Poverty and Unemiployment in India: An Analysis of Recent Evidence SWP417 World Bank Staff Working Paper No. 417 October 1980 E1J PUB HG \ , 3881.5 .W57 W67 no. 417 ihe views and interpretations in this document are those of the author and should not be attributed to the World Bank, to its affiliated organizations, or to any individual acting in their behalf. WORLD BANK Staff Working Paper No. 417 October 1980 POVERTY AND UNEMPLOYMENT IN INDIA: AN ANALYSIS OF RECENT EVIDENCE This paper examines the association between poverty and unemployment using the data collected by the Indian National Sample Survey from October 1972 to September 1973. Contrary to the widely accepted view, supported even in the ILO reports, that the poor are too poor to remain unemployed, this paper high- lights a clear association between unemployment and poverty (as measured by the per capita expenditure of households). Poverty is, however, more wide- spread than unemployment. A careful analysis of the data for two states of India (Gujarat and Maharashtra) shows that according to both the conventional definition and a more comprehensive measure (designed to capture involuntary idleness within the reference week) , the inc:idence of unemployment was markedly higher among those whose "usual activity" was casual labour. The self-employed (including employers) and family helpers reported a much less-than-average level of unemplovment or underemployment. The casual labourers were over-represented among the bottom deciles in terms of their per capita expenditure; they reported a lower-than- average level of literacy and education, and were generally younger than other workers. Those in rural areas were predominantly agricultural labourers with no land or very small land holdings. Two distinct groups among urban casual labourers were agricultural labourers and miscellaneous workers in the "not elsewhere classified" category. The incidence of unemployment (in terms of persondays) in 17 major states of India shows a statistically significant, positive association with the percentage of casual labourers in the rural labour force and in the urban male labour force. In ot:her words, the importance of casual labourers in the labour force seems to explain a good part of the interstate variance in unemploy- ment rates. It is suggested that such differences in the structure or composition of the labour force might: explain some of the differences in unemployment rates reported for different countries. Also, with an increase in the share of casual labour in the labour force, unemployment rates estimated through surveys can be expected to rise in India. Prepared by: Pravin Visaria Development: Research Center Development Policy Staff Copyright 0 1980 International Bank for Reconstruction and Development / THE WORLD BANK 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. First printing October 1980 Second printing June 1984 All rights reserved Manufactured in the United States of America (i) Abstract This paper examines the association between poverty and unemployment using the data collected by the Indian National Sample Survey from October 1972-September 1973. Contrary to the widely accepted view, supported even in the ILO reports, that the poor are too poor to remain unemployed, this paper highlights a clear association between unemployment and poverty (as measured by the per capita expenditure of households). Poverty is, however, more widespread than unemployment. A careful analysis of the data for two states of India (Gujarat and Maharashtra) shows that according to both the conventional definition and a more comprehensive measure (designed to capture invol- untary idleness within the reference week), the incidence of unemploy- ment was markedly higher among those whose "usual activity" was casual labour. The self-employed (including employers) and family helpers reported a much less-than-average level of unemployment or underemploy- ment. The casual laborers were over-represented among the bottom de- ciles in terms of their per capita expenditure; they reported a lower- than-average level of literacy and education, and were generally younger than other workers. Those in rural areas were predominantly agricul- tural labourers with no land or very small land holdings. Two distinct (ii) groups among urban casual labourers were agricultural labourers and miscellaneous workers in the "not elsewhere classified" category. The incidence of unemployment (in terms of persondays) in 17 major states of India shows a statistically significant, positive association with the percentage of casual labourers in the rural labour force and in the urban male labour force. In other words, the impor- tance of casual labourers in the labour force seems to explain a good part of the interstate variance in unemployment rates. It is suggested that such differences in the structure or composition of the labour force might explain some of the differences in unemployment rates re- ported for different countries. Also, with an increase in the share of casual labour in the labour force, unemployment rates estimated through surveys can be expected to rise in India. (iii) Acknowledgements Thanks are due to Professor V. M. Dandekar, Chairman of the Governing CounciL of the National Sample Survey Organization, and to P. B. Buch, M. A. Telang and S. M. Vidwans, former or current Direc- tors of the Bureaus of Economics and Statistics in Gujarat and Maharashtra, for providing me with an opportunity to study the 27th Round state sample data for the two states analysed in this paper. Several basic tables used for the preparat:ion of this paper were compiled at the Gujarat computer Centre in Gandhinagar, India, with the cooperation of a large staff working under the leadership of P. B. Buch and K. B. Trivedi. Others who have helped in the statistical work include R. Murti Pemmarazu, Shyamalendu Pal, Robert E. Sterrett, Jr. and Cynthia Hwa. I have greatly benefitted from many discussions with Montek S. Ahluwalia, B. S. Minhas and T. N. Srinivasan at various stages of the preparation of this paper. Others, whose advice was particularly useful during the earlier stages of preparation of data for analysis, include Professor M. L. Dantwala, my teacher and colleague at the University of Bombay, and Sudhir Bhattacharyya of the N.S.S. Organization. Thanks are due also to Balu Bumb, Roger Grawe, R. K. Hazari, Mark Leiserson, Dipak Mazumdar, V. N. Rajgopalan, V. V. Bhanoji Rao and Suresh Tendulkar for their comments and suggestions on an earlier draft of this paper. None of them bears any responsibility for the errors that might remain. Introduction The extent of association between poverty and unemployment in the developing countries is often a subject of considerable debate. The origin of the debate can be traced to a scepticism regarding the validity of the low levels of unemployment reported by successive labour force surveys in developing countries. Some analysts argue that the poor are too poor to remain unemployed and that their low levels of income compel them to work irrespective of the level of reward.-/ Fur- thermore, many of those few who get classified as unemployed in the labour force surveys are believed to be the better-off. This view questions the validity oE the now-conventional concepts of unemployment and labour force that have been developed in the western countries after the Depression of the 1930's and have since been adopted and propagated by international agencies like the International Labour Office in developing countries. This paper seeks to demonstrate that with some adaptation, the conventional approach to the measurement of unemployment can provide better estimates of the underutilization of labour time available in a country; with proper tabulation and analysis, the data show a clear association between poverty and unemployment in India, although poverty 1/ For example, a recent survey article reports that ". . . the openly unemployed are not primarily drawn from . . . low-income groups; on the contrary they are disproportionately from relatively high income families, and are well educated." See A. Berry and R. H. Sabot, "Labour market performance in developing countries: A survey," World Development, vol. 6, p. 1211. - 2 - is certainly more widespread than unemployment. Empirical evidence is also provided supporting an earlier hypothesis that an important explanation for low levels of unemployment reported in the labour force surveys of several developing countries (such as India) is the status distribution of workers, particularly the predominance of the self-employed and family helpers among workers. The first part of this paper briefly outlines the main features of the approach to the measurement of unemployment adopted in India during the past decade in two nationwide surveys which were conducted in 1972-73 (from October to September) and 1977-78 (from July to June) as part of the 27th and 32nd Rounds of the National Sample Survey. Since very little of the information gathered in the 32nd Round has been released so far, the concepts and definitions used in the 27th Round provide the basis for discussion. The main body of the paper is devoted to an examination of the 27th Round data on unemployment for the "state samples"-/ canvas- sed by the states of Gujarat and Maharashtra in Western India. These data are used to examine not only (i) the extent of association between poverty and unemployment, but also (ii) the "usual" labour force and employment characteristics of those who were unemployed during the entire 1/ The state samples are selected and interviewed by investigators employed by the State Governments. The sampling and other proce- dures followed by them are the same as those used for the "central sample" selected and canvassed under the auspices of the National Sample Survey Organization. - 3 - reference week (i.e., the week preceding the day of interview),-L/ and (iii) the share of different categories of workers in the total unutilized labour time (or persondays of unemployment). Finally, the last part of the paper examines the likely wider validity of the data from the states for the rest of India as well as for other countries of the developing world. 1/ The "usual" labour force and employment characteristics take into consideration: (a) whether or not the respondents were "usually" in the labour force; (b) if they were usually in the labour force, whether or not they were usually employed; and (c) if they were usually employed, which broad sector (farm or non-farm) of employ- ment, and the status or class of worker (i.e., self-employed, a regular wage or salaried employer, a regular wage or salaried employee, a casual employee or family helper). The usual activity categories which are used to classify the employed have been shown in several tables in the text. - 4 - Alternate Methods of Measuring Unemployment The 27th and 32nd Rounds have utilized simultaneously three alternative methods of measuring unemployment. These methods include the definition of unemployment used in many countries of the world which classifies as unemployed a person without any work and seeking (or avail- able for) it during the entire reference week (i.e, the week preceding the day of interview).- The activity of the reference week is described as the current activity and those unemployed during the reference week are called the "currently unemployed." This method continues the approach used in the earlier rounds of the Indian National Sample Survey (since 1958-59) and permits comparison with past data as well as with other countries of the world. The resulting estimates can be called the incidence of "week-long" unemployment. In addition to the data on current activities, the respon- dents were also asked about their "usual" activities. The original intention of the group that designed the schedules was to identify usual activities as the "principal activity of the year preceding the day of interview" on the ground that the living standards of the household would be conditioned more by the "usual" activities of the previous year rather than by the activity of the reference week (which may be a transient seasonal activity).-/ The instructions to investigators 1/ Some persons may not actively seek work because of their impression or knowledge that work opportunities are not available. Therefore, the definition of unemployed has been broadened to include those who do not actively seek work but are available for it (at wage rates and under working conditions prevalent in the local situation). 2/ Some earlier rounds of the NSS, notably those conducted during 1958- 59 and 1959-60, had highlighted rather large seasonal variations in the level and patterns of economic activities. - 5 - used a rather vague definition of a usual activity as one indicated by the "normal working pattern" of respondents, pursued "over a long period in the past" anct "likely to continue in the future.""I Essen- tially, this was an approximation of the "gainful worker" approach to the measurement of the economically active population. Persons reported to be unemployed in terms of their usual activities were likely to be "chronically unemployed," and an estimation of their number was consid- ered important.2/ Data on "usual" activities of respondents also provide some interesting information on what the currently unemplcyed persons usually do. A third estimate of unemployment was obtained by asking persons classified as "'employed" during the reference week (i.e., cur- rently employed) about their activities during each day of the reference week. These data often described as the time disposition data for the reference week, were recorded in units of half-days rather than hours worked.-/ They permit a. more comprehensive measure of unemployment, 1/ See: NSS Organization, National Sample Survey, 27th Round, October 1972-September 1973, Instructions to Field Staff, Vol. 1, Design, Concepts, Definitions and Procedures (New Delhi: September 1972), Para. 7.0.12 and 7.7.2. 2/ Questions on the duration of unemployment, if asked of those classified as "currently unemployed," can be used to identify the chronically unemployed. In the 27th Round, only the "usually unemployed" were asked about the duration of their unemployment. 3/ There is widespread scepticism among persons associated with the NSS about information on hours worked. The respondents generally report the average number of hours worked during the reference week (usually with a preference for even digits, e.g., two to four hours); the investigator selects a number and multiplies it by six or seven (depending on the reported days of work). - 6 - including the reported underemployment of the "currently employed." Once again, we can estimate the persondays of unemployment according to the various usual activity categories of the labour force. A fourth method, that can be used only when the time dis- position data for the reference week are available, would abandon the priority rule used under the current activity approach which classified as employed a person who worked for even one day. This method, which I would call the major activity approach, would classify a person as unemployed, if the unemployed days in the reference week exceed the days when he is employed./ In discussing the data for Gujarat and Maharashtra, this fourth approach will be illustrated. 1/ Some marginal cases can arise if the number of days when a person is employed in a week equal the days when he is unemployed. In such cases, I would classify them as employed, although an opposite rule can also be used on the plausible ground that any implicit overstatement of the incidence of unemployment would only highlight a serious problem. The labour force status of an individual is uniform according to the priority criterion as well as the major activity criterion. Even if a person is not in the labour force for a major part of the week, the priority rule ensures his inclusion in the labour force. - 7 - Estimates of IJnemployment According to Alternate Criteria For rural and urban areas of India as a whole, Table 1 shows the 27th Round 1'1972-73) estimates of the incidence of unemploy- ment according to three alternate approaches, as well as the labour force participation rates. The participation rates are almost the same according to both usual and current activity criteria but unemployment rates differ significantly. In rural areas, the usual activity criterion shows a very low incidence of unemployment, significantly elow the estimate based on the current activity criterion; in urban areas the differences between the two sets of estimates are relatively small.-/ It is not possible to estimate the participation rates in terms of person- days from the data published so far, but they would presumably be lower than those based on the other two criteria, insofar as many persons (particularly females) report themselves as outside the labour force on some days within the reference week. The incidence of unemployment is, however, the highest in terms of the persondays criterion; once again, the difference:; are larger for rural areas where one would a priori expect higher underemployment among agricultural workers than in urban areas. 1/ The reported incidence of usual and current unemployment overlaps to a considerable extent, particularly in urban areas of India. Table 1 in Annex L shows the distribution of the usually unemployed according to the duration of unemployment. Evidently, about 15 to 20 percent of i:hose reported as usually unemployed had been unem- ployed for up to t:hree months. They might be new entrants into the labour force. It is debatable whether they should be considered 'chronically unemployed" (as is often done in India.) - 8 - Table 1 INCIDENCE OF UNEMPLOYMENT IN INDIA, ACCORDING TO ALTERNATIVE CRITERIA, 27TH ROUND OF THE NSS, OCTOBER 1972-SEPTEMBER 1973 UsuaZ Activity Current Activity Persondays Criterion Criterion Criterion Rural Urban Rural Urban Rural Urban Sex India India India India India India (A) Incidence of UneMpZoyment Males 1.16 4.79 3.03 5.97 6.75 7.99 Females 0.48 6.05 5.51 9.78 7.83 12.58 Persons 0.91 5.03 3.87 6.55 7.83 8.85 (B) Percentaqe of Unen7pZoyed* Males 0.75 2.87 1.94 3.55 - - Females 0.18 1.00 1.90 1.44 - - Persons 0.47 1.99 1.92 2.56 - - (C) Labour Force Participation Rates* Males 64.59 59.96 64.07 59.46 NA NA Females 37.71 16.53 34.50 15.68 NA NA Persons 51.40 39.60 49.58 39.07 NA NA Source: NSS, Draft Report No. 255/10, pp. 36, 129. * Figures are arithmetic averages of the estimates for four sub-rounds. They relate to persons aged five years and over. Percentages of unemployed according to usual and current activity criteria show unemployed as per- centage of population aged five years and over. Note: The 17th Round estimates of the incidence of unemployment (according to the current activity criterion) during July 1961-June 1962 were as follows: Males Females Persons Rural India 3.7 8.5 5.1 Urban India 3.0 3.3 3.1 NA: Not available - : Not applicable - 9 - AsSccLaL3.3 retween Poverty and Unemployment The widely used index of poverty in India is the monthly per capita expenditure (MPCE) of a household, a proxy for income. The 27th Round data on unemployment have been tabulated separately for six discrete MPCE intervals; the lowest of these includes a very small per- centage of total househloids, but because of the very large size of the sample, the estimates for even this bottom group may be reasonably stable. Table 2 shows the incidence of unemployment in terms of the persondays approach for each MPCE group by subround. Figure 1 shows the same data graphically. A clear inverse association between MPCE and the incidence of unemployment is evident in each subround in both rural and urban areas of the country. For Gujarat and Maharashtra, Table 3 shows the incidence of unemployment in terms of usual and current activity data as well as persondays for different deciles of households.!/ While estimating unemployment in terms of persondays, the intermediate six deciles were condensed into three quintiles. 1/ The deciles are deciles of households (not of population), arrayed in an ascending order of their monthly per capita consumption expen- diture. Given the inverse association between average household size and the MPCE of households, the bottom deciles of households include more than 10 percent of the population, whereas the reverse is true of the upper deciles. Deciles of population would have different cut-off points; but the pattern(s) evident in the deciles of households would be seen in the deciles of population as well. Our data are based on the "state" samples. The broad comparability of these data with the "central" samples has been discussed at length and confirmed in the author's "Living Standards, Employment and Education in Western India, 1972--73," mimeographed, 1977. - 10 - Table 2 INClOEfC' OF UP"YuL0Y=NT (?CRSO::0AYS LN'VLOYED -AS !EFCZNT OF ?ERSON:0AYS ".: LAl1OR rORC-) SY PER Ct2-.\ ('?CT-) ?.U-AL .:,D 1!:: t A:n '- 27' Ro ':D OF .,IE :;S.; OCTOBa^ L,72 - SF?v-:'I, '9,3 rRursL zrrda d80 UI Ir.i3 7 Oct. Z Share ot Oct. Z Snare oc Oct.- Jan.- Apr.- July- 1972- Households Cct.- Jan.- Apr.- July- 1972- Households Dec. Hlar. June Sept. Sept. Oct. 72- Dec. Mar. June Sept. SQpt. Oct. 72- HPC! Grouo (Rs.) 1972 1973 1973 1973 1973 Senc. 73 1972 1973 1973 1973 1973 Sent. 73 MALES =ES up to - 11.00 15.3 19.5 23.6 11.7 17.5 14.7 52.8 22.9 38.0 32.1 11.00 - 20.99 9.2 12.8 13.7 11.9 Ll.9 13.7 12.8 18.6 16.3 15.5 21.00 - 33.99 6.9 8.6 9.8 7.4 8.2 5. 9.5 10.6 10.8 12.5 10.9 -. 34.00 - 54.99 5.2 6.3 7.2 5.5 6.1 A. 8.0 9.7 9.4 9.9 9.3 A. 55.00 - 99.99 4.2 4.8 4.5 4.5 4.5 7.1 6.2 7.0 7.1. 6.9 100.00 & above 3.4 2.9 3.0 2.8 3.0 4.1 3.7 4.6 4.4 4.2 All 6.0 8.7 7.9 6.2 7.2 7.3 7.9 8.1 8.5 . 8.0 FFM4LES FMfAL0S up to - 11.00 33.8 26.8 29.9 27.1 29.4 17.5 30.6 22.2 32.9 25.8 11.00 - 20.99 14.8 18.6 20.2 17.2 17.7 18.8 17.6 17.9 13.7 17.0 21.00 - 33.99 9.8 13.1 17.4 12.0 13.1 S. 13.0 14.2 18.0 15.2 15.1 5. 34.00 - 54.99 7.8 9.7 12.4 8.4 9.6 A. 11.9 11.7 15.0 12.9 12.9 A. 55.00 - 99.99 6.2 7.4 8.0 6.3 7.0 12.6 13.3 15.7 12.7 13.6 100.00 & above 3.6 2.0 7.1 3.4 3.3 11.2 8.8 11.5 9.8 10.3 All 9.3 11.5 14.2 10.0 11.3 12.6 12.8 15.5 13.0 13.' PEPSONS PEAM(SIS up to - 11.00 23.9 22.1 26.1 17.6 22.4 0.7 15.8 42.5 22.7 35.8 29.2 0.3 11.00 - 20.99 11.3 15.0 16.1 14.0 14.1 9.8 15.1 14.4 18.3 15.6 15.9 4.5 21.00 - 33.99 7.9 10.1 12.2 8.9 9.8 30.1 10.4 11.5 12.5 13.2 11.9 19.2 34.00 - 54.99 6.0 7.3 8.7 6.4 7.1 35.2 8.8 10.1 10.5 10.5 10.0 27.4 55.00 - 99.99 4.8 5.5 5.5 5.0 5.2 19.0 7.9 7.2 8.2 S.2 7.9 28.3 100.00 S above 3.4 2.6 3.9 2.9 3.2 5.1 5.0 4.3 5.4 5.0 4.9 20.2 All 7.1 8.6 9.8 7.4 8.2 100.0 8.4 8.7 9.4 9.3 9.0 100.0 Note: The figures for the entire Round are un*eighted averages of the estinates for four subrounds. As a result. Chey are sli6hcly diffore-,t fron che widely quoted escinates reporting the incidence of une-ploynent in terms of persondays as 7.8 percent in rural India and 8.8 percent in urban India. - 11 - Figure 1 INCIDENCE. OF UNEMPLOYMENT IN TERMS OF PERSONDAYS AMD MONTIHLY PER CAPITA EXPENDITURE OF HOUSEHOLDS RURAL AND URBAN INDIA, 1972-73 30 * to RURAL INDIA I20 I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 110 40 URBAN INDIA 30 & 20 120 <11.00 I.02-20.99 21.00-33.99 34.00-54.99 50.00-99.99 >100.00 _w- =___ SLs *3 thlt PU CoIu EIpdjtute 4.I AuaI R *....n....*4 Frm. -_ PAFeI - 12 - Tabhle 3 IRCII)PENC D0V 1`Irrlfv1,rST ACCPrI'Ir TO AlTI:It NhTxVE CRITERIrA, nY SEX AND oF MONITlY 1.H CAPYTA FXN.N1Fl)HTPEz (nrctr), Ca2A11A1 AND I'M:Itt, Iq77-3 __________G_________ Ctp,-rrat Thavri7 Polrn'anlztsn Urban Maharanhtyra Thtra2 C!Li'arat2: LPr?'ns C,.t I rn .rftrom Uba.#Jn1f HPCR Docile htlos Fe.aien t'ernonu Hales Femaler lersons Malsc9 FcamJes 2'crasne Vales Fcmales Persoins (A). Usual Activity Data (Ln terms of personls) 1 0.9 0.5 0.7 3.6 3.1 3.5 1.1 - 0.6 6.1 1.2 4.6 2 0.4 0.9 0.6 5.0 4.2 4.8 0.5 0.1 0.3 4.5 1.7 3.8 3 0.9 0.4 0.7 5.4 - 4.4 0.3 - 0.1 5.0 3.2 4.5 4 0.9 0.2 0.6 4.1 4.1 4.1 0.5 - 0.3 5.1 3.5 4.8 5 1.0 - 0.6 3.2 3.2 3.2 1.2 - 0.6 6.2 7.2 6.3 6 0.2 0.5 0.3 3.6 5.2 3.9 0.6 - 0.3 4.6 0.9 5.1 7 0.7 - 0.4 3.1 4.9 3.3 0.7 0.3 0.5 3.9 4.2 3.9 t 0.6 0.6 0.6 3.7 2.8 3.6 1.3 - 0.7 3.4 8.2 3.9 9 0.7 - 0.4 3.6 4.6 3.7 0.4 - 0.2 2.8 4.7 3.0 10 1.1 0.4 0.9 2.6 19.4 4.7 0.3 0.4 0.4 0.9 4.1 1.4 All 0.7 0.4 0.6 3.8 4.3 3.9 0.7 0.1 0.4 4.4 3.8 4.3 (B) Current Activity DataC (in terms of persons) 1 3.6 4.1 3.8 5.7 6.6 5.9 4.3 10.9 7.2 8.6 6.0 7.8 2 2.2 3.3 2.6 6.0 4.7 5.7 3.2 6.2 4.5 5.8 3.1 5.2 3 2.0 2.4 2.2 6.3 7.7 6.6 2.3 5.3 3.7 5.4 5.2 3.4 4 1.9 2.7 1.3 .4,5 6.7 4.9 2.1 6.3 4,0 5.7 5.9 5.7 5 2.8 3.2 2.9 3.5 5.8 3.9 4.5 2.9 3.8 6.6 7.4 6.7 6 0.7 1.9 1.2 3.9 12.6 5.1 2.2 5.4 3.6 4.8 10.6 5.6 7 1.1 1.6 1.3 3.9 6.7 4.3 1.5 2.3 1.8 4.3 6.4 4.7 8 0.9 1.4 1.1 4.3 4.9 4.4 M32 3.5 3.3 3.5 7.4 3.9 9 1.2 2.1 1.5 4.2 5.8 4.4 2.2 3.0 2.5 2.9 6.6 3.3 10 2.6 1.4 2.2 2.7 17.4 4.5 1.5 1.5 1.5 1.1 4.5 1.6 All 1.9 2.5 2.2 4.6 7.3 5.1 2.7 5.0 3.7 5.0 6.0 5.2 (C) Time Disposition Data (in terms of perasn- days) 1 10.1 12.8 11.1 9.9 13.3 10.8 13.1 20.6 16.3 13.5 13.7 13.5 2 7.3 11.0 8.8 10.2 10.9 10.3 11.1 15.7 13.1 9.0 8.2 8.8 3-4 5.9 8.7 7.0 7.6 12.5 8.5 7.7 14.1 10.5 7.9 10.4 8.4 5-6 5.3 6.9 5.9 5.5 12.1 6.3 9.2 12.3 10.5 6.7 12.2 7.5 7-8 3.5 5.2 4.1 6.0 6.7 6.1 6.8 9.2 7.8 4.7 10.6 5.3 9 3.4 4.6 3.8 6.0 7.1 6.1 5.8 9.3 7.1 3.5 7.7 4.0 tO 3.9 4.2 4.0 3.3 21.5 5.3 3.2 5.9 4.0 1.3 4.6 1.8 All 5.5 7.9 6.4 6.9 11.7 7.7 8.2 12.8 10.0 6.8 10.5 7.4 In estimating these figures, priority is given to a person's classiflcation as employed; work for even a balf day during the refereice week is considered adequace to classify a person as employed. Persons classified as unemployed had not worked at all during the reference week; they could have been outside the labour forte during a part of the week. - 13 - While the data on the incidence of unemployment in terms of usual or current activity do not show a clear consistent relationship with MPCE decile of households,l/ a more or less steady inverse relation- ship is evident between MPCE decile and the incidence of unemployment in terms of persondays. Except for some erratic deviations, the labour force in the bottom deciles of households clearly suffers from a signif- icantly higher incidence of unemployment and/or underemployment. The inter-decile variations in unemployment are, of course, much smaller than the differentiaAs in per capita expenditure. And although poverty is more widespread than unemployment, there is a clear association be- tween the two: The poor did report non-availability of opportunities for work to a considerably greater extent than the average level in the two states.-/ 1/ A statistically significant inverse relationship between average MPCE in different ,ieciles and the incidence of unemployment in terms of current activity criterion is evident for females in rural Gujarat, males as well as females in urban Gujarat, females in rural Maharashtra and males in urban Maharashtra. 2/ These findings differ from the earlier indications of little associ- ation between poverty and unemployment or even a direct relationship between MPCE and the incidence of unemployment. Among the nation- wide surveys, the ninth Round of the NSS, from subsamples 3 and 4 canvassed during August-November 1955 (a sample of about 8,250 households), had indicated a direct (or positive) relationship be- tween the incidence of unemployment and the MPCE, both in rural and urban areas of the country. However the number of per capita expenditure classes in the ninth Round was only four, and effectively three, because the top class accounted for less than one percent of the rural population and only three percent of the urban popula- tion. Further, labour force and employment status was determined in terms of the "unual status" of the respondents, which would show only chronic unemployment, and which fails to show a clear relation- ship between MPCE and the incidence of unemployment even in the data for Gujarat and Maharashtra in Table 3. See: Pravin Visaria, "Labour Force, Unemployment and Underemployment in India: Retro- spect and Prospect," in The Indian Economy: Performance and Prospects, ed. J. C. Sandesara (Bombay: University of Bombay, 1974). Prior to the 27th Round, only in the ninth Round were labour force charac- teristics tabulatecl according to per capita expenditure of the household. - 14 - It has been argued that unemployment (again in terms of persondays in 1972-73), in different regions of rural India does not seem to be related to the productivity of land.l/ Indeed, in 56 regions of rural India, for which data on the unemployment rate during 1972- 73 are available, a positive correlation of 0.30 (significant at the five percent level) is observed between unemployment and average agricul- tural output per hectare (in rupees, 1970-71 to 1972-73).2/ Apparently, the value of agricultural output per hectare is not a good index of the extent of poverty in a region. Land productivity necessarily de- pends on factors such as fertility of the soil, rainfall and irrigation, frequency and pattern of cropping, etc. Also, the regions with high agricultural productivity may attract unemployed labour from neighbouring areas. Unemployed and Unemployment According to Usual Activity To understand the correlates of poverty and unemployment more clearly, we shall examine the "usual" activities of persons clas- sified as "currently unemployed" and of those reporting unemployed per- sondays. The incidence of unemployment according to different criteria will also be estimated separately for each usual activity category. As noted earlier, these categories take into account the main sector of employment (farm or non-farm) as well as the status or class of worker (self-employed, employees and family helpers). Among the employees, 1/ D. T. Lakdawala, "Growth, Unemployment and Poverty," Presidential Address delivered at the All India Labour Economics Conference, Tirupati, December 31, 1977. 2/ The total number of rural "regions" in India in the 27th Round of the NSS was 65. The agricultural output data are based on a study undertaken by the Perspective Planning Division of the Planning Commission and the Jawaharlal Nehru University. According to Lakdawala's address cited above, the agricultural output data were not available for 9 of the 65 regions. - 15 - a distinction was madea between "a regular salaried employee/wage labourer" and "a casual employee/wage labourer." There may be some scepticism about the extent to which it is possible to idenitify some of these usual activity groups, partic- ularly the "casual labourers," because of the high probability that individuals move across these categories during different periods of the year or even over a short span of time. However, persons experienced in conducting field work in India do not envisage any difficulty in identifying households or workers whose principal activity during the year (or a reference week) in terms of labour time disposition (or source of income) is working as an employee or casual labourer.1/ Table 4 shows the usual activity distribution of persons classified as "current:ly unemployed" according to the conventional prior- ity criterion as well as our major activity criterion, the incidence of unemployment, and the participation rates for Gujarat and Maharashtra.- 1/ According to a personal communication from Sudhir Bhattacharyya, the NSS official in charge of the design of the 27th Round Survey of employment and unemployment, the interviewers reported no diffi- culty in identifying or classifying the "casual wage labourers" although the Instructions to Field Staff did not define the term "'casual labourer."' As shown later, a large majority of casual labour- ers in Gujarat and Maharashtra were agricultural labourers or workers in non-classifiable occupations. These groups are indeed likely to suffer from instability of employment; and their classification as 'casual' labourers is quite plausible. 2/ The participation rates shown in Table 4 are based on the current activity clata. The small differences between the participation rates based on the priority criterion and those based on the major activity criterion are due to some editing of the data during the time interval between their estima- tion and some rounding of the multipliers during later data processing. - 16 - !eble 4 VIVAL m?TIVTISzS o? P0?SnS C'IS ID A5 i D StlTC 3t9 S tX2 VW UIIDD! ALTRNATv .TC.RIT . ...IARAT A5D SWAKASITkA. 1972-73 tb.m1a,ed During ueew1eyad TJrtes 09mpIlaye Dwee Unemployed During the Referle the RnereoY ce Week the iefetee Meek tloe Refereee Week (Prior,tv Criterion) (Nator Activity Crtt.rten) (Priorir Ctiterton) (Kaier Activty Criterion) VAuMAl AiV etty Males Femles Perose X FavaJjj enrse. Mg * P J g F. .1*§ ire A aUvtAL GUJARAT Oi UA S.lf-1eprey 20.2 2.1 11.8 26.3 3.0 15.5 7.1 5.1 6.5 10.2 8.5 6.6 Oi Fr0 15.7 2.0 9.3 21.5 3.0 12.t 1.53 2. 1.5 2.6 1.6 2.3 lUe-Fee 4.6 0.1 2.5 4.6 * 2.6 5.6 26 5.0 7.6 6*7 7.3 W1oee 30.4 66.2 46.9 47.4 75.7 60.5 10.3 22.0 13.2 n.1 32.2 24.8 Seguler-Co Farm U F e 0.7 1.1 0.9 * 3 N * * u gUl A-FM-Fam 0.3 S 0.2 0.5 S 0.3 2.8 S 2.1 5.1 0 2.S Csusl Laborer 30.1 66.2 46.7 46.2 74.5 59.3 7.4 22.0 11.1 19.0 32.2 22.5 Us"" Selpt 8.0 16.7 12.0 7.6 14.6 10.8 0.6 13.5 3.9 0.5 12.2 3.5 Fe" 6.0 13.4 11.4 7.1 13.4 10.0 0.3 12.6 3.4 0.3 11. 5 .1 Soc-F. 3 1.3 0.6 0.5 Ll 0.9 0.5 0.9 0.5 0.3 0.7 0.4 All floyed 51.7 65.0 70.7 81.4 93.2 09.9 1S.0 40.6 23.4 32.8 53.0 37.9 09pled" 36.5 U1.7 26.0 16.5 6.1 11.6 82.3 56.5 75.7 67.3 44.8 61.4 Outtide labor FOe 4.9 1.4 3.4 2.2 0.7 LS 0 2.8 0.7 a 2.2 0.6 All 100.0 1O0.0 100.0 100.0 100.0 200.0 100.0 100.0 100.0 U10.0 U0.0 100.o Labor Force Partiripettio Rate 6.5 41.9 52.0 61.5 41.2 51.6 55.7 12.5 34.9 55.7 u.s 56.7 Inaide_c of b0_1l_t 1.9 3.5 2.2 4.3 5.6 4.9 4.6 7.3 5.1 5.6 9.4 6.3 seU-st-lqe 13.3 6.8 9.9 16.9 4.1 10.1 3.2 5.8 3.6 5.7 7.9 6.2 0O Fam 11.2 6.3 8.4 14.2 3.8 *.7 0.9 0.6 0.8 1.6 0.7 1.4 o-FAMI 2.1 0.5 1.2 2.7 0.3 1.4 2.3 5.2 2.6 4.1 7.2 4.6 11.0,0 55.8 76.3 67.5 62.3 7f.7 1.o 10.3 24.7 13.2 19.5 39.7 26.2 kegelar-Ce FeS 0.4 - 0.2 0.2 0.1 0.1 - - - - - RegSelar-KAo-Far 0.6 - 0.3 0.6 0.2 0.4 1.7 0.2 1.4 2.2 0.7 1.8 Ceseel taborer 54.8 76.3 67.0 61.7 78.4 70.5 6.6 24.5 11.6 17.3 39.0 2.4 Ibpeid Nelper 8.1 13.0 12.1 6.9 16.2 12.7 1.3 4.2 1.9 1.5 5.6 2.1 On revs 7.7 14.8 1. 6.3 15.8 12.2 0.3 2.7 0.3 0.3 2.4 0.0 Now-Fer 0.4 0.2 0.3 0.6 0.4 0.5 1.0 1.3 1.1 1.2 2.6 1.5 A11 _lioe 77.2 9i.1 89.2 68.3 9. 93.8 14.9 34.7 18.7 26.7 52.6 52.7 _l.oed 21.0 0.6 9.5 10.5 0.4 5.1 I.1 59.2 79.1 7. 43.3 46.4 Outside Labor Yensc 1.9 1.1 1.5 1.3 0.6 0.9 1.3 5.9 2.1 1.1 4.2 1.9 All 100.0 100.0 100.0 100.0 100.0 200.0 100.0 100.0 100.0 200.0 100.0 200.0 Labor Fece. Pertclipetion Rate 62.1 45.6 53.9 61.6 44.3 53.2 57.5 14.1 37.1 57.4 U.8 37.1 Iscidedce of Unleeployowt 2.7 5.0 3.7 5.7 9.0 7.1 5.0 6.0 5.2 5.9 6.9 *.3 Notes: (1) N: Nsgligibl* (2) Perons leassitfied s uneeployed according to the priorit" criterion had ont worked at 11 during the referentc u.k. Rver, thqw ctgh he" been oetside the Ibeur force d.rion a pert (eve. a eajor pert) of the week. These clausttied as wnpleped according to the tim dispoettimn criterion w-re seeking or votilable for work for a eajor pert of the week (or else their days of uenployint exeeded the am.ber of dys when thev had work). ( P ?artitlpetion rates relate to the populatien esed fiv years nd vee. Thear en based on Covret aetivitT dost. (4) All fipiree he. bewen round.4 incepedently. - 17 - Table 5 ACTIVIITY DISTRIBUTION OF THE USUALLY EMPLOYED IN GUJARAT AND MAHARASHTRA. 1972-73 Rural Gujarat Urban Gujarat Usual Activity es Females Persons Males Females Persons Self-Employed 60.4 17.5 43.3 32.9 21.1 30.9 On Farm 54.6 16.4 39.4 5.0 3.3 4.8 Non-Farm 5.8 1.1 3.9 27.9 17.8 26.2 Employee 27.5 25.1 26.6 61.1 51.5 59.4 Regular-On Farm 3.2 1.5 2.5 0.7 0.6 0.7 Regular-Non-Farm 7.0 1.1 4.6 50.8 27.0 46.7 Casual Laborer 17.4 22.5 19.4 9.7 23.8 12.1 Family Helper 12.1 57.4 30.1 5.9 27.4 10.0 On Farm 11.3 55.6 28.9 0.6 14.6 3.1 Non-Farm 0.8 1.8 1.2 5.3 12.8 6.6 All Employed 100.0 100.0 100.0 100.0 100.0 100.0 RuraZ Maharashtra Urban Maharashtra Usual Activity Males Females Persons Males Females Persons Self-Employed 38.6 7.2 24.6 24.7 17.4 23.4 On Farm 32.0 5.8 20.3 2.7 1.9 2.6 Non-Farm 6.6 1.3 4.2 22.0 15.5 20.8 Employee 44.1 44.9 44.4 68.5 63.6 67.6 Regular-On Farm 7.7 0.3 4.4 1.0 0.6 0.9 Regular-Non-Farm 5.7 0.8 3.5 59.1 35.6 54.8 Casual Laborers 30.6 43.8 36.4 8.4 27.4 11.8 Family Helper 17.4 48.0 31.0 6.8 19.0 9.0 On Farm 15.9 45.8 29.3 1.1 7.5 2.3 Non-Farm 1.5 2.1 1.8 5.7 11.5 6.8 All Employed 100.0 100.0 100.0 100.0 100.0 100.0 Note: All figures have been rounded independently. - 18 - Table 5 shows the activity distribution of those classified as "usually employed." The estimated incidence of unemployment for each usual activity category is shown in Table 6.1/ According to Table 4, both in rural and urban areas, few of the 'currently unemployed' were outside the 'labour force' in terms of their usual activity.-/ Secondly, a large majority of the 'currently unemployed' in rural areas were employed in terms of their usual activity. On the other hand, a large majority (over 60 percent) of the currently unemployed in urban areas were 'usually unemployed' also. Both in rural and urban areas, the proportion of the 'usually employed' was higher among the currently unemployed females than among males. The rural- urban differences are consistent with the view that rural unemployment is partly a seasonal phenomenon. Table 6 shows that the rural employees in Gujarat suffered from an unemployment rate almost three times as high as that of all the employed in rural areas, and the casual labourers fared even worse. In rural Maharashtra, the difference was smaller, but the casual labourers were clearly the worst off. In urban Gujarat and Maharashtra, the inci- dence of week-long unemployment (based on the priority criterion) among the employees appears to be the same as or even lower than that among all usually employed persons because of the relative predominance of 1/ The difference between the estimated incidence of unemployment according to the priority rule and the major activity criterion is greater in rural areas than in urban areas, and slightly more for females than for males. Since the denominator for both sets of estimates is the same, the difference between the two sets for a given sex and usual activity category indicates the proportion of persons who are classified as unemployed because of the adoption of the major activity criterion. Persons classified as employed only because of the priority rule are more numerous in rural areas than in urban areas and slightly more numerous among females than among males. 2/ These few would probably be the new entrants into the labour force. - 19 - :able 6 INCIDENC E OF UNEiMPLOYMENT IN TEFRS OF CURRENT ACTIVTY SY TFtE NATURE OF USUAL ACTIVITY, CUJARAT AND MAHARASHTRA. 1972-73 Incidence of Incidence of Unemployment Unemployment (Priority Criterion) (Major ActivitY Criterion) Usual Activity Males Females Persons Males Females Persons RU)TAL GUJARAT Self-Employed 0.6 0.3 0.6 1.9 1.0 1.7 On Farm 0.6 0.3 0.5 1.7 1.0 1.6 Non-Farm 1.5 0.3 1.4 3.6 0.3 3.2 Employees 2.1 6.6 3.8 7.4 17.0 11.0 Regular-Dn Farm - - - 1.1 4.3 1.7 Regular-Ron-Farm 0.1 - 0.1 0.3 0.3 0.2 Casual Laborer 3.4 7.3 5.2 11.5 18.6 14.8 Family Hel ?ers 1.3 0.7 0.9 2.7 1.4 1.7 On Farm 1.4 0.7 0.8 2.7 1.4 1.6 Non-Farm - 1.8 1.1 2.6 3.6 3.2 All Employ-ad 1.1 2.1 1.5 3.5 5.5 4.2 URhAN GUJARAT Self-Emplo:red 1.0 1.8 1.1 1.8 3.9 2.0 On Farm 1.2 4.8 1.7 2.9 4.8 3.1 Non-Farm 1.0 1.2 1.1 1.6 3.5 1.8 Employees 0.8 3.3 1.2 2.1 6.0 2.7 Regular-On Farm - - - - - - ReRular-tlion-Farm 0.3 - 0.3 0.3 - 0.3 Casual LiLborer 3.6 7.0 4.8 11.6 13.1 12.1 Family Helplers 0.5 3.8 1.9 0.5 3.7 2.4 On Farm 2.3 6.7 5.9 2.3 7.5 6.6 Non-Farm 0.3 0.5 0.4 0.3 0.5 0.4 All Employzd 0.9 3.1 2.1 1.9 5.1 2.5 RURAL ,AR.TRA Self-Employed 1.0 4.9 1.4 2.5 5.5 2.9 On Farm 1.0 5.7 1.5 2.6 6.4 3.0 Non-Farm 0.9 1.8 1.0 2.4 1.8 2.3 Employees 3.5 8.3 5.6 8.2 15.5 11.4 Regular-Oa Farm 0.1 - 0.1 0.1 2.1 0.2 Regular-N3n-Parm 0.3 - 0.3 0.6 2.4 0.8 Casual La)orer 5.0 8.5 6.8 11.8 15.9 13.9 Family Help ars 1.3 1.6 1.5 2.9 3.2 3.1 On Farm 1.4 1.7 1.6 2.9 3.2 3.2 Non-Farm 0.6 0.5 0.5 2.4 1.8 2.1 All Employedl 2.1 4.9 3.3 5.1 9.0 6.8 URA) MARAR4ASTRA Self-Employed 0.7 2.2 0.9 1.4 4.2 1.8 On Farm 1.8 2.7 1.8 3.6 4.4 3.7 Non-Farm 0.5 2.1 0.7 1.2 4.1 1.5 Employees 0.8 2.5 1.1 1.8 5.7 2.4 Regular-On warm - - - - - Reagular-Non-Parm 0.1 - 0.1 0.2 0.1 0.2 Casual Laborer 5.5 6.2 5.7 13.1 14.2 13.5 Family Helpers 1.0 1.5 1.2 1.3 2.5 1.7 On Farm 1.4 2.4 2.1 1.4 3.2 2.4 Non-Farm 0.9 0.9 0.9 1.3 2.0 1.5 All Employed 0.8 2.3 1.0 1.7 4.8 2.2 - 20 - the regular non-farm workers (shown in Table 5). But the casual labourers in urban areas of Gujarat suffered more than twice as high an incidence of week-long unemployment as all usually employed persons; in urban Maharashtra, the difference between the casual labourers and other usu- ally employed persons was greater. The casual labourers of urban Gujarat fared even worse if unemployment is defined in terms of major activity of the week. Since even the major activity criterion does not take full account of underemployment or unemployment within the reference week, which may be particularly important for the self-employed and family workers, Table 7 shows the incidence of unemployment in terms of person- days in the two states. The low level of unemployment in terms of per- sondays among the regular employees is only to be expected; but it is indeed surprising that the self-employed and family helpers reported a lower-than-average incidence of unemployed persondays. The explana- tion probably lies in work-spreading in various ways. Table 8 shows the percentage of total unemployed persondays in rural and urban areas of Gujarat and Maharashtra that was accounted for by persons reporting specified usual activities. (The residual percentage, i.e., the difference between 100 percent and the total percentage of unemployed persondays accounting for all usually employed persons together, was attributable to the usually 'unemployed' persons.) Once again, the casual labourers, both in rural and urban areas, were much worse off in terms of unemployed persondays than workers in other categories; they accounted for 58 and 71 percent of the total unemployed persondays in rural areas of Gujarat and Maharashtra, respectively. (The self- employed farmers, on the other hand, accounted for only 17 and 10 percent of the unemployed persondays in the two states, even though during nine out of the twelve months of survey covered by the 27th Round, Gujarat and Maharashtra were affected by a severe scarcity.) Table 7 INCIDENCE OF UNEMPLOYHENT DURING THE REFERENCE WEEK IN TERMS OF PERSONDAYS (UNEMPLOYED PERSONDAYS AS PERCENT OF PERSONDAYS IN LABOUR FORCE) ACCORDING TO THE USUAL ACTIVITY OF THE EMPLOYED, RURAL AND URBAN GUJARAT AND MAHARASHTRA, 1972-73 Rurat Owjarat V rban Gujarat Rural Mahuarashtra Utrban Maharashtra Usual Activity Hales Females Persons Males Females Persons Hales Females Persons Males Females Persons Self-Employed 2.52 1.73 2.40 2.97 4.32 3.26 3.68 7.69 4.11 1.87 4.63 2.22 On Farm 2.40 1.79 2.26 2.93 5.98 3.25 3.72 9.19 4.28 4.06 5.22 6 23 Non-Farm 4.23 0.80 3.88 2.98 4.02 3.26 3.48 2.41 3.33 1.60 4.58 1.97 Employees 10.14 20.01 13.74 3.26 7.80 3.90 12.18 20.57 15.78 2.69 8.09 3.55 Regular-On Farm 0.87 3.89 1.57 - - - 0.30 1.56 0.34 0.39 1.07 0.45 Regular-Non-Farm 0.36 2.56 0.57 1.06 0.48 1.00 1.25 3.75 1.51 0.51 0.52 0.52 Casual Laborer 15.86 22.08 18.66 15.27 16.70 15.73 17.37 21.06 19.27 18.88 19.87 19.25 Unpaid Helper 3.39 2.98 3.10 3.15 6.61 4.69 4.11 5.04 4.71 2.09 2.90 2.38 On Farm 3.29 2.92 3.02 4.50 12.03 10.42 4.22 5.15 4.82 2.39 3.94 3.28 Non-Far& 4.77 4.86 4.82 2.98 1.19 2.41 2.95 2.86 -2.91 2.03 2.23 2.09 All Employed 4.78 7.48 5.73 3.16 6.78 3.77 7.55 12.68 9.66 2.46 6.63 3.16 All Persons in Labour Force (including the Usually Unemployed) 5.49 7.88 6.36 6.90 11.65 7.66 8.88 14.62 11.16 7.29 11.71 8.02 Percentage of Total Unemployed Persondays Accounted for by the Usually Employed 85.05 94.10 89.12 43.98 54.89 47.18 91.36 98.53 95.09 34.31 58.80 40.21 - 22 - Table 8 PERCENTAGE OF TOTAL UNEMPLOYED PERSONDAYS ACCOUNTED FOR BY PERSONS WITH SPECIFIC USUAL ACTIVITY, GUJARAT AND MAHARASHTRA, 1972-73 RuraZ rujarat Urban Cujarat Usual Activity Males Females Persons Males Females Persons Self-Employed 27.4 3.9 16.7 13.3 9.0 12.4 On-Farm 23.0 3.8 14.3 2.0 1.4 1.9 Non-Farm 4.4 0.1 2.4 11.3 7.6 10.5 Employee 50.3 69.8 59.1 28.1 32.7 29.5 Regular-On Farm 0.5 0.8 0.7 0 0 0 Regular-Non-Farm 0.5 0.4 0.4 7.6 1.1 6.0 Casual Laborers 49.3 68.6 58.0 20.5 31.6 23.5 Family Helper 7.5 20.3 13.2 2.6 13.2 5.3 On Farm 6.8 19.3 12.4 0.4 12.0 3.3 Non-Farm 0.7 1.0 0.8 2.2 1.2 1.9 All Employed 85.2 94.0 89.0 44.0 54.9 47.1 Rura Maharzrashtra Urban Maharashtra Usual Activity Males Females Persons Males Females Persons Self-Employed 16.8 3.9 10.1 6.2 6.8 6.3 On Farm 14.1 3.6 8.7 1.5 0.7 1.3 Non-Farm 2.7 0.3 1.4 4.7 6.1 5.0 Employee 65.8 76.8 71.6 26.4 47.6 31.5 Regular-On Farm 0.3 0.04 0.2 0.1 0.1 0.1 Regular-Non-Farm 0.9 0.3 0.6 4.4 1.8 3.8 Casual Laborers 64.6 76.5 70.8 21.9 45.7 27.6 Family Helper 8.7 17.8 13.4 1.9 4.5 2.5 On Farm 8.2 17.3 12.9 0.4 2.4 0.8 Non-Farm 0.5 0.5 0.5 1.5 2.1 1.7 All Employed 91.3 98.5 95.1 34.5 58.9 40.3 Note: Thc usually 'unemployed' accounted for thte remaining unemployed persondlays. - 23 - Our data fo:r Gujarat and Maharashtra provide the first direct evidence to explain why sieveral labour force and unemployment surveys have provided very low en;timates of unemployment for rural India, lower than what many analysts consider plausible.'/ Our disaggregated estimates of unemployment for different categories of the usually employed take account of underemployment within the reference week and are, therefore, more comprehensive than the earlier estimates that were based on the priority rule. If the impression that the rural self-employed and family workers (who account for over 50 percent of the rural labour force) suffer from a significant level of unemployment and/or underemployment is correct, they are much less willing to search or to report their search and/or availability for work than are the employees. Further, the data are consistent with some suggestive evidence provided by small-scale Nvillage surveys in which farmers indicated a distinct unwillingness to work outside their own farms.-2 Thus the status composition of the rural working force, with a predominance of the self-employed and unpaid family helpers, is an important explanation for the low estimates of rural unemployment.-/ l/ Several studies seeking to estimate underemployment have been reviewed in Pravin Visaria, "Employment," in: A Survey of Research in Economics, vol. 2, Macroeconomics (Bombay: Allied Publishers Private Limited, 1975). 2/ Pravin Visaria, "The Farmers' Preference for Work on Family Farms," in Report of the Committee of Exgerts on Unemplovment, Planning Commission, Government of India (New Delhi: 19 pp. 185-194. 3/ Among the analysts seeking to explain the low incidence of rural unemployment in terms of the status composition of the working force are P. C. Mahalanobis and V. K. R. V. Rao. See: P. C. Mahalanob.s, "Concept and Measurement of Unemployment," in Employment and Unem- ployent, ed. V. K. R. V. Rao (Madras: Asia Publishers (Pvt) Ltd., 1968); and V. K. R. V. Rao, "Employment and Unemployment in the Indian Economy," Economic Development and Cultural Change (April 1959). The Expert Committee cited in footnote 2 above had asserted without any statistical evidence that "the problem of unemployment is most serious for workers who seek wage employment." (See para. 5.9 on page 31 of the report.) Our data confirm the validity of that hypo- thesis. - 24 - Incidence of Unemployment and the Proportion of Casual Labour in Different States of India Since the casual labourers are the critical group reporting a very high incidence of unemployment in terms of "current activity" as well as "persondays," the same relationship would be expected between the reported level of unemployment and the proportion of casual labourers among the usually employed. Table 9 reports the results of an explor- atory exercise conducted for the 17 major states of India. The under- lying data for rural India have been shown in Figure 2 and Table 2 in the Annex. The coefficients of correlation between the proportion of casual labourers and the incidence of unemployment in terms of person- days in the rural areas of the 17 states are 0.82, 0.90 and 0.85, respec- tively, all statistically significant at the one percent level. In urban areas, the correlation between the two variables is significant at the one percent level for males (0.64) but not even at the five per- cent level for females or the two sexes together. According to the results presented in Table 9, a one percentage point increase in the proportion of casual labourers in the rural labour force would result in an increase of about 0.4 percentage point in the reported incidence of unemployment in terms of persondays. Prima facie, the results for Gujarat and Maharashtra showing the importance of the share of casual labour for the reported incidence of unemployment, seem to receive sup- port from the aggregate data for other states of India.!' 1/ An exploration of the factors underlying the interstate differences in the proportion of casual labourers in the rural labour force is beyond the scope of this paper. The likely contributory factors include: the pressure of agricultural population on land; distrib- ution of land; the extent of and scope for a diversification of agriculture into non-crop production such as forestry, horticulture, animal husbandry and fishing; and the relative importance of cottage and small-scale industries such as gur-making and handlooms inclu- ding silk and carpet weaving. - 25 - Table 9 RELATIONSHIP BETWEEN THE PERCENTAGE OF UNEMPLOYED PERSONDAYS AND THE PERCENTAGE OF CASUAL LABOURERS AMONG WORKERS IN RURAL AND URBAN AREAS OF MAJOR STATES OF INDIA, 1972-73 Regressiion Constant Correlation 2R Coefficient Term Coefficient R Adjusted RuraZ Areas Males 0.396** -1.339 0.82 0.67 0.64 (5.47) (0.86) Females 0.395** -1.729 0.90 0.81 0.79 (7.90) (1.13) Persons 0.373** -1.144 0.85 0.72 0.70 (6.22) (0.75) Urban Areas Males 0.422** 3.327 0.64 0.40 0.36 (3.19) (2.04) Females 0.246 6.868* 0.44 0.19 0.15 (1.88) (2.70) Persons 0.112 6.650** 0.35 0.12 0.07 (1.46) (4.29) * Significant at the fiLve percent level. * Significant at the ofLe percent level. Notes: (1) Figures in parentheses are the 't' values. (2) A logarithmic transformation of both the dependent and independent variables increases the percentage of explained variance to 0.76, 0.88 and 0.85 for rural males, females and persons, respectively. The corresponding figures for urban males, females and persons are: 0.41, 0.08 and 0.41. (3) The regressions are based on the data for 17 major states of India (excluding Meghalaya and Jammu and Kashmir). Figure 2 INCIDENCE OF UNEMPLOYMENT AND THE PERCENTAGE OF CASUAL LABORERS IN THE LABOR FORCE, RURAL INDIA, 1972-73 24 226 .0~~~~~~~~~~~~~~~~~~ 2 44 12 Assm 12 Punja 22 8eht 3 R1 0 0014 h20~~~~~~~~~~~~~~~~~~~~~~~~~ 10 lSrnc i1 Pf0a 16W Bnp 1 7 K14ruts 1 17 0Iih 12 13 .10 s1 -~~~~~ 0 0? 2110~~~~~~~~~~~~~0 9 ih9 P t2 OS t 10 10 7 .2 0 2 Asan 09 2.2unjab 3, B ¶6 13, Ra p p as ph pn 0 5ayas Ia 15 2 25ta 30 3 0 4 0 5 1 0 25 3 5 4 4 0B 1 1 0 2 0h6 4 5 Keralal,PesmPaoi M Adhya Praedsh I0P 20 AhiwflshtPuije - 27 - A few other characteristics of the casual labourer group are worth examining since it is the most adversely affected by unemploy- ment and/or under-employment. The occupational distribution of casual labore!rs is reported in Table 10. In rural areas, a large majority of casual labourers (over 84 percent) were agricultural labourers;-/ most of the remainder were in the amorphous "other" category. Likewise, agricultural labourers also constituted a significant proportion of urban casual labourers most of whom work in the rural fringe of urban centres. Among others, "labourers not elsewhere classified" were an important group. A sigiaificant percentage of the urban casual employees were: (a) spinners, weavers, etc. (the textile industry is quite impor- tant both in Gujarat and Maharashtra and employs several workers on a daily basis), (b) domestic helpers, (c) construction workers and (d) carpenters, cabinet makers and related wood workers. These are indeed the activities where casual labourers are likely to be employed. "Porters," often used as an example of disguised under-employment, are grouped with operators of mechanized transport, stationary engines and related equipment and may indeed be the most important subgroup among casual labourers in that category. Tables 11 and 12 show selected characteristics of casual labourers in rural and urban areas, respectively, of the two states. A comparative perspective is provided by showing the distribution of 1/ Casual labourers formed a large majority of all agricultural labourers in the rural areas of the two states. The precise percentages are given below. (A majority of the remainder were regular farm employees.) Males Females Persons Rural Gujarat 81.5 90.3 85.4 Rural Maharashtra 78.4 98.7 88.4 Table 10 OCCUPATIONAL DISTRIBUTION OF CASUAL LABOURERS IN GUJARAT AND MAHARASHTRA, OCTOBER 1972 - SEPTEMBER 1973 Urban Guiarat Urban Maharashtra -Rural Gu,arat Rural Maharashtra Occupation Males Females Persons Males Females Persons Males Females Persons Males Females Persons 1 Agricultural labourers 21.6 38.7 27.5 33.2 62.8 45.7 84.1 87.0 85.4 85.7 90.9 88.5 2 Other agri- culture 1.2 1.5 1.3 1.1 0.6 0.9 2.5 0.7 1.7 1.5 0.5 1.0 3 Spinners, weavers, etc. 4.2 3.6 4.0 7.7 1.1 4.9 0.3 0.0 0.2 - - - 4 Bricklayers and construction workers 4.0 3.4 3.8 8.8 2.9 6.3 0.5 0.6 0.5 2.0 1.1 1.5 5 Carpenters and related wood workers 2.6 - 1.7 3.8 - 2.2 (Included in "other") 6 Mechanised trans- port drivers, stationary engine material handling and related equip- ment operators 1.7 - 1.1 3.7 0.4 2.3 (Included in "other") 7 Housekeepers, matrons, cooks, waiters, building caretakers, sweepers, cleaners and related 3.5 8.9 5.4 4.8 5.2 4.9 (Included in "other") 8 Labourers not elsewhere classified 49.1 39.3' 45.7 25.4 22.4 24.1 (Included in "other") 9 Other 12.1 4.6 9.5 11.5 4.6 8.7 12.6 11.7 12.2 10.8 7.5 9.0 All 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Table 11 SMLCIED CRACMCnIrICS 0F C6LSUAL WAGEZ 16A0928 An ALL WORI8RS IN )11 CUJ&AUT AM1 WMARASIIA, 1912-73 01A041 LA210UR2R5 ALL VW8(CR$ Rural Gojarat Surat Ilaharaahtra Rural culavat, Duval Plaherath.tre, Halos Females Persona males PFesuales Pftersona ___le_ ____males ______als__819 EEn A. flousehold Oc-oP.tign W1L.1C .oller "Aw' 0.8 1.2 1.0 0.8 3.1 2.0 4.5 1.8 3.4 5.4 3.1 . CuItloatur 10.8 12.3 11.3 7.0 4.5 6.7 68.4 72.5 70.0 49.5 31.1 50.3 Auri. labour 76.3 72.6 74.7 50.6 77.2 78.7 17.3 19.2 18.1 33.5 36.1 34.7 Artisans & others 11.9 13.9 12.8 11.8 13.1 12.5 9.8 6.3 8.5 11.3 .9.7 10. 7 All 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 D. Site of Land Holding Possessed by the Hous*- No land 19.2 19.6 19,4 17.5 17.6 17.7 6.8 6.0 6.3 9.7 9.1 9.4 0.01 - 0.99 S2.5 50.5 51,6 34.2 36.8 35.6 18.3 13.2 17.1 19.0 19.5 19.2 1.00 - 2.49 11.7 10.7 11.3 13.5 13.2 13.3 8.4 8.4 8.4 10.7 12.5 11.6 2.50 - 4.99 8.6 12.2 10.3 12.9 13.1 13.0 15.3 18.3 16.5 13.3 14.4 13.8 3.00 - 7.49 3.5 2.7 3.2 10.4 8.7 9.5 13.0 13.8 13.3 12.1 12. 6 12.5 7.50 - 9.99 1.8 1.3 1.7 3.0 3.1 3.1 7.2 7.1 7.1 6.0 6.1 6.1 10.00 -19.99 2.1 2.6 2.3 6.1 3.5 3.8 19.0 19.7 19.3 15.8 14.9 15.4 20.00 & above 0.5 0.2 0.3 2.2 1.9 2.1 12.1 11.3 11.9 13.4 10.8 12.2 All 100.0 100.0 100,0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 C. Educationa1 Attalrnnat, Illiterate 68.7 92.4 79.7 61.2 90.5 76.7 55.8 89.9 69.4 49.5 89.0 67.6 Up to prinary 29.0 7.2 19.0 32.8 8.9 20.2 36.4 9.1 25.5 39.3 9.8 25.8 Kiddle school 2.0 0.1 1.1 4.5 0.4 2.4 4.8 0.5 3.1 7.3 0.8 4.3 ,. S ..ondery 0.2 0.2 0.2 1.5 0.2 0.8 2.5 0.5 1.7 3.7 0.4 2.2 % Graduate 4 above - - - - 0.5 - 0.3 0.2 - 0.1 All 100.0 100.0 100.0 100.0 100.0 100,0 100.0 100.0 100.0 100.0 100.0 100.0 0. Age Cromn - 9 0.2 0.1 0.1 0.2 0.2 0.2 0.3 0.5 .,.4 0.4 0.4 0.4 10 -14 5.6 8.1 6.8 5.0 7.6 6.4 5.0 7.0 5.8 5.1 6.4 5,7 1is-19 18.2 17.1 17.7 14.3 11.7 12.9 13.8 15.7 14.6 11.3 11.4 11.4 20 -24. 13.8 13,4 13.6 12.5 12.8 12,6 13.7 14.2 13.9 11.3 12.6 11.9 25 -29 13.1 14.5 13.8 11.5 14.5 13.1 12.8 14.3 134 12.4 13.4 12.8 30-34 12.3 14.3 13.2 11.0 12.6 11.8 12.3 13.2 12.7 11.1 13.3 11.1 35 -39 10.9 10.7 10.8 13.7 13.2 13.4 10.6 10.1 10.4 12.0 13.0 12.5 40 -44 8.1 8.3 8.2 8,7 8.6 8.6 8.1 9.3 5.6 9.2 9.2 9.2 45 - 49 6.4 6.3 6.4 7.7 7.4 7.6 7.4 7.1 7.3 8.2 7.5 7.9 30 - 54 4.6 3.6 4.1 5.8 5.3 5.5 6.6 4.4 5.8 6.2 5.2 %.B 55 - 59 3.3 1.5 2.6 4.8 3.1 3.9 3.8 2.3 3.2 4.8 3.8 4.3 40+ 3.4 2.0 2.6 5.0 2.9 3,9 5.5 1.8 4.1 7.9 3.6 8.,0 All 100.0 100.0 100.0 100,0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 It. Pc eie 1 20.1 20.4 20.3 15.3 11..3 14.7 10.7 12.5 11.41 10.1 10.7 10.4 2 16.9 15.4 14.2 14.6 13.8 14.2 10.9 12.1 11.3 10.5 11.2 10.8 3 12.3 13.1 12.7 11.7 13.5 12.7 10.0 10.9 10.4 9.5 1l,0 10.3 4 12.7 13.3 13.0 10. 11.7 11.3 1.0.6 11.4 1.1.0 10.0 11.03 1q.4 5 12.3 12.2 12.3 10.7 11.7 11.2 10.3 9.7 10.1 10.7 1L.7 11.1 6 6.6 8.6 8.6 10.6f 10.9 10.8 10.4 10.7 10.5 10.2 10.5 10.4 7 7.1 7.2 7.1 9,5 8.8 9.1 9.6 9.3 9.3 10.4 10,1 10.3 $ 4.2 4.0 4.1 8.3 7.7 8.1 9.7 8.4 9.3 1.9 9.3 5.6 9 4.0 4.4 4.2 5.2 5.4 1.3 6.9 8.3 8.8 9.5 8.1 6.9 10 1. 6 1.4 1.5 2.9 2.3 2.6 8.6 6.5 7.7 9.3 6.3 7.9 All 100.0 100.0 100.0 10.C-,0 10.0 100.0 100.0 100.0 100.0 100.0 100.Q 000.0 - 30 - Table 12 SELECTED CHRACTERISTICS OF CASUAL W4AGE LAROURERS AND ALL WORKERS IN URBAN CUJARAT AND KAHARASHTRA, 1972-73 CASUAL LABOURERS ALL WORKERS Urban Gujarat Urban Maharashtra Urban Gujarat Urban Maharasbtra Males Females Persons Males Females Persons Males Females Persons Males Females Persons A. F-1-atlonal Attainment Illiterate 67.9 94.3 77.8 45.2 88.2 63.0 23.3 83.3 33.4 15.6 61.7 23.3 Vp to Pri-ory 32.1 5.7 22.2 40.4 9.9 27.8 53.2 13.1 46.4 38.2 15.9 34.5 liddl., Sch^ol -- -- -- 10.9 1.6 7.1 9.7 0.8 8.2 18.5 6.3 16.4 Secondarv -- -- -- 3.3 0.2 7.0 0.0 2 /: 9.f 6 v.7 :2.: 19.: Graduate & Above - N ._ N 4.0 0.4 3.4 7.0 4.0 6.5 All 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 B. Ago Group 5-9 0.3 -- 0.2 0.1 0.1 0.1 0.1 0.1 0.1 - 0.1 - 10 - 14 2.9 2.5 2.7 2.1 3.9 2.8 1.2 1.8 1.3 1.2 2.8 1.5 15 19 21.5 17.4 20.1 15.5 7.8 12.3 8.8 13.6 9.6 6.2 8.5 6.6 20 - 24 16.1 10.7 14.2 15.5 11.8 13.9 15.3 11.0 14.5 13.6 13.2 13.6 2- 29 12.0 12.2 12.1 12.8 12.2 12.6 13.6 12.7 13.5 15.4 12.9 15.0 3( - 34 10.8 13.0 11.6 11.7 14.0 12.7 13.3 13.5 13.3 14.6 13.4 14.4 35 - 39 9.2 12.4 10.3 12.0 13.9 12.8 12.9 13.5 13.0 13.5 13.8 13.5 4r) - 44 8.8 10.9 9.5 7.9 9.9 8.7 10.8 10.3 10.7 11.0 9.7 10.7 45 - 49 8.2 8.0 8.2 7.6 10.5 8.8 8.8 9.7 9.0 9.0 10.0 9.2 50 - 54 6.4 6.6 6.5 6.7 8.6 7.5 7.4 8.1 7.5 6.9 7.2 7.0 55 - 59 1.7 3.0 2.1 3.3 3.4 3.3 3.8 2.4 3.5 4.0 3.5 3.9 60+ 2.2 3.1 2.5 4.8 3.9 4.4 4.0 3.2 3.9 4.6 4.8 4.7 All 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0. 100.0 100.0 100.0 C. PI": !Urcil'sq 1 24.9 28.8 26.2 30.3 38.1 33.6 10.4 19.8 12.0 10.0 21.2 12.1 2 19.6 13.8 17.6 23.6 25.3 24.3 10.8 14.4 11.5 10.8 17.3 12.0 3 11.9 15.6 13.2 12.8 14.9 13.7 10.9 12.7 11.2 10.5 14.6 11.2 4 10.5 14.0 11.7 11.8 9.7. 10.9 11.0 13.0 11.4 11.0 10.0 10.8 5 8.1 9.4 8.6 5.5 5.5 5.5 10.3 8.1 9.9 10.5 8.5 10.1 6 6.3 3,4 5.3 6.1 3.6 5.1 10.3 7.8 9.9 10.4 7.0 9.8 7 7.9 5.1 6.9 4.5 1.2 3.1 10.5 6.9 9.9 9.8 4.9 8.9 a 4.9 5.7 5.2 2.5 1.3 2.0 9.0 7.0 8.6 9.9 5.1 9.0 9 4.7 3.1 4.2 2.4 0.5 1.6 8.5 5.7 8.0 8.9 5.4 8.3 10 1.2 1.2 1.2 0.5 -- 0.3 8.3 4.6 7.6 8.2 5.9 7.8 All 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 - 31 - both casual labourers and all workers according to various character- istics. For rural labourers, we have shown the household occupation or the main source of income-/ as well as the size of holding possessed (i.e., land owned plus land leased in minus land leased out) by the household.2/ These characteristics are not quite relevant for urban casual labourers, for whom only the distribution by age, educational attainment and MPCE decile is shown. Considering first the household occupation, Table 11 shows that three-fourths of the rural casual labourers belonged to households for which agricultural labour was reported as the main source of income. Regarding their land hol-dings, over 70 and 53 percent of casual labourers in rural areas of Gujarat and Maharashtra, respectively, were from house- holds with less than one acre of land. The casual labourers are obviously poor with respect to the most importarnt asset in rural areas. (Both these observations are entirely consistent with the reported occupations of casual labourers according to Table 10.) Data on other characteristics of both rural and urban casual labourers show them to be far behind other workers with respect to "human capital," somewhat younger than other workers, and substantially over- 1/ The "household occupation" was determined from the list of gainful occupations pursued by the members of the respondent households as that which "fetched the maximum earnings" during the one year preceding the date oi survey. If the earnings from two occupations were equal, the occupation of the most senior working member was recorded as the household occupation. See: National Sample Survey, 27th Round, Instructions to Field Staff, Vol. 1 (Delhi, 1972), pp. 9-10 of the instructions for schedule 10.0. 2/ Various aspects of ditta on land holdings and their correlation with living standards as indicated by PCE have been discussed in my "Size of Land Holding, Livi.ng Standards and Employment in Rural Western India, 1972-73," mimetographed (July 1980). Separate data on owned and leased land are not available. - 32 - represented in the bottom deciles of households in terms of their per capita expenditure.l/ Two to five percent of the casual labourers appear to be even in the top quintile in terms of their per capita expenditure, partly because they had significantly lower-than-average household size, low age dependency ratios and much higher-than-average participation rates.-/ On the whole, therefore, the casual labourers seem to be a particularly disadvantaged group, both in rural and urban areas.- 1/ The differences would seem even sharper if the casual labourers were compared with other workers, rather than all workers. The data on age can be rearranged to highlight the inverse association between the percentage of casual labourers and the age group of workers. The growing pressure of population on land or the inability to expand the land area under cultivation at the same rate as popu- lation or the labour force tends to raise the proportion of casual labourers (or agricultural labourers) among the younger workers. 2/ Data on these characteristics have been summarized for "agricultural labour households" in my "Size of Land Holding, Living Standards and Employment in Rural Western India, 1972-73," mimeographed (July 1980) 3/ It is the author's impression, supported in extensive discussions with knowledgeable agricultural economists in India, that the classification of casual labourers in that category is not a transitory or life cycle phenomenon to any significant extent. - 33 - Discussion and Implication of Findings It seems 4clear from the evidence presented that casual labourers should be a high priority group in any programme to alleviate poverty and reduce unemiployment. Secondly, as the recent Draft Five Year Plan prepared by the Indian Planning Commission-/ clearly recognizes, the urban indus- trial sector in India is unlikely to provide much opportunity for increa- sed employment to the rural casual labourers. With the urban population of India approaching 145 million in 1980, the absorption of even the natural increase of the urban labour force in gainful employment is likely to be a challenging task because the industrial growth in India over the past 15 years has been very slow and continues to be highly capital intensive. Thus, although the interrelation betwen the rural and urban labour markets cannot be denied, the solution for the unemploy- ment problems of the rural casual labour force must be sought primarily in the rural sector. ALmost inevitably, therefore, the rural casual labour popu- lation would grow at an accelerated pace; with an increase in its pro- portion in the total labour force, the rate of unemployment estimated through labour force surveys would also rise. Of course, survey data on unemployment are subject to several limitations. Despite the refinements introduced in our data for mea- suring unemployment, they do not necessarily provide a clear guide to the supply of labour that would be available in response to any program 1/ Government of India, Planning Commission, Draft Five Year Plan, 1978-83, vol. 1 (New Delhi, 1978). - 34 - to expand work opportunities. The level of wage rate and the work con- ditions would certainly be important determinants of the actual labour supply. In Maharashtra, for example, the Employment Guarantee Scheme has reported a considerable gap (during 1978-79) between the number of workers "registering" for employment (2.8 million) and the number actually reporting for work on any one day (an average of 0.52 million, with a maximum of 0.77 million).- It is not known, however, to what degree the relatively low average turnout reflects a high turnover. A question arises as to whether the casual labourers would attain a per capita expenditure above the poverty line if all their reported unemployment and underemployment were eliminated. A categor- ical answer cannot be obtained without elaborate statistical calcula- tions, but it would probably be negative. Additional work opportunities for casual labourers would presumably have a sizeable positive impact on their incomes and living standards. It is difficult, however, to specify the precise nature of additional work opportunities; for example, in rural areas should they take the form of a public works programme or of additional demand for labour on the farms or in non-farm enterprises? Given the limited assets of casual labourers in terms of land and skills or education 1/ M. L. Dantwala, "Rural Employment: Facts and Issues," Economic and Political Weekly, Vol. 14, No. 25, June 23, 1979, pp. 1048-1057. The Scheme was introduced in 1972 as a declared commitment of the State Government to employ in unskilled manual labour any individual over 18 years of age registered with the village panchayat within 15 days of that individual presenting himself for work. Normally, work is provided within the block (an administrative unit of 100 villages, with an average population of about 100,000). Wages are paid on a piece-work basis, calculated such that "dilligent" work for seven hours would yield a minimum wage of three rupees (approx- imately US$0.40). - 35 - (in the short run at least), the avenue of public works programmes might be more amenable to state action than t:he indirect route of increasing the intensity of agriculture (through increased frequency of cropping with irrigation and other modern inputs), which would in turn augment the demand for casual labour. The latter policy has been the central objective of state policy in India for the past 30 years but has not prevented an increase in the number and in the proportion of wage employees and casual labourers in the rural labour force. The need to select projects under the public works programme with utmost care cannot 'be overstated; they must be technically sound and must strengthen the production potential of the rural economy. They should also be integrated into a long-range development plan for each watershed or small -area. The manpower and talent required to pre- pare such small area plans reportedly exists in most states of India. However, truly integrated plans, which take account of the local agro- climatic conditions and of the need to restore the ecological balance and/or restructure cropping patterns in different parts of the country, can be implemented only if political decision-makers are determined to initiate concerted action and resolve the inevitable conflict of interests among the different land-owning classes of the society.-/ (A detailed discussion oE these issues is beyond the scope of this paper.) I/ The assertation is not based on the data examined earlier in this paper. An accelerated program of investment in the infrastructure of agriculture is certainly highly desirable. However, it is difficult to judge whether and to what extent the additional demand for labour generated by an increased frequency of cropping, etc., would be met by an increased supply of effort by the self-employed and the family labourers as distinguished from casual labourers. 2/ Two excellent reports prepared during the Fifth Plan period by the Task Force on Integrated Development appointed by the Planning Com- mission (under the leadership of B. S. Minhas) have addressed some of these difficult issues. See: Planning Commission, Task Force on Integrated Rural 'Development, (a) Report on Integrated Agricul- tural Development Projects in Canal Irrigated Areas (New Delhi: September 1972); (b) Integrated Agricultural Development in Drought Prone Areas (New Delli: June 1973) (mimeographed). - 36 - Finally, one of the major findings of our data for India, namely the association between the importance of casual labourers in the labour force and the reported incidence of unemployment seems to be relevant to the interpretation of unemployment statistics (based on a reference period of one week) of other countries. However, we have found no country other than India that distinguishes casual labourers from other categories of workers: employees are generally identified as one group. In Thailand, for example, where the censuses and labour force surveys report a very low incidence of unemployment (around one percent or less of the labour force), the self-employed (including em- ployers) and unpaid family workers constitute a significant majority (78 percent or more) of the labour force.-/ On the other hand, in Peninsular Malaysia, Taiwan and Sri Lanka, which reported unemployment rates of about five, eight and fourteen percent, the non-employees constituted 43, 44 and 34 percent of the labour force in 1973, 1974 and 1969-70, respectively. 2/ 1/ The unemployment data for Thailand are available from the population censuses of 1960, 1970 and the labour force surveys of 1969, and 1971-1976. The status distribution of the labour force has been obtained from the same censuses and the 1973 labour force survey. 2/ The data cited above are based on the Household Expenditure Survey conducted in Peninsular Malaysia during 1973, the Family Income and Expenditure Survey of Taiwan for 1974 and the Socio-Economic Survey of Sri Lanka conducted during November 1969-October 1970. - 37 - Estimates of unemployment and of the labour force are known to be very sensitive to differences in definitions in surveys and sta- tistics. In particular, the data for Malaysia, Taiwan and Sri Lanka cited above are not based on comparable conceptual frameworks.- Also, the availability of free rice rations (two pounds per capita per week) in Sri Lanka probably had an influence on the reported estimates of unemployment, since it permitted potential workers to search for an "acceptable" work opportunity longer than would be possible otherwise. However, as the structure of employment in an economy moves towards a preponderence of employees rather than self-employed and family workers, and as education standards rise, it is likely that "new entrants into the labour force" will search for a "job" in terms of wage or salaried employment (rather than work on the Eamily farm or in other famiLy enter- prises). At the very least, this hypothesis deserves further explora- tion. Furthermore, it would be interesting and useful to examine the extent of underemployment among those classified as employed during the reference week, with a collection of detailed data on time dispo- sitioni and the "usual" activities of the respondents. 1/ The Malaysian data are based on a reference period of one week. The Taiwan survey did not specify any explicit reference period and used essentially a usual status approach. The Sri Lankan survey, on the other hand, used a mixture of a reference period of one month and a usual status approach. - 38 - Annex 1 Table 1 PERCENTAGE DISTRIBUTION OF PERSONS CLASSIFIED AS UNEMPLOYED IN TERMS OF THEIR USUAL STATUS BY DURATION OF UNEMPLOYMENT, RURAL AND URBAN INDIA, 1972-73 Rural India Urban India Duration of Unemployment Males Femnales Persons Males Females Persons Up to 3 nonths 15.71 19.78 3.6.48 14.63 16.53 15.07 Above 3 and up to 6 months 15.34 15.29 15.33 1.5.33 10.55 14.22 Above 6 months & up to 1 Year 1.9.56 ;9.47 19.54. 20.36 19.46 20.15 More than one Year 49.39 45.46 48.65 49.68 53.46 50.56 All 100.00 100.00 100.00 100.00 100.00 100.00 Source: NSSO, Draft Report No. 255/10, Dp. 110, 197. Results refer to the entire Round -- i.e., four subrounds combined. Table 2 PERCFrFlACE DlISrRlBNfrIrON OF Sli.E(CTKn lI.itR FORCE CIIARACTFRTSTTCS OF Till' RURAL POPUlATION, BY STATES Labor Force PJrtilir,ation Rates* Proportini rnf Casr,.il Laborers SeekJ2&r Available for Work In libor Forec (Usual Status) Kale Fema le Total ilbIe Fem:ale Total Male Female Total Mile FeawIc To taI Andisra Pradesh 72.8 52.7 62.8 27.2 48.8 36.2 0.63 0.27 0.48 8.1 16.3 11.2 *.s.,8 ,S.4 ,.2 JJ,.7 ;.4 i5.o iu.2 0i.1 5 ..64 U.67 1.9 2.4 1.9I Bihar 63.6 23.1 42.3 22.9 35.8 26.9 1.90 0.69 1.56 8.6 14.1 10.0 GujaraE 61.9 44.6 53.5 22.0 26.2 23.8 0.74 0.16 0.50 5.7 5.0 5.4 laryana 59.6 34.9 47.8 9.5 it.4 9.1 1.98 0.20 1.38 3.9 1.0 2.9 lcumtchel Pradech 61.5 53.0 57.1 4.8 0.6 2.8 0.63 0.15 0.40 0.8 0.2 0.5 KCarnataka 68.0 50.5 59.5 27.0 37.1 31.2 0.99 0.24 0.67 7.2 11.0 8.6 Kerala 57.4 30.6 43.6 37.0 45.6 40.1 5.45 4.32 5.05 22.5 25.4 23.5 Madhya Pradesh 67.1 52.8 60.2 15.5 24.8 19.4 0.16 -- 0.10 2.7 4.5 3.4 Mat,arashtra 64.9 53.6 59.2 31.5 44.7 37.6 0.08 0.11 0,69 7.7 11.7 9.4 Me rhalaya 63.8 54.9 59.5 10.8 6.1 9.9 -- -- -- 1.7 1.8 1.8 Orlssa 61.0 36.1 51.8 29.8 37.8 30.6 1.25 '0.38 0.95 7.6 :,.7 ;0.2 Punjab 63.4 31.4 48.4 15.9 9.6 13.9 0.93 0.51 0.74 5.0 1.4 3.9 Rajastalen ti8.9 63.2 66.2 5.4 4.8 5.2 0.39 0.19 0.3 3.6 2.8 3.2 TamiI taOdu 70.4 51.4 60.P 30.9 45.8 37.3 1.22 0.33 0.84 11.3 13.5 10.5 Uttar Pradesh 62.6 28.2 46.1 12.8 14.0 13.2 0.54 0.18 0.43 3.2 3.7 3.4 West BcnIIaJ 61.1 15.9 39).1 31.3 37.9 32.6 2.52 2.J9 2.59 9.6 15.6 10.7 Chandigarbi i.a. n.a. n.a. n.a. in.a. n.n. n.a. n.a. n.u. fl.fl. n.a. n.a. D- t,i 52.5 48.9 %t .0 12.6 3.9 9.3 0.NN8 _ 0.55 4.8 (1.6 3.2 Cod s5.6 48.4 51.7 30.3 44.7 36.6 1.71 4.11 2.76 14.7 29.6 21.0 PundlI-lerry 64.1 34.7 49.4 41.0 59.4 46.8 4.90 0.72 3.44 14.6 28.8 19.6 Jacemu and Kasismir 64.4 27.1 46.2 2.0 0.8 1.6 0.40 0.03 0.39 9.3 6.1 8.6 Manipur 52.3 33.9 43.2 1.8 0.8 1.4 0.59 -- 0.37 4.7 4.5 4.5 Tripura 59.8 24.2 42.7 25.1 30.8 26.1 0.82 1.20 0.94 5.5 7.3 5.9 ALL-INDLA 64.6 37.7 48.6 21.8 31.3 26.6 1.16 0.48 0.90 6.8 9.9 7.8 It This measure of unemployment is based on the percentage of person-days reported as unemployed vithin a week's reference period in each quarter. ' Rates relate to population aged five years and over. Source: OOI, National Sawple Survey. 27th Round, October 1972 - September 197.3. PUB HG3881.5 .W57 W67 no.417 Visaria, Pravin M. Poverty and unemployment in India : an analysis of recent evidence. PUB HG3881.5.W57 W67 no.417 Visaria, Pravin M. Poverty and unemployment in India : an analysis of recent ev The World Bank Headquarters European Office Tokyo Office U 1818 H Street, N.W. 66, avenue d'lena Kokusai Building Washington, D.C. 20433, U.S.A. 75116 Paris, France 1-1 Marunouchi 3-chome Telephone: (202) 477-1234 Telephone: (1) 723-54.21 Chiyoda-ku, Tokyo 100, Japan Telex: WUI 64145 WORLDBANK Telex: 842-620628 Telephone: (03) 214-5001 RCA 248423 WORLDBK Telex: 781-26838 Cable Address: INTBAFRAD WASHINGTONDC ISSN 0253-2115 / ISBN 0-8213-9322-7