Nadu (32.1 per cent) and Haryana (31.5 per cent).

The share of non-farm employment in the country as a whole was 23.7 per cent in

1999-2000. Thus, it is observed that the share of non-farm sector has increased over

the period acres all main states including the state of Punjab. However, the pace of

shift from agriculture to non-agricultural activities, especially in rural areas needs to

be addressed at the policy level.

2.5 Sectoral growth rate of employment in Punjab

Table 2.6 shows the sectoral growth rates in employment of rural workers in

the state. The annual growth rate of employment in the manufacturing sector in rural

areas has increased from minus 0.64 per cent during 1983/1993-94 to 6.83 per cent in

1993-94/1999-2000. The household industry in rural areas has also registered

substantial rise during the 1990s. The construction sector has also recorded a high

growth of employment during this period in both rural and urban areas. Transport,

storage and communication is another sector which has witnessed a very high growth

of employment.

Table 2.6: Sectoral growth rate of rural employment (UPSS) in Punjab: 1983-2000Sector 1983/1993-94 1993-94/1999-00Agriculture -0.86 1.53Mining & quarrying 0.32 NAManufacturing -0.64 6.83Electricity, gas, water etc. 9.82 -4.17Construction 5.75 9.57Trade, hotel & restaurants 5.26 0.00Transport, storage communication, etc. 1.69 8.55Finance, insurance & real estate 8.13 0.53Public administration, community services 7.10 -3.21All sectors 0.10 2.00Source: NSSO, (Various Rounds).

2.6 Unemployment rates in Punjab

The NSSO recorded the unemployment rate of Punjab at 4.2 per cent in 1999-

2000, as against 7.3 per cent in all India. If unemployment rates of rural males are

29

observed according to UPS, CWS and CDS criterion, it emerges that there is a high

degree of intermittent unemployment in the state. This shows lack of regular

employment for many workers. Furthermore, unemployment rates for rural males on

UPS basis have increased by about one percentage point during 1993-94 to 1999-2000

and same is the case with rural females. From 1983 to 1999-2000, the unemployment

rates for rural males had declined until 1993-94, but rose significantly thereafter.

Female unemployment rates in rural areas have been on the decline on all the three

measures (Chadha and Sahu, 2002).

A survey by the Economic and Statistical Organization of Punjab (2000) of the

unemployment situation in the state indicates that the situation of unemployment is

the most serious in the age group of 18 to 35 years. According to this survey, there

were 14,71,527 unemployed persons in the state in 1998, of which 10,40,269 (70.69

per cent ) belonged to rural areas. Estimates of unemployment in the Ninth Five Year

Plan (1997-2002), by Planning Commission of India (1999), indicate that the growth

of employment during the Ninth Five Year Plan would be 0.73 per cent as compared

to that of the labour force which will be 2.27 per cent during the same period. The

projected growth rate of employment in the state is one of the lowest among major

states. Hence, it is estimated that unemployed persons during the Ninth Five Year

Plan will be the 10,65,000 persons in Punjab. When added to the backlog as estimated

by Economic Advisor, Punjab, 2000, as in 1998, the situation becomes really grim. It

is suggested that the economic growth rate in the state, should be three times higher

than the population growth rate, if unemployment is to be taken care of. The annual

economic growth rate of Punjab had been in the vicinity of 3 per cent during the

1990s while the population growth rate had been around1.8 per cent. This, along with

the investment deficiency, explains the rise in unemployment rate and deceleration in

growth over the years. It has been estimated that Punjab has suffered from an

investment gap of Rs. 94970 million per annum during the last fourteen years, i.e.,

1995-2009 (Department of Economics, 2011). Of the total estimated unemployed

persons, 8,97,860 (61.62 per cent) were educated and the rest uneducated (Economic

Advisor, 2000). The shares of educated and uneducated employed in the rural areas

were 56.17 per cent and 43.87 per cent, respectively. However, the share of educated

unemployed persons was much higher at about 73 per cent in urban areas. This

30

indicates that the education infrastructure is much better in urban areas in comparison

to rural areas where a large labour force is deprived of good education and training

opportunities.

The employment context of Punjab, in fact, changed significantly after the

mid-1970s. Agricultural migration to newly reclaimed lands in other parts of India,

which has been continuing since the closing decades of the 19th century, virtually

came to a halt. Recruitment in defense forces was regulated on the basis of the share

of the eligible population in different states in 1974 and this was to the disadvantage

of Punjab. The number of ex-servicemen, seeking re-employment, is much larger than

the new entrants to the defense forces (CRRID, 2002). Meanwhile, avenues of

emigration to other countries remain regulated.

Unemployment in Punjab is essentially of educated persons in nature as 61.6

per cent of the unemployed being matriculates or above. Nearly one-fourth of them

are technically or professionally trained being diploma holders, engineers, trained

teachers and doctors. Educated unemployment is growing faster in rural than in urban

areas. A survey of unemployment and underemployment carried out during 1979-81

brings out that nearly 80 per cent of the unemployed in rural Punjab were matriculates

and above but majority of the under employed were either illiterate or just illiterate

(Krishan, 1986). The unemployed workforce, labeled as uneducated, cannot be

absorbed in the secondary and tertiary sectors, without giving them further schooling

and raising their skill acquisition. Due to lack of appropriate training programmes for

skill formation, uneducated unemployed persons have to be content in rural areas with

disguised unemployment (Gill, 2002).

2.7 Underemployment in Punjab

Not only is there the problem of open unemployment, the quality of existing

employment is low and deteriorated into an increasing level of under employment.

Under utilization of labor time of workers in agriculture and in some lines of self

employment in non-agriculture has been noticed for the rural areas of the state

(Simmons and Supri, 1995). It has been estimated that one-third of the workforce

involved in agricultural operations can be withdrawn without any net loss to

agricultural output. Approximately, one million cultivators and 0.28 million

agricultural labourers were surplus in 1991, causing under employment for the rest of

31

the workforce (Gill, 2002). The problem of under employment is very serious among

cultivators as compared to agricultural labourers. Whereas the agricultural labourers

can afford to leave the village and seize every opportunity of employment, but the

self-employed cultivators are prevented from doing so by the very nature of the

enterprise which requires their presence even during the off-season (Dantwala, 1953).

Their problem is further aggravated because of the small size of the majority of

holdings as well as because of hiring in of agricultural labourers for certain activities

which the peasant cultivators do not undertake due to social and economic factors. At

the same time, the fast shrinking time-gap between harvesting of one crop and sowing

of another (due to intensive cultivation), force even the small and marginal holders to

hire in some agricultural labour (Sidhu, 1991; Gill, 2002).

2.8 Stagnanted employment in Punjab’s organized sector

Tackling the problem of open unemployment is a difficult and more complex

process because there is a mismatch between the aspirations of the unemployed and

the policy environment in the state. Rural job seekers aspire to get government and

semi government jobs due to security of service and higher salaries as well.

Government on the other hand is not willing to hire workers. In the last 15 years or so,

the government is rather down sizing its lower bureaucracy and other jobs. The profile

of employment in the organized sector shows that it does not hold any prospect for

absorption of rural unemployed youth. In 2005, 7,73,116 workers were employed in

organized sector out of which 67.26 per cent were in public sector and 32.74 per cent

in the private sector. The share of public sector employment has decelerated since

1985, whereas the share of private sector employment has increased from 26 per cent

in 1985 to 28 per cent in 1990, to 30 per cent in 2000 and further to 32.74 per cent in

2005. The share of public sector in employment has continuously decreased in

absolute sense from 5,66,197 workers in 1990 to 5,19,976 in 2005 (Statistical

Abstract of Punjab 2008). Female employment in the organized sector in the state was

1.44 lakh (17 per cent) in 2000. The share of organized sector employment in total

employment in the state was about 9 per cent only in 2000. Obviously a very large

proportion of the workforce in the state is engaged in informal sector (CRRID, 2002).

Growth rate of employment in the organized sector has constantly declined from 2.63

per cent in 1981-82 to 1.36 per cent in 1995-96 and further to 0.10 per cent in 1999-

32

2000. The decline in the growth rate of employment in the public sector has been

much faster than in the private sector. For instance, the growth rate of employment in

the public sector declined from 1.75 per cent in 1985-90 to -0.19 per cent during

1999-2000, and in the private sector from 2.22 per cent to 0.80 per cent during the

same period.

The growth rate of Indian economy during the last two decades suggests that

high growth rate is no guarantee for employment in the organized sector. Similarly,

industrialization experience of Punjab indicates that employment generating capacity

of organized industrial sector is on the decline. Employment per unit has declined

from six in 1981 to four in 1999-2000 in the small scale industries sector and from

481 to 386 in the large and medium sector during the same period (Table 2.7).

Investment per employee and production per employee have shown an increasing

trend during the same period for both the SSI and the large and medium sectors. This

trend, seems to be inevitable in the current competitive context, has a serious impact

on employment generation (CRRID, 2002).

Table 2.7: Average employment per unit, investment and production per employeeEmployment per unit Investment per

employee (Rs.)Production peremployee (Rs.)

Year

SSI L&M SSI L&M SSI L&M1980-1981 6 481 12535 66269 42226 1039541985-1986 5 453 15898 112709 46277 1917571990-1991 4 504 20166 213121 60549 3765931995-1996 4 400 27622 415501 116063 7914621999-2000 4 386 42963 625688 188117 1005121Source: CRRID, 2002.

The average investment in plant and machinery per small scale unit in Punjab

was only Rs.1.46 lakh in 1997-98, which was much lower than Rs. 5 lakh in

Maharashtra. During the same period, the average employment per unit in Punjab was

significantly low at 4.3 persons compared to 8 persons in Maharashtra. These and

other indicators show that Punjab is far behind the other states in employment

generation in industrial sector. However the small scale sector in Punjab is still labour

intensive in character. With 20 per cent of total industrial investment, it accounts for

80 per cent of industrial employment in the state. The capacity of organized industrial

sector to absorb surplus labour in agriculture is quite limited in India. Punjab is no

exception to it. Employment elasticities across sectors have been falling over time.

33

There is no tendency for them to increase; they may rather further fall in the wake of

increasing international competition caused by opening up of the economy (Papola,

1991).

The tragedy of rural unemployed is that the urban based industrial enterprises

prefer the migrant labour for the manual work and the urban youth for the clerical,

supervisory/managerial jobs. In the Hero Cycle Factory, near Ludhiana, nearly 50 per

cent of the unskilled labour was accounted for by migrants from East Uttar Pradesh

and North Bihar (Laxminarayan, 1982).

The tertiary sector of the state also does not offer much scope for the

absorption of rural under/unemployed workforce. The lack of right kind of skills and

education and capital requirements pose mighty barriers to successful entry into many

of the organized sector tertiary lines. The activities at the lower rung like rickshaw

pulling, street vending, coolies and construction activities in urban areas and even in

large villages have been cornered by the migrant workers. Migrant workers of the

second generation (who were born and grown up in the state) are seen doing the most

of the work of plumbering, electricity fittings, carpentry, masonry, repair of home

appliances, etc. Rather in the towns most of them have moved upwards by becoming

contractor in construction and house building activities. Rural unemployed youth,

thus, is not being absorbed even in unorganized service sector. The higher end jobs in

service sector not only require higher formal education, specialized skills, but social

and political contacts also. But the presence of rural students in state's universities and

colleges is dismal (Ghuman et al., 2009). For remunerative self employment in

organized service sector sufficient capital resources including urban space is of

paramount importance. Here again, the rural job aspirants are losers (Chadha and

Sahu, 2002).

2.9 Strategy for employment generation in Punjab

The long run strategy for employment generation in the state demands that

nearly half of the cultivators and 20 per cent of the agricultural labourers and the

entire growth of their number must be shifted outside agriculture both within and

outside rural areas in next 10 to 15 years (Gill, 2002). Though more employment can

be created by diversifying agriculture away from the wheat-paddy monoculture, into

pulses, oil seeds, fruits and vegetables and so on (Johl, 2002), it has been observed

34

that rural youth considers it an inferior occupation and below its dignity to work as

wage labourers on somebody else's farm due to many socio-cultural reasons (Chand,

1999). Furthermore, to make agricultural-diversification led employment strategy a

success, the state will have to make a huge investment in research and development of

new HYV seeds of high labour intensity crops, commodity-specific marketing,

storage, processing and other related fields. Only dairy sector is one branch of

farming where rural young workers, especially belonging to the dominant caste of Jat

Sikhs can engage themselves in self employment in addition to working on their own

lands. Rural boys and girls all have a cultural affinity with production processes

involved in milk sector. Along with the attitude, they thus have the necessary skills

and know-how for dairy activities. Wage employment in out of the village located

non-farm occupations, however, is fast catching up. Many a rural workers including

that of Jat Sikh stock are seen offering themselves for wage employment in

construction and other activities in urban labour chowks. The basic attitude of rural

job seekers has to be changed from always trying for government jobs. For this, the

appropriate changes in the educational system are required to be carried out with the

emphasis on vocational education over the general education. State government also

should not downsize the lower levels of its bureaucracy without attempting the same

at the top level.

In view of the mounting evidence that urban based heavy industrialization and

service sectors are not going to solve the problem of unemployment/

underemployment in the rural areas of Punjab, one has to think about setting up small

scale, spatially dispersed, local raw material based industrial units in the small towns

of the state. In India, 53 per cent of employment in the manufacturing sector is located

in rural areas and almost all of it is in the unorganized sector. Though the village

based traditional manufacturing activities have shown a constant decline in India

(Saith, 2000), yet, there is evidence to suggest that the economies of size, technology

and market are leading to a shift of certain rural industrial activities to small rural

towns (Papola, 1987; Saith 2000). It has been observed that the smaller sized urban

settlements, towns with a population in the range of 20 to 50 thousand have registered

the fastest growth of employment (Sinha and Mehta, 1987). There seems to be

emerging a trend towards a relative shift of small manufacturing activities from the

35

large to these small towns which are mainly characterized as rural towns. It has been

argued that this shift from villages and large urban settlements to small towns is not a

mere relocation, but has significant additive component (Papola, 1991). It is these

small rural towns where many of the services of health, education and administrative

units are located. Thus, the scope and potential of productive employment in

manufacturing and service sector activities within these small towns needs to be

recognized and positively encouraged by providing adequate and suitable

infrastructural support and fiscal and financial incentives making provision that these

incentives do reach small units and are not cornered away by the larger ones as has

happened before.

In Punjab, urbanization and agricultural development are closely linked.

Although industrialization remains the main force for urbanization, many small and

medium firms specialize in trade, marketing, and processing of agricultural produce,

and provide agricultural implements and other inputs. Since agricultural development

is fairly evenly distributed over the whole state, the development of agro processing

and agro input industries also is spread widely among small and medium market

towns (Bhalla, 1995). The small agro based units located in large villages or small

rural towns would not only provide gainful employment to the rural youth but also in

many ways help arresting the process of environment degradation. The state has a

large number of widely dispersed small towns. Each of these is a notified agricultural

produce market. These small towns have all the potential to become the focal points

for synergized agricultural-non-agricultural development. This would enable the

workers to commute easily between the place of work and their rural habitats.

The examples of the town and village enterprises (TVEs) in China and rural

industrialization of Taiwan offer useful insights for such a strategy of industrialization

(Kabra, 2005). China's rural industrial sector has become the most important source of

non-agricultural output and employment growth. Similarly, rural industrialization

strategy of Taiwan in transforming its economy has many lessons for an agriculturally

developed state like Punjab. The role of state in promotion of rural non-farm

employment in China and Taiwan cannot be over emphasized. Besides carrying out

successful land reforms, the state governments in these regions invested hugely

especially in rural infrastructure (Hart, 1998). Though rural infrastructure in Punjab is

36

already fairly developed as it has already achieved 100 per cent access of its villages

through all-weather metalled roads and each and every corner of the state is

electrified, yet for the transformation of countryside a basic change in the minds of

our planners would be required. All along the line, the planners and economists had

assumed that most, if not all, of the industries should be located in urban areas (Sethi,

1991). The programme and policies to promote rural industries were never a part of

the industrial policy of the country (Papola and Mishra, 1980). The above comments

apply equally to the state of Punjab.

It has been argued that the state has all the strengths which are needed for a

vibrant and dynamic rural non-farm sector (Fisher et al., 1997; Chand, 1999). Firstly,

the rural youth possesses some advantage over their urban as well as migrant

counterparts in agro processing because of their intimate knowledge of production,

procurement and processing of raw materials into final products. Secondly, the

excellent network of metalled roads and transport and reasonably good physical

infrastructure throughout the state is more than sufficient for a spatial distribution of

industrial units, so that the workers do not have to migrate from their rural habitats.

Thirdly, the availability of agricultural raw materials in abundance makes the state a

suitable destination for the rural non-farm sector. At present, valuable raw materials

are being simply wasted away and in many cases burned away degrading the

environment hugely. For example, at present, more than five million tons of paddy

straw is destroyed by burning without using it for industrial purposes. By promoting

industrial demand for straw as it can be used to manufacture products like straw-

board, paper, alcohol, mats and ropes, the industries can be set up in the middle of

farms. The diversification of crop husbandry into dairy sector is also a potential area

for the creation of employment for the rural youth. The kind of skills needed in dairy

is in abundance with rural men and women. Culturally and socially also, they have an

affinity with the processes involved in this activity (Chand, 1999; Kahlon, 2001). The

high milk production in the state (and the low availability of it at the national level)

offers good opportunities for generating employment in processing and transportation

of milk products to the urban destinations. The success of Nestle in this regard is a

live example of how milk based economic enterprise located in a rural town can

change the lives of many ruralites in the radius of 30-40 kilometers.

37

Punjab has an added advantage that almost every small town in the state is a

mandi town also. The main/principal yards for sale and purchase of agricultural

produce and offices of Agricultural Produce Markets are all located in these small

rural towns. Here, the processes of cleaning, weighing lifting, transportation and

storage involving the interactions and engagement of cultivators, market labourers,

traders, transport workers and those involved in storage and processing make these

locations as 'happening places', thus having good potential for further generation of

rural employment. In addition to this, many educational, health, and entertainment

services are located in these small towns. These invariably have shops/dealerships for

the modern agricultural inputs. Floor mills, rice shellers, etc. tend to be located in

these places due to better power supply, drinking water and other supporting services.

But undoubtedly to make these small towns real hubs of economic growth and

employment generation, investment in infrastructure (roads, water supply and

sanitation, housing, health and education) will be a prerequisite so that they have all

the necessary services in place, thus, reducing any incentives to migrate to large

towns/cities like Ludhiana, Jalandhar and Amritsar. Uninterrupted quality power

supply is also a pre-requisite for industrial development. It has been suggested that

rural cooperatives if allowed to work autonomously can play a very significant role in

rural industrialization and in filling the infrastructural gaps in larger villages (Singh,

2000). The evidence shows that the rural non-farm sector in the state is already

growing at a healthy rate (Fisher et al., 1997).

To sum up, the problem of unemployment and underemployment in Punjab in

general and in its rural areas in particular is really serious. The government sector is

closing its doors to fresh recruitment. Rather over the last 15 years or so, it is in the

process of down sizing of its manpower, especially at the lower rung. In view of the

financial mess in which the state finds itself, nothing much can be expected for direct

state employment. The urban based heavy industry and the productive jobs in the

service sector can also not solve the problem in view of the non-availability of the

right kind of skills and attitudes with the rural unemployed. Even otherwise en mass

shift of rural labour force to urban towns is neither feasible (in view of the dwindling

resources of the state needed for housing and other infrastructural requirements in the

towns) nor practical (because of the cultivators' inability to leave their lands

38

altogether). In view of these observations, there is an urgent need to raise the growth

rate of GDP and employment. It would need a favourable investment climate and a

compatible policy orientation. The development of RNF sector is sine qua non for

addressing the problem of rural unemployment in the state.