Rural labour markets in India

Division of Agricultural Economics, IARI

Rural labour markets: Insights from a few villages

A Amarender ReddyPrincipal Scientist (Agricultural Economics)Division of Agricultural EconomicsIndian Agricultural Research Institute, New DelhiEmail: [email protected] [email protected]


Changes in rural labour markets• What is the response to increase in wage rates in

different states by farmers• How different small and marginal farmers

response in terms of labour use and mechanisation

• How farm mechanization effected employment in agricultural sector

• What about youth and women employment • Both VDSA and CoCS, Govt. of India data were

used


Machine labour (Rs/ha) TE 2010 Human labour (days/ha) TE 2010

State Paddy Wheat Cotton Paddy Wheat Cotton

AP 1894 (0.5) 1838(12.7) 65(-6.7) 90(-1.6)

Maharashtra 1111(4.7) 106(0.0)

Gujarat 2952(3.0) 1993(2.5) 54(-3.0) 144(4.0)

WB 1279(7.1) 154(0.2)

Haryana 3824(4.0) 5284(4.1) 2404(7.5) 79(0.6) 38(-0.8) 98(2.8)

Punjab 4852(2.0) 5507(4.6) 4525(3.0) 53(-0.7) 23(-5.3) 93(1.0)

TN 3126(7.4) 140(-2.7)

Total 2200(4.2) 3840(4.0) 2051(4.8) 94(-1.1) 44(-2.5) 102(0.4)

Farm mechanisation and labour use

Note: Figures in parenthesis annual growth rates (%) from 1999 to 2010


Labour productivity (kg/day)

Still increasing even in Punjab and Haryana


y = -0.5x + 73.2

y = 44.1x + 2381 0

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1.5 2.4 2.9 3.0 3.2 3.9 4.2 4.7 5.4 6.6 8.0 9.3 10.0 13.4 21.0

Machi

ne la

bour

(Rs/ha

)

Mand

ays

Farm size (ha)

Human and machine labour use per ha

Man days/ha Machine labour (Rs/ha)

Linear (Man days/ha) Linear (Machine labour (Rs/ha))


Farm mechanisation and labour use • Labour use per hectare is more in cotton based cropping systems.

• The labour use per hectare decreased mainly in wheat, chickpea and paddy since late 1990s– due to farm mechanisation.

• Mechanisation is spreading to less developed states also. It increased labour productivity significantly when compared to land productivity.

• There is also a process of casualisation of agricultural labour as reflected in increased share of casual labourer in states like AP, Karnataka, TN, Bihar, Maharashtra, Punjab, Gujarat and Haryana.

• However, in most of the crops in Orissa, WB and in some crops in UP, MP and Rajasthan still share of family labour is high with low level of farm mechanisation and less labour productivity which reflects the prevalence of subsistence agriculture.


y = 0.078x + 1.7

y = 0.026x + 0.2

0.0

0.5

1.0

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2.0

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3.0

0.0

2.0

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2 3 3 4 4 5 8 10 18 Hire

d to f

amily

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) labo

ur ra

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Hire

d to f

amily

(fem

ale) la

bour

rati

o

Farm sie (ha)

Size and hired to family labour ratio

hired to family (female labour) ratio hired to family (male labour) ratio

Linear (hired to family (female labour) ratio) Linear (hired to family (male labour) ratio)


State Sugarcane Paddy Cotton Maize Chickpea Wheat Total

AP 75 65 66 60 70

KNK 67 68 62 66

TN 75 48 66

Bihar 66 58 75 47 61

MHRT 61 62 61

Punjab 51 55 43 52

GUJ 54 46 52

HRN 72 52 34 17 27 51

Orissa 51 51

WB 50 50

UP 43 43 30 34 39

MP 41 42 33 38 36 38

Raj. 11 14 11 17 13

TOTAL 67 52 50 43 39 35 54

Share (%) of casual labour use in human labour by state (TE 2010))


State Chickpea Maize Cotton Sugarcane Paddy wheat Total

HRN 9.71 9.09 6.72 4.72 3.21 6.69

MP -1.02 4.1 2.48 9.43 -1.67 3.29

WB 3.13 3.13

Punjab 4.52 2.58 -2.79 2.98

Guj 5.04 -6.44 1.94

Bihar 18.88 -2.75 -2.52 1.84 1.63

Orissa 1.49 1.49

TN -4.12 3.17 1.38

UP 11.3 4.7 -0.91 -2.71 0.44

RAJ 2.21 15.35 -10.09 -2.99 0.04

AP 3.84 -0.99 -0.57 -25.52 -3.23

MHRT 0.34 -4.85 -3.37

KNK 1.04 0.92 -6.5 -3.9

Total 11.42 2.14 1.25 -0.79 -1.64 -1.9 0

ACGR (%) of casual labour from 2005 to 2010


Farm mechanisation and labour

• The positive association among farm mechanisation, displacement of family labour and increased casualisation of labour is observed across many states and crops.

• Some less developed states are catching up in the process.

• In this process, there is a steep increase in the labour productivity in agriculture, but the growth rates in wage rates are not commensurate with labour productivity growth.

• There is huge labour productivity gap exists across the states with Punjab and Haryana at top with MP and Orissa at bottom.


y = -0.2234x2 + 5.9786x + 114.910

50

100

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2 3 3 4 5 7 10

Farm size (ha)

Female to male labour days ratio(%)


Educated unemployed and expectations • Most of the higher-educated remain unemployed

due to a lack of sufficient employment opportunities, even though higher education increases the probability of being engaged in regular employment.

• However, households spending heavily on children education in the hope that they will obtain regular employment in urban centres.


Only few better jobs in rural India • The quality of work was significantly better only among a few

higher educated men and women with regular employment , for example, teachers, nurses, record keepers and health workers.

Who is getting better jobs?• Persons with asset ownership (landed) and semi-skills were

obtaining regular employment with higher earnings.Growth of semi-skilled jobs• The employment opportunities for semi-skilled men with a

middle-level education is increasing due to rural non-farm sector development.


Demand for semi-skilled work • The number of hours spent on economic activities

increases with an increase in land ownership and assets and education.

• Most of the employment continues to be found in agriculture and to some extent in traditional caste occupations in remote villages.

• Most of the non-farm employment like small businesses(self-employment) , retail shops, agro-processing, the repair and maintenance of agricultural implements, transport and construction, requires only semi-skilled workers with little education.


Skilled rural India?

• Educated semi-skilled workers have gained employment and increased earnings in newly emerging non-farm sectors, like mobile phones, electronics and computers, and in other occupations, such as tractor drivers.

• The demand for certain traditional occupations, such as traditional toddy tapping (that is, producing alcohol from palm) and cleaning clothes, is increasing in towns; this work is done by rural men and women with some skills irrespective of education level.


Women employment • Men’s participation in economic activities was higher than

women. There was a huge gap in monetary income between men and women .

• If we take in to account domestic duties also, women work more hours per week compared to men.

• The segregation of the rural labour market by gender was particularly visible in rural labour markets in India with men shifting to non-farm occupations with higher wage rates, while women still depend on farm work (either self-employed or as casual labourers and domestic duties).

• Among women, levels of education and experience have little influence on the choice of occupation or the quality of employment.


Lewis turning point in labour markets • Our results show at national level there was a slower structural

transformation in labour markets

• but some states like Kerala, HP, Punjab, Haryana and Tamil Nadu are on the verge of Lewis turning point with faster non-farm sector growth, high percapita income, urbanisation, higher agricultural labour productivity and wage rates.

• Some developed states like Gujarat, AP, WB and Maharashtra showed lower wage rates and higher rural poverty, but have early potential to pass the lewis turning point given their rapid economic growth.

• Some less developed states like Orissa and MP takes much longer time


Policy options

• Incentives for the development of farm machinery which improves women productivity and employment rather than replace women in agriculture

• Focus on increasing labour productivity in backward regions and rainfed crops.

• Skill and entrepreneur development with focus on middle educated rural youth


Policy options – small farmers

• Encouragement to small farmers to increase their off-farm income and employment opportunities through value chain upgradation.

• Small farmers and agricultural labouerers needs to be given easy loan coupled with skill training to earn additional income from non-farm activities.

• Rural formal credit agencies needs to give easy loans for off-farm employment generation


Thank You

Rural labour markets in India

Economy & Finance

Transcript of Rural labour markets in India