PRAGOTI

Today the World economy is experiencing the deepest recession in the history of capitalism after the well known great depression of 1930’s. The Indian economy might be relatively less hit as compared to the developed World, but the intensity of that is not negligible at all. However, the official macro-level information about the employment-unemployment-underemployment scenario is not available yet. Here we have made an attempt to calculate the aggregate figure for job-loss during 2008-09 in India as a result of ongoing recession of the World economy.

We have projected the sector-wise GDP separately for six sectors under consideration viz. i) agriculture and allied, ii) mining & quarrying, iii) manufacturing and electricity, gas & water supply, iv) construction, v) trade, hotel and restaurant and vi) all other services for the whole year of 2008-09, assuming similar growth rates for the 4^th quarter as they were during the 3^rd quarter (Source: CSO press release dated 27/02/2009 on ‘Quarterly Estimates of GDP for the Quarter ending’) and actual figures for the first three quarters at 1999-2000 constant prices. According to the present calculation, the growth rate of GDP at constant prices would be only 6.45% in India (and not 7.1% as the advanced estimate of CSO claims) during the current economic year, provided the fourth quarter growth does not come down further - in such a situation (as January trend shows), the GDP growth would just cross 6% during 2008-09. However, the ‘other service’ would (at least partially) include the effect of 6^th pay commission implementation during 3^rd quarter of the current year (real growth rate has gone up from 8.5% during 1^st half of 2008-09 to 13.1% during 3^rd quarter). We have considered 8.5% growth rate in GDP at constant prices for ‘other services’ during 3^rd quarter also (as before) for calculating the employment figure for that sector to avoid the effect of pay commission salary hike.

We have taken sector-wise employment (workforce according to usual status i.e. principle status plus subsidiary status) data for 1999-2000 and 2004-05 large sample of NSSO (Report no. 458 & 515) for rural-urban-male-female. We have also taken sector-wise GDP data from CSO at (1999-2000) constant prices for the years 1999-2000, 2004-05, 2007-08 (QE) and that for the first three quarters of 2007-08 and 2008-09. We have calculated sector specific average employment elasticity between 1999-2000 and 2004-05. We applied same elasticities on the growth of GDP at constant prices between 2004-05 and 2007-08 to calculate the sector-specific employment growth rates during 3 years. By deducting annual average employment growth rates from annual GDP growth rates, we get the sector-specific average growth rates in productivity during these three years. For sectoral growth rates in employment for 2008-09, we have deducted annual average growth rates in productivity (as calculated for the period 2004-05 to 2007-08) from the annual growth rates in sectoral GDP for 2008-09 over 2007-08 at constant prices. Finally, to calculate the aggregate employment of the six sectors under consideration during 2008-09, we applied these employment growth rates on calculated employment figures for 07-08.

To calculate the sector-wise job-loss, we first have calculated potential GDP for 2008-09 assuming the sectoral growth rates remaining same for the 3^rd and the 4^th quarters as they were during 1^st two quarters of the current year before the recession. Then we have applied the same sector-specific employment elasticities, calculated as above, on the potential sector-wise GDP growth rates. The difference between the potential employment figures of 2008-09 and estimated (actual) sector-specific employment figures would give us the sector-wise figures for job-loss. Since, the employment figures are number of people and not the number of man-days, roughly the same number of people, who were employed during first half of 2008-09 could have ensured the potential GDP growth, ceteris paribus. With the slowing-down of the growth rate, some employment would necessarily be retrenched.

Despite good monsoon, the agricultural and allied sector has got a highest shock during our main harvesting season this year. Our calculated job-loss in agriculture and allied sector would be more than 78 lakh. However, since agriculture is a residual sector comprising of lot of disguised unemployment and also since real output in this sector is dependent on many exogenous factors, we leave the loss in farm employment out of our present calculation. In the manufacturing sector alone (including electricity, gas and water supply), the number of jobs would be reduced by 14.4 lakh. Jobs in trade, hotel, restaurant etc. would be lower roughly by 10.5 lakh and that in the construction sector by more than 6 lakh. These three sectors together would constitute an aggregate job-loss of approximately 31 lakh. The details break-up of sector-wise calculation of job-loss is presented in the table below. It is needless to say that if the fourth quarter growth rates come down further, in such a situation (as January 2009 trends show) situation would be bad to worse. 

Table: Sector-wise Estimated Job-Losses during 2008-09 in India

(Employment Figures are in Lakh)

Note: # considering 13.11% growth as 8.5% during 3^rd quarter to avoid the pay-commission impact.

      I am grateful to Pinaki Chakraborty and Prasenjit Bose for their comments.