Mobility and Stagnation in India’s Rural Labour Market

Transformation of the countryside from agrarian subsistence economy to non-farm monetised economy is propagated as a precursor of growth and development that involves shifting of labour from farming to off-farm activities. India has started its journey in this path but has a long way to go. Researchers also question the changing pattern of rural labour movement as a positive phenomenon or a distress one. This paper attempts to examine the complexity of changes in rural labour market in India over a quarter of a century to untangle the dynamics. It is observed that the changes taking place are not always conducive to progress as a large part of it is distress-driven. While some social groups are going up the ladder, a large mass of others are stagnating in the same or similar occupations. It appears that agriculture still holds the key to rural development. A three-pronged strategy of agricultural progress, human capital formation and rural industrialisation is necessary for breaking the shackles of continuity and usher in changes that are real rather than apparent.


Introduction
Development theories lay great emphasis on the necessity of transforming a predominantly agrarian subsistence economy to a non-farm monetised economy as a facilitator of growth and development. The process involved in such a transformation includes movement of workers from agriculture to secondary and tertiary sectors, from cultivation to non-farm activities, from self-employment to wage labour -both over time and across generations. India has started its journey on this path but has a long way to go yet as close to two-third of its population and workforce are still dependent on agriculture for their livelihood. In addition, this linear model of development has been questioned recently; researchers commenting that the transformation process in the labour profile may be forced and distress-driven rather than dynamic and due to pull factors (a forceful argument by Abraham, 2009 and also by Sen & Jatav, 2010). This paper explores these issues related to the changing pattern of rural labour market in India over a quarter of a century using large sample survey data from National Sample Survey Office 1 (NSSO) of India. We observe that the changes occurring in the countryside carry both signs of change and continuity. A section of the population, mostly from the advanced social classes, has experienced sectoral mobility and vertical movements. But for a large section, especially the Scheduled Caste (SC) population, the movements are lateral from one low-paying job to another, and mostly driven out of despair.
The changing occupational distribution is, therefore, to a large extent apparent and in reality there are clear symptoms of stagnation, which, if overlooked, has serious implications for the development process in general and social inclusion in particular.

Current Research Base
India's rural economy, especially the agricultural sector has seen a lively and rich research body developing around it, befitting its central role in the social, economic, and political processes. Most of these have dwelt on the situation of rural labour, either briefly or at length [see Bardhan (1977) for a survey of research till late 1970s and Coppard (2001) for an excellent survey of more recent literature focussed on rural non-farm sector]. Apart from those already mentioned, studies that focus specifically on rural labour include Sastry . Almost all these studies report a declining share of agriculture and farming among rural workers and movement onto secondary and tertiary sectors. However, the dynamics and the merit of such changes have been questioned in recent years and the jury is divided on whether the changes are growth-driven and virtuous or distressdriven and vicious. We critically analyse the changes observed over a long time period of a quarter of a century to smooth over periodical short-term disturbances by looking at parametres like employment status, sectoral and occupational distributions, wage and consumption levels and movements over time and generations.

Figure 1: Rural Transformation -A Framework
There is no doubting the fact that structural transformation of rural India would necessitate shift from farm-based, subsistence, non-wage, and irregular work to off-farm remunerative wage labour over time ( Figure 1). However, there may be two completely different processes that may lead to such an outcome. In one, there is a dynamic integration of farm and non-farm sectors leading to demand-driven shift of workers from agriculture and cultivation to manufacturing and services. The resultant jobs are regular and well-paid, leading to improvement in livelihood and economic status. The other process is a distress-driven supply push of surplus farm workers into non-farm manual jobs that are irregular and ill-paid, leading to further immiseration. Which of these two processes is actually operating would be evident by examining the indicators that are associated with these processes (Figure 2). The results discussed below would provide us a clue to the process.  Figure 3). This has been accompanied by a fall in employment rate as well, indicating lower absorption of rural labour into productive jobs. Self-employment, especially in agriculture, has declined along with a rise in casual wage labour. Regular salaried work has increased in Punjab, Haryana, Gujarat, Tamil Nadu and Himachal Pradesh, but has declined elsewhere, indicating its link with the economically betteroff States. Thus the broad picture is that of increased work participation, declining labour absorption, and increased casualisation.

Figure 3: Labour Market Indicators in Rural India
Social stratification prevents this broad trend to be applicable across the spectrum. There has been absolute decline in the number of Hindu Upper Caste (HUC) workers all along -mirroring the substantial rural-urban migration observed among this social class facilitated by their superior social, economic and human capital profile. Casualisation has also declined for this group and includes just about one-fourth of all HUC workers. On the contrary, incidence of casual wage labour is above 40 per cent for Hindu Scheduled Tribe (HST) workers and over 60 per cent for Hindu Scheduled Caste (HSC) workers, and has been increasing over this period. Thus, the processes of change in employment status are different  Table 1.
across socio-religious groups with the HUCs clearly having an edge over the others.

Sectoral & Occupational Changes:
There is no doubt that over this quarter century workers in rural India have moved out of agriculture, now accounting for two-thirds of all rural workers compared to more than four-fifths in 1983 (Tables 3 & 4, Figure 4). Sectors that have gained from this outflow are construction (+6.

Figure 4: Rural Employment by NIC Groups in India
Source: Same as Table 3 A g r i c u l t u r a l & Again, these shifts are not uniform across social groups. The HSTs have seen lowest decline in share of agriculture/farming, indicating their continued dependence on land/forests for livelihood. Highest decline in share of land based activities has been for the HSCs, most of who have moved into the construction sector, reflecting perhaps the landlessness and increasing land alienation within this group. For the HUCs, the movement is mainly from agriculture to manufacturing and trade at the sectoral level and from farming to administrative, managerial, sales, and professional jobs at the occupational level.   parents. It is observed that even among cohabiting households occupational and industrial pattern shows a shift from agriculture to construction, trade, manufacturing, and transport sectors over generations (Table 7). However, there is substantial stickiness as well as more than 75 per cent of agricultural sector workers have their children in this sector itself ( Table 8) than half of the children venture into sectors other than that of their parents. It is also noteworthy that there exist movements from non-agriculture sectors to agriculture sector over generations, though the magnitude is small.

NIC Category Current Previous Occupation Category Current Previous Generation Generation
Generation Generation   At occupational level too, stickiness is high for farming and production and construction related jobs ( The fluidity observed earlier over time is, therefore, working within households as well where current generation workers are moving out of parental industry/occupation. But we now have evidence that the shift is not always a one way traffic out from primary sector/ occupations. People, though small in numbers, are moving into land based activities as well and the transformation process is stymied rather than full-fledged.

Mobility and Stagnation
While the evidence so far suggests considerable mobility in the rural labour scenario, we have also observed signs of stagnation across generations and for some social groups. This will become clearer if we cross-tabulate industrial sectors and occupations (Table 10).    We can get some idea about the process if we look at the sources of income and consumption pattern. The myth that shift of workers from agro-labour to non-agro labour is always beneficial is perpetuated by the fact that households whose predominant source of  income is non-agro labour have an average consumption level that is more than twice of the households whose predominant source is agro-labour (Table 11, Figure 6). There are also evidences to show that productivity, wages and working conditions are generally higher in the non-farm sector than in the farm sector (Fisher and Mahajan, 1998). In addition, Monthly Percapita Consumption Expenditure (MPCE) of non-agro-labour households have increased by close to 7 per cent per annum over this quarter century while that of agro-labour households have marginally declined (Table 12). However, this does not guarantee that workers moving into non-agro sectors will be assured of such higher levels of wage, income and consumption. What has been the data and evidence in this regard? We observe that proportion of households who report that cultivation is their predominant source of income have dropped from 41 to 32 per cent over the quarter century, which is expected in the light of employment dynamics observed earlier (Table 13, Figure 7).  Social inequality is also increasing as the processes are different across social groups as mentioned earlier.

Figure 7: Predominant Source of Income of Households in Rural India
Source: Same as Table 13.  The distress is all the more evident if we look at the gender dimension. It is observed that the rural female workers have witnessed very little changes over the years. Their dependence on agriculture is as high as 80 per cent even in 2009 and share of casual wage labour has been steady around 42-44 per cent. It is the males who have been shifting out of land-based activities and for whom casualisation has increased by more than 10 percentage points. All these indicate that rural male agricultural workers and self-cultivators under duress are venturing into seasonal, casual off-farm jobs to supplement family income while the farm-jobs are entrusted to the women folk of the household. Bereft of adequate human capital, the surplus male labourers get into low-productive, low-paid manual jobs which have pathetic work conditions and unsure duration. The distressdriven employment growth in the rural nonfarm sector observed by researchers during the decade 1993-2004 has clearly extended its stay. The transformation process is, therefore, more cosmetic than meets the eye and indicates stagnation rather than mobility.

Conclusion
What are the clear messages coming out of this analytical exercise? First, evidence shows that the transformation process currently underway in the rural labour market in India is a stunted one. The fluidity that is being observed and manifesting itself as mobility of labour across sectors are more apparent than real. Second, even this mobility is limited to a small sub-section of the population. This section, predominantly the upper caste households, is having a dynamic change and moving out of low productive primary landbased occupations to better paying secondary and tertiary jobs. Third, for the majority population the movements are distress-driven and from one low paying job to another with frequent seasonal switches between them. Fourth, such a para-normal transformation process is caused to a large extent by low agricultural productivity, adverse man-land ratio and lack of capital formation in rural India which is pushing out surplus labour. Fifth, these workers lack the human capital (education and skill) demanded by modern secondary and tertiary sectors to get opportunities in the [This paper was presented at the Annual Conference of Indian Society of Labour Economics held at Jawaharlal Nehru University, New Delhi in December, 2013 and also at the Department of Economics, Calcutta University in February, 2014. The author has benefited from comments received during the two presentations and thanks the participants for the same. Thanks are also to anonymous referees for revisions that enriched the paper] Notes 1 The NSSO conducts periodical large sample surveys on employment, unemployment, consumption expenditure of the people, etc. These surveys provide information on employment status, broad occupation groups, wages earned by each individual and also the Monthly Percapita Consumption Expenditure for each family. For further details on NSSO Surveys, see www.mospi.nic.in. urban/peri-urban sectors. Sixth, constricted growth of labour-intensive small and medium non-farm enterprises in rural areas are also preventing these workers from gaining access to non-primary jobs that are regular and better-paying but located in rural areas.
Under such a situation, what may be the likely solution? In our opinion, the policy thrust has to be three-pronged. First, improving agricultural productivity through capital formation should be the top priority. Public capital formation in agriculture has been dwindling over the last two decades and the negative impact is felt by the small and marginal farmers (the largest segment in terms of population linked with them) as they lack private capital to tide over this shortfall. Stabilisation of costs and prices, should also lead to better returns from cultivation and farm related activities. While at present the input market has mostly been left to the market, asymmetry and bottlenecks in the product market hinder the farmers benefiting from marketing their products. Second, ensuring skill formation among rural youth will go a long way in developing the human capital base of rural India and enabling the rural youth take up nonfarm jobs and even become entrepreneurs. The Prime Minister Kaushal Vikas Yojana is a bold step in this regard and may change the rural dynamics in long-run. Third, supply of skilled manpower will not solve the problem unless there is a simultaneous proliferation of rural industries that have high employment elasticity. Thus, contrary to popular perception, the changes in rural labour dynamics do not call for policy holiday for agriculture sector though apparently its share in employment is declining. Rather this sector calls for immediate support to convert the rural transformation process from being distress-driven to growthoriented. Sadly, governments over the last two decades have relied more on agricultural subsidies rather than public investment to pay lip service to the rural economy. It is high time that policies take a bend in the river, otherwise rural economy will surely capsize, an eventuality that urbanising India cannot afford.