Eleventh five year plan identified the weaknesses on the employment front during the period of reforms.…

Question

Eleventh five year plan identified the weaknesses on the employment front during the period of reforms. Describe them.

Ghissu Editorial · Accepted Answer

The Eleventh Plan found jobless growth during reforms: daily-status unemployment rose from 7.3% (1999-2000) to 8.3% (2004-05) and organised employment shrank 0.38% a year during 1994-2004. It also flagged dominant low-productivity informal work, stagnant real wages and skill and regional mismatches.

**Introduction**

The Eleventh Five Year Plan (2007-2012) highlighted critical employment weaknesses during the reform period that risked undermining inclusive growth⟦1⟧, especially in states like ==Andhra Pradesh== where structural shifts in agriculture and industry were prominent. Despite robust GDP growth, these weaknesses threatened to exclude large sections of the workforce from the benefits of economic progress.

**Employment Weaknesses Identified**

SKETCH: comparison | Employment Challenges During Reforms  
a: Organized Sector Employment  
b: Informal Sector Employment  
- Declining or stagnant jobs :: Rapid growth but low productivity  
- Wage stagnation or decline :: Low wages and job insecurity  
- Concentrated in urban and industrial areas :: Predominantly rural and self-employed  
- Limited social security :: Minimal formal benefits

2. **Decline in Organized Sector Employment**: Employment in the organized sector declined at an annual rate of 0.38% during 1994-2004 due to rising capital intensity and outsourcing. This trend frustrated educated youth who expected better formal job opportunities.

3. **Dominance of Informal and Low-Productivity Jobs**: Non-agricultural employment grew at 4.7% annually (1999-2005), but mainly in the unorganized sector, dominated by low-productivity self-employment lacking job security and social benefits.

4. **Wage Stagnation and Inequality**: Real wages in non-agricultural sectors stagnated during 1999-2005, with organized sector wages stagnating or declining for workers, even as managerial salaries rose sharply, reflecting growing inequality.

**Analysis in Economic Reforms Context**

7. **Regional Disparities and Structural Mismatches**: States like ==Andhra Pradesh== faced skill mismatches and uneven growth; coastal industrial corridors showed promise, but drought-prone areas like Rayalaseema lagged, highlighting regional imbalances.

**Way Forward**

8. **Promote Labour-Intensive SMEs and Labour Law Reforms**: Strengthen policies and credit access for SMEs, especially in ==Andhra Pradesh==, to create quality jobs. Implement labour law reforms balancing flexibility with social security to encourage formal employment growth.

**Conclusion**

Addressing these employment weaknesses is vital to ensure that economic reforms translate into inclusive and sustainable employment growth across regions and sectors.

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