Unincorporated manufacturing jobs stay below 2010-11 level, shows NSO data

Data showed that the manufacturing sector employed nearly 33.7 million workers in 2023-24, compared to 34.9 million workers in 2010-11

Employment in the unincorporated manufacturing sector remained below the 2010-11 levels in the October-September period of 2023-24, according to an analysis of the latest Annual Survey of Unincorporated Sector Enterprises data released on Wednesday, alongside the comparable 67th National Sample Survey round conducted in 2010-11 by the National Statistics Office (NSO).  Experts attribute the current lower levels of employment in the manufacturing sector to the continued impact of successive  economic policy shocks such as demonetisation, the  goods and services tax, and Covid-19 pandemic-activated lockdowns. 

Data showed that the manufacturing sector employed nearly 33.7 million workers in 2023-24 period, compared to 34.9 million workers in 2010-11. However, the number of establishments in the sector increased to 20.14 million, compared to 17.2 million during the same time period. 

P C Mohanan, former acting chairman of the National Statistical Commission, says that the unincorporated manufacturing sector is yet to recover from the impact of successive economic policy shocks. Similarly, other government policies to boost manufacturing, such as Make in India, have also failed to positively impact the sector. 

“Meanwhile, the growth witnessed in the number of establishments is primarily due to the increase in the share of own-account enterprises (OAEs) compared to the share of hired-worker enterprises, which employ at least one hired worker on a fairly regular basis,” he added. 

An OAE is a business entity that is run by an individual or members of a household without employing any hired workers on a regular basis. 

 

Data shows that the share of OAEs in the sector grew to 88.3 per cent in 2023-24 period, compared to 83.8 per cent in 2010-11 period. Unincorporated enterprises refer to business entities that are not legally registered under the Companies Act, 1956, or under the Companies Act, 2013. These unincorporated non-agricultural enterprises, ranging from small-scale manufacturers and service providers to trade establishments, constitute a major portion of the economy. 

Pronab Sen, former chief statistician of India, says that there is no doubt that the unincorporated sector was severely hit by several policy decisions. “As a result, the older establishments that were there died down. For a new enterprise to take birth and grow in size, it will take time. Hence, there is a visible increase in the share of OAEs, and that has resulted in the number of establishments growing while employment remains low in the sector,” he added. 

Echoing similar views, Labour Economist Santosh Mehrotra says that the Micro, small and medium enterprises (MSMEs) in the unorganised sector are the biggest employment providers in the non-farm sectors.

 

“The deterioration of MSMEs in the unorganised sector and non-farm employment in these units was very much part of the sharp slowdown seen after 2016 due to successive policy-induced shocks. For a large population, OAEs have emerged as a survival strategy after the pandemic,” he added.

 

The data showed the total number of unincorporated establishments stood at 73.4 million in the October 2023-September 2024 period, up from 65.04 million in October 2022-September 2023. The total number of workers employed stood at 120.6 million, up from 109.6 million during the corresponding period.