Haryana's superior quality of employment

by Mahesh Vyas

Haryana’s employment challenge is in the structure of its employment. Its employment is largely of salaried employees. This is a great advantage that Haryana offers to its people and also to those from the rest of India who are attracted to the state as quality migrants. Poor quality employment such as of daily wage labourers is relatively small in the state. And, the share of better quality jobs such as of salaried employees is higher than it is in almost any other large state. But, it is far more difficult for an economy to generate salaried jobs than it is for people to join the armies of daily wage labourers. This difficulty is not limited to Haryana. But, it hurts Haryana the most. Haryana is a rich state with a relatively high per capita income. People here are therefore apparently less willing to take up informal employment in the unorganised sector. The demand in Haryana is likely more for the difficult-to-generate salaried jobs. Haryana’s advantage as the provider of good quality jobs is therefore also its challenge.

Before the pandemic, salaried jobs were the dominant form of employment in Haryana. Between September 2018 and April 2020, salaried jobs accounted for over 31 per cent of the total employment in Haryana. No other form of employment in the state had a larger share in the total. Farmers came a close second with a share of just-below 30 per cent. Business persons accounted for another 24 per cent and the remaining 14 per cent were small traders and daily wage labourers.

This composition of employment compares very well with the all-India average where the dominant form of employment is small traders and daily wage labourers. These accounted for 32 per cent of total all-India employment in the same September 2018 through April 2020 period. Salaried jobs accounted for a much smaller, less-than 22 per cent. Farmers accounted for 28 per cent and business persons for nearly 19 per cent.

In Haryana, the pandemic hit the salaried employees the most. Salaried jobs fell from about 2.3 million during January-April 2020 to 1.6 million during May-August 2020 and further to 1.4 million during September-December 2020. This implies a cumulative fall of about 39 per cent during the course of less-than one year. This is an extra-ordinary hit because the rest of the country did not see such a big attrition of salaried jobs. At the all-India level, they fell by about 13 per cent initially and recovered thereafter.

Haryana has taken longer to claw back the lost salaried jobs. But, it has recovered much of the losses.

Remarkably, during May-August 2022, salaried jobs were once again the top form of employment in the state. During this period, Haryana employed 2.2 million salaried persons. This is well above the farmers who are estimated to number a little less than 2 million. The number of farmers has dropped from 2.3-2.4 million till recently, possibly because of the erratic monsoon this year in the northern states. At the same time, salaried jobs have increased steadily in the state to claim the position of the largest form of employment.

Salaried employees account for 31 per cent of total employment in Haryana. States that do better than this are small city-sized states like Delhi, Goa, Chandigarh and Puducherry. In these states, salaried jobs account for 50-60 per cent of total employment. There is very little agriculture in these places. Himachal Pradesh, Uttarakhand and Jammu & Kashmir also show high proportion of salaried employees 40-50 per cent. These, again, have little agriculture. Among the rest of the states, Haryana tops in terms of salaried employees.

The state has a healthy mix of farmers and salaried employees. This reflects a combination of its traditional base of an agrarian economy and its growing modern industrial economy and its more recent spurt in services sectors. The latter’s concentration in Gurugram benefits from its proximity to New Delhi.

It is interesting to note that traditional industrial powers such as Maharashtra, Gujarat, Tamil Nadu and West Bengal have a lower share of salaried employees in their respective total employment compared to Haryana.

Haryana’s success in achieving this structural shift decisively away from agriculture and daily wage labourers is also the source of its employment challenge. Informal employment in the form of daily wage labourers, farm labourers or small traders easily absorbs labour. The absorption is often thinly disguised unemployment. Haryana, interestingly, does not offer this escape route to labour. Or, it may be more appropriate to say that the people of Haryana do not accept this low-wage option. Haryanvis prefer salaried jobs, largely to the exclusion of other options.

As they seek employment but do not find any, the unemployment rate in the state rises. This is not what happens in most states particularly the agrarian states. Farmlands and casual jobs absorb labour and keep the unemployment rate down.

But, when the overall economy grows hesitatingly and when investments into new plant and machinery or other productive capacities are limited, new salaried jobs are hard to create. When India’s capex cycle re-starts in full earnest, Haryana will be an automatic beneficiary. Besides its advantages of being close to the national capital, it also has a large labour force that looks for good quality jobs and is willing to remain unemployed till the economy turns around and offers them the jobs they want.