What do you understand by Employment Elasticity? Discuss the trends in India in different sectors over there recent years.

Published: February 7, 2016

Model Answer:
Employment elasticity is defined as the measure of how employment varies with changing economic output. A low employment elasticity shows jobless growth. Though, during the last decadal years 2004-14, India saw some of the highest rates of gross domestic product (GDP).But, the problem, however, is that this high growth hasn’t led to more jobs. During the period, there has been a reduction in the number of workers employed in agriculture sector. But the employment elasticity in the manufacturing sector too was negative. The government explains this by quoting that labour intensive technology has been replaced by capital intensive technology and more and more labour force has been accommodated in unorganized sectors or new jobs in the informal sector, with many others went converted into successful small scale entrepreneurs. Thus, the trend shows that the recent years, the highest employment elasticity has been shown by the Construction and utilities sector (which includes energy, water and waste management).These are the biggest job generators in our country. As per the National Sample Survey Office in 2011-12, about 43% of Indian workers were engaged in agriculture and related activities; working population engaged in the secondary and tertiary sectors is growing, with 24% of them in the secondary sector and about 30% in the service sector in 2011-12, and almost 3% people remain unemployed. The unemployment rate has gone down considerably to 3% in 2012 from 9.4% in 2009-10.

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