India’s Trade Sensitive Employment-Analysis at the Sectoral Level

The current paper examines to address the issues related to employment generation vis-à-vis export growth. The literature identifies that the relationship is complex and is dependent on number of factors such as labour intensity of production process, technology integration, import content in exports or degree of domestic value addition, business cycle etc. to drive or thwart higher employment. It is also linked to availability of skilled labour force as per requirement. Using ASI and TiVA database, three panel datasets have been created from 2008/09-2013/14 to analyse this relationship. The study finds that in exporting industries overall growth in employment is higher than the manufacturing sector as a whole, however, critical variations are seen with respect to the firm size and factor intensity. Labour intensive sectors has greater potential to hire workers, especially female workers. The paper also highlights that factor intensity and export orientation does not provide a comprehensive picture since two other compelling forces like domestic value addition and total factor productivity has significant role to play. The study suggests that female employment rises in labour intensive industries where productivity is low, contractual and managerial employment rises where productivity is high. However, contractual employment declines with the rise in exports at industry level. In case productivity rises along with domestic value addition it is observed that employment of contractual workers is enhanced. Further, rise in domestic value addition does not reveal a significant relationship with rising employment which is perhaps due to the fact that not many industries in India are currently connected with global value chain.