Trends and Patterns in Labour Quality in India at Sectoral Level

In this paper aggregate labour quality and the first order quality indices of education, age and gender have been estimated using the JGF (1987) methodology for the Indian economy, its broad sectors, disaggregated 27 Indian industries and for the organized and unorganized manufacturing industries. The objective is to find out the changes which have taken place in different labour characteristics over time. It is important as all employed persons are not homogeneous and any change over time in its characteristics has its effect on its marginal product and hence on productivity and growth of GDP. The period covered for the analysis is 1980-81 to 2014-15, which is divided into three-sub-periods, 1980-81 to 1993-94, 1994-95 to 2002-03 and 2003-04 to 2014-15, and the period covered for the organized and unorganized manufacturing industries labour quality indices is 2000-01 to 2014-15. The main results of the analysis are (a) growth of aggregate index of labour quality in India during the period of 1980-2014 grew at an annual average growth rate of 1.4%, which is almost comparable to the growth in persons employed and could contribute significantly to the growth of GDP; (b) the main driver of its growth has been the growth in the education Index which contributed 1.23 percentage points to its growth; (c) growth of aggregate labour quality during 1980-2014 is relatively high in Mining, Electricity, Manufacturing and Services sectors and is low in Agriculture and Construction; and (d) the growth of labour quality is higher in organized manufacturing as compared to unorganized manufacturing.