When it comes to jobs, the thrust of the Modi government’s policy can be described in two words – job creation. Emphasising that more people in India need to be job creators than job seekers, the government has even launched many schemes, like Start Up India, Skill India programme and Mudra Yojana to incentivize self-employment.
Self-employment has in fact been used by this government to defend India’s abysmal unemployment statistics, with our previous (interim) finance minister Piyush Goyal even claiming that job losses were a good sign, since they revealed the Indian youth’s preference for entrepreneurship.
Data, however, tells a different story. As the Indian economy witnesses a slowdown and the start up industry takes us arms against the Modi government, one-of-a-kind data collected by the Periodic Labour Force Survey (PLFS) in 2018 reveals just how precarious a position India’s self-employed find themselves in, as low income and non-existent financial security cripples their prospects.
What’s more, the survey also casts a serious dent on the government’s entrepreneurship narrative, as the numbers reveal that most who are self employed in India don’t even earn enough to be able to become entrepreneurs or job creators.
Until the PLFS survey of 2018, employment data did not capture the earnings of the self-employed. This data was only collected for PLFS 2018, and the picture that’s emerging out of it is not pretty.
First, as the data reveals, only a small part of India’s self-employed actually hire workers with nearly 70% of them being own workers, i.e. those who run their enterprises on their own, without hiring outside labour. Only 4% actually employ outside labour, with the remaining 26% being unpaid help who assist household members in running their business, without remuneration.
Second, most who are self employed (about 60%) are engaged in agriculture and this share is significantly higher in rural areas than urban ones. While 52.2% of rural households are engaged in agriculture, up from 49.8% in 2011-12, in urban areas, the share of self-employed households has declined from 35.3% in 2011-12 to 32.4% in 2017-18.
Third, most self employed people in India make very little money. According to the survey, the average monthly earnings for all self-employed workers stood at ₹8,000 per month, much lower than the average monthly earnings of regular workers. Only 10% of the self-employed reported earnings of over ₹20,000 a month, with just 1% reporting making more than ₹50,000.
Fourth, the gender pay gap is highest in the category of those who are self employed, where in rural areas, male workers earn 2.67 times more than female workers, and in urban areas, a male worker earns three times what female workers earn.
This is not to say that the salaried in India have got things made. According to PLFS, most regular jobs in India do not pay well. 45% of salaried workers — the best-paid workers in India — earned less than ₹10,000 per month, and only about 4% of them earned more than ₹50,000 per month in 2017-18.
Overall, nearly 72% regular workers earned below the minimum monthly salary of ₹18,000 prescribed by the 7th Pay Commission. And only a miniscule 0.2% earn over a lakh per month, as per the survey results.
The survey results clearly show the precarious position situation most workers in India find themselves in when it comes to getting a job. Most clearly though, it busts the entrepreneurship narrative that the Modi government has been spouting. When it comes to employment generation, India needs to buck up. And when it comes to doing it through self employment and entrepreneurship, the country still have a long, long way to go.