India has 76 million entrepreneurs!

‘Wage earners are shrinking. In both, the organised and unorganised sectors. And, entrepreneurs are growing.’
‘But the increase in entrepreneurship is of a kind that does not create salaried employment or daily wage employment,’ says Mahesh Vyas.

Employment takes many forms and a salaried job is only one of them.

The Consumer Pyramids Household Survey (CPHS) captures all forms of employment — whether it is formal or informal employment in the organised or unorganised sector; whether it is a salaried job or entrepreneurship in some form, even if the entrepreneurship is essentially self-employment.

Today’s gig workers would classify as self-employed entrepreneurs, for example.

So would the typical Ola/Uber cab driver.

CPHS is designed to cover them all so long as they live in households in India.

The first observation we make is that the overall employment in India has been almost a constant at around 406 million since 2016.

During the 12 waves of CPHS conducted since January 2016, the total employment has been estimated at between 401 million and 412 million with an average of 406 million.

The first wave conducted during January-April 2016 estimated employment at 404 million and the last wave conducted during September-December 2019 estimated employment at 406.5 million.

Evidently, there hasn’t been much movement on total employment over the four years since 2016.

Within this stable of 406 million employed persons, the share of employment for those less than 30 years of age has been declining.

These accounted for about a quarter (25.6 per cent) of total employment in January-April 2016.

By September-December 2019, their share had fallen to a little over a fifth (20.8 per cent).

Those in their thirties also accounted for a quarter of the total employment in early 2016 and their share fell lesser to 23 per cent.

Bulk of the employment is with those over 40 years of age.

It was 49 per cent in early 2016 and their share has risen to 56 per cent in late 2019.

This ageing profile of India’s workforce is as intriguing as it is disturbing.

It is intriguing because India is a young country with 35 per cent of its working age population in the 15- to 30-year bracket.

These young people carry the promise of the fabled demographic dividend.

But it is intriguing that their presence in the workforce has been shrinking.

This structural shift in the age profile is also disturbing because an ageing profile is least capable of tackling with the challenges of new technology and an increasingly competitive business environment.

This ageing profile of the workforce is also prevalent in the salaried employees.

Salaried employees include industrial workers, white collar workers, managers and support staff. It excludes farmers, traders, wage labourers and entrepreneurs.

We observe that salaried jobs have remained within a narrow band of 86 million and 88 million during this period.

So, salaried jobs have accounted for around 21 per cent of total employment in the country.

But this share has fallen a tad — from 21.7 per cent in 2016 to 21.4 per cent in 2019.

In 2016, 34 per cent of the salaried jobs were with people who were under the age of 30 years.

In 2017, this proportion dropped to 31 per cent.

Then it dropped to under 30 per cent in 2018 and, in 2019, it fell further to 29 per cent.

This is not just a decline in relative terms.

There is an absolute decline in salaried jobs for those under 30 years of age.

About 30 million people under 30 years of age had a salaried job in 2016.

By 2019, this number dropped by five million to 25 million.

This decline is as intriguing as it is disturbing.

It is possible to assume for a moment that there is a decline in new salaried jobs available although even that is a bit incredulous.

There has to be at least some increase in salaried jobs for those below 30 years of age.

This fall in the number of salaried employees and in particular young salaried employees or even those in their thirties with salaried jobs has implications on India’s consumption growth story and also on its savings rate.

While salaried jobs have fallen a bit, the count of wage labourers and small traders has declined sharply from 173 million in 2016 to 131 million in 2019.

On the other hand, the count of farmers and business persons has increased.

The count of farmers has increased from 93 million in 2016 to 111 million in 2019.

The count in entrepreneurs is bigger — from 52 million to 76 million.

While there was an 18 million increase in farmers, there was a 24 million increase in entrepreneurs.

Wage earners are shrinking. In both, the organised and unorganised sectors. And, entrepreneurs are growing.

But it is worth noting here that the increase in entrepreneurship is of a kind that does not create salaried employment or daily wage employment.

There is only one kind of employment that can do this — self-employment.

The count of self-employed shot up by 23 million from 33 million in 2016 to 56 million in 2019.

Their share in total employment has increased from 8 per cent in 2016 to nearly 14 per cent in 2019.

Entrepreneurship is vitally important for India’s growth but, these enterprises need to grow beyond merely being means of self-employment.

Mahesh Vyas is managing director and CEO, Centre for Monitoring Indian Economy.

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